Buying Property in Costa Rica

Buying Property in Costa Rica

Just to set your mind at ease, Buying property in Costa Rica is not as scary as you would think despite all the horror stories you may have heard. With the right team to guide you, it can be a very rewarding and exciting experience.

The decision to purchase real estate in a foreign country can at first be a daunting and a scary proposition. However, it is possible to safely buy property in Costa Rica with the assistance of a reputable realtor and attorney. I can help you locate a property suitable to your needs, educate you as to property values and other considerations in your chosen area, and assist you with negotiating a fair price. You will also need the expertise of a real estate attorney (Certified Public Notary) with a good reputation who can handle the financial aspects of the transaction and ensure that you will have legal title to your property.

Escrow Services

Escrow services are available in Costa Rica through well-known international companies such as Secure Title Latin America


It is possible to purchase real estate through direct transfer where one or more individuals acquire property in their personal name. Purchasing properties through a new Costa Rica corporation is also very common in Costa Rica. The process of setting up a corporation is not complicated or expensive, but requires the expertise of a good attorney to follow the legal protocols involved.

The Public Registry of Properties

All property in Costa Rica should be registered in the Public Registry of Properties, whether the property is fee simple or concession. By means of the Public Registry of Properties your attorney will be able to confirm that the seller possesses ownership of the property, and to discern if there are any restrictions, liens or encumbrances on the property before the deal goes through. Avoiding the purchase of unregistered property is strongly recommended as this could take years to rectify.

Folio Real Numbers and Catastrals

Each property registered in the Public Registry of Properties has a Folio Real number, which is the unique number assigned to each property to identify it. The number is comprised of three parts, the first number indicates the province the property is located in, there are 7 provinces in Costa Rica. The second group of six numbers is the number of the property itself, and the last group indicates how many owners the property has. All properties must have this number in order for clear title to be obtained. Each registered property also has a survey map or Catastral or also called a Plano Catastro. In order to transfer, mortgage, or acquire a property, the survey plan must be recorded at the Public Registry of Properties.

Property Taxes

Property taxes in Costa Rica are very low, only ¼ of 1% of the registered property value. Certain standard closing costs are required in Costa Rica to transfer the title of a property from the seller to the buyer, and this is always paid by the buyer. Closing Costs include: (1) Real Estate Transfer Tax, which is 1.5% of the registered value of the property on the deed; (2) Registration Stamps, which total approximately .84% of the purchase price; (3) The Notary Fee, which is 1.25% of the property sales price. This means on the purchase of a $100,000 property, closing costs would be approximately $3,590.00 and property taxes $250 per year or lower.


If you need to borrow funds, it is generally far simpler and interest rates are usually much lower in your home country. However, if your credit rating is impeccable, and you are willing to put down a sizable deposit, obtaining financing in Costa Rica may be possible.  For most financing utilizing local banks they may require that you have your Costa Rica residency. Certain projects and/or private owners may also offer some kind of financing arrangement. I can advise you on the best options and which projects and owners offer financing. Another options is to utilize your 401K or IRA from the United States in a totally self-directed plan.

Me and the Tres Amigos Team: With over 15 years of on the ground professional real estate experience in Costa Rica, I have the education and knowledge to answer your questions about purchasing property, and I am dedicated to helping you through the steps required to safely purchase your dream property in beautiful Costa Rica.

Creating a Costa Rica Corporation

Some people name their Costa Rica Corporation after a beach they like or a geographic structure, or something that reminds them of home. Others jumble the letters of their children’s names. And animals are popular, particularly, the humble iguana and turtle.

Regardless of what you call it, forming a local corporate entity and using it to purchase and manage your property holdings is a practical and common sense route to take in Costa Rica.

While it is extremely easy to create a corporation in our country, it is also a smart move, which serves your interests since it will in many ways make things easier and safer for you.

Unlike the restrictive regulations found in other jurisdictions around the world and central America, according to Costa Rican law, this new entity or corporation may be fully owned by a foreign citizen.

Nevertheless, a new local corporation is a distinct entity from its owners (the shareholders). Thus, the new Costa Rican corporation will be also to sign contracts, purchase and sell its assets, and enter into business in its own name.

The legal system allows for several specific corporate entities from which to choose. The two most commonly used forms are the Sociedad Anonima, generally abbreviated S.A., and a less elaborate form of the former, called Sociedad de Responsabilidad Limitada, known as S.R.L. or Ltda. Both the S.A and the S.R.L. are limited liability corporations, meaning that its owners are only responsible for the corporation’s debts with their own personal assets up to a certain limit: their initial participation in the social capital, which in practice can be insignificant. The two may be used to conduct the same type of activities as regulations do not require for you to select one or the other depending on what you plan on doing. Notwithstanding this, there are differences between them, and you should select the one that vest suits your needs.

For instance, the administration of the S.A. is more complex than that of the S.R.L. The S.A. must be managed by a board of directors that consists of at least three different individuals occupying the positions of president, secretary, and treasurer, plus a fourth person acting as a comptroller. In the formation of a S.R.L., only a single manager is sufficient according to the law.

Forming a corporation in Costa Rica, whether an S.A. or S.R.L., is a simple but formalistic procedure. It is simple because a corporation may be formed by as few two individuals with legal capacity, although having to perform a formal incorporation deed with a Costa Rican Notary Public is required by law. Such deed will show the names of those people appointed to represent the corporation and act on behalf of it, and obviously, the name of the corporation being created.

Choosing a name for the new Costa Rica entity is always an interesting exercise. The name may be a word or more likely a group of words in Spanish or in any foreign language provided a translation in Spanish is given. It can even be a name with no meaning whatsoever. The only condition is that the new name must not be identical or similar to any other corporation name already registered in the public registry. To avoid rejection of registration because of name similarity and risk of confusion, a quick name search at the Registry before the incorporation is recommended and should be performed by the law firm in charge of the process.

The by-laws of the corporation, and in particular its scope of activity, which can be drafted to cover a very wide range of commercial activities, will need to be stated on the Notary document, and the same is true concerning the initial capital shares and stock distribution among the partners.

The incorporation deed will also need to be filed for registration at the Commercial Section of the Public Register. All information contained in it becomes of public access, meaning anyone can look it up. Future changes to these by-laws must equally be recorded at the Register.

In contrast, share transfer that take place after the incorporation remain in the private realm of the company, and must only be recorded in its shareholders registry book.

If you plan to purchase property in Costa Rica and form a Costa Rican corporation and decide not to reside in Costa Rica it is advisable to utilize your attorney as the resident agent. The attorney will hold and keep safe all the legal documents and perform annual shareholders meeting, to comply with local laws. Even if nothing has changed it is advisable to do this in the event you want to sell you assets, all will be in legal order. The fees to form a Costa Rican Corporation and be a resident agent vary from attorney to attorney and are very reasonable, starting as low as $500 for a corporation and $300 per year as the resident agent.

More generally, land ownership through a local corporation is highly recommended as future transactions are rendered considerably easier. Ownership through a corporation allows greater flexibility and predictability concerning land and property management, including tax and estate planning, and representation.

Costa Rican law allows you to use a corporation to own land, a home and a condo, even when this entity does not conduct actual business in the country. There are advantages when proceeding is this way, and, although it may not be the best solution in all cases, most of the time ownership through a corporation can save you money and, perhaps more importantly, spare you unnecessary headaches.

Feel confident that when you are ready to make the move and own your own piece of Paradise, I can assist you with finding the right property as well as helping you choose the right legal team to represent you and ensure that transaction is safe, legal and a smooth process.

Why to Buy in Costa Rica?

About fourteen years ago, my wife and I began our quest for adventure. Although we loved the United States, we wanted to add a little more adventure – and sunshine – to our lives. We spent several wonderful months exploring Costa Rica and Central America, but when we hit Papagayo area Guanacaste, we knew we’d found what we were looking for. Spectacular beaches, friendly locals and great climate were a large part of the draw. However, what clinched the deal were Costa Rica’s foreigner-friendly laws for purchasing property, and the low cost to obtain residency.

Friendly Laws For Foreign Investors and Home Buyers

Unlike some of the other countries In Central America, foreigners have the same rights when purchasing land in Costa Rica as locals do. You can own property outright in your own name or in the name of your corporation. You do not need a local partner, except in cases of beach front concession property, where special rules apply. There is absolutely nothing to prevent you from purchasing property in your own name, but the majority of buyers form a corporation with the help of a reputable lawyer and then purchase property through that corporation. The reason for this is threefold. One - it may be more beneficial to have your income (from rentals) or capital gain (from sale of the property) taxed within a Costa Rican company rather than having it taxed as personal income. Of course, this depends on the tax laws of the country from which you originate. Two - it allows for simplified estate planning, whereby you can give or will shares of the corporation that owns the property to members of your family. Three – if you ever decide to sell your property, you can avoid paying property transfer taxes a second time by simply transferring the shares of the corporation to the new owner.

The Costa Rica Real Estate Registry

Another plus for property purchasers in Costa Rica is its central land registry which allows your lawyer to confirm that there is clear title to your property, as well as to discern if there are any restrictions on the property before the deal goes through. Further, if you would like to have the added protection of title insurance, the services of international title insurance companies such as Stewart Title are now available in Costa Rica. Also attractive are Costa Rica’s very low property taxes - 1/4 of 1% annually. That means if you buy a condominium or home with an assessed value of $100,000. the property taxes per year would be $250. Now that's what I am Talking About.

Choose the Right Agent

The actual nuts and bolts of purchasing are similar to those in North America. Dealing with a real estate company that has been selling in the Papagayo area for years provides additional security. More importantly, work with a Realtor with a good reputation. One of the best ways to find someone you can trust is simply to ask around. Given that most communities in Costa Rica are relatively small, it won’t take you long to come up with some names of reputable Realtors in the area. Also, you should secure your own lawyer to represent your interests in a property purchase. Your lawyer should check the title on your property in the central registry, and can also assist with forming corporations, opening bank accounts and doing other business related to land purchase.

When you are Ready to Make an Offer on Costa Rican Real Estate

Many foreigners who come to Costa Rica to look at property have already arranged their finances so that are ready to make an offer if they find what they are looking for. But what can you do if you happen upon the perfect property while on vacation? An offer can usually be written up with a small good faith deposit to be raised to 10% within a few weeks. Final closing would normally be anywhere from 30 – 60 days. If you need to borrow funds, it is far simpler and interest rates are usually lower in your home country. However, if your credit rating is impeccable, financing in Costa Rica may be available to you. There are also many new Mortgage Brokers doing great deals here in Costa.

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