BUYING A HOME IN NOSARA – THE RIGHT WAY!
So, you’ve made the decision that Nosara is the place to invest in real estate. You’ve done your preliminary research, found what appears to be the home of your dreams, and agreed on an offer. What could possibly go wrong?
Since Nosara began making to appear on the tourism radar in the early 1970’s the number of people who have fallen in love with the area and made the snap decision that they’d like to invest has grown by the year. Buying a property, whether at home of abroad represents one of of the biggest decisions the aveage person will ever make. While the majority of Nosara investors experience a smooth, trouble free buying process there’s also been plenty of horror stories where unwitting real investors have been badly burnt, and in some cases lost their entire investment. In a market where the number of self proclaimed real estate ‘professionals’ is increasing at an alarming rate it is crucial that you choose one who truly has your best interests at heart. Luckily, this situation has improved over the years. However, it remains essential that anyone who decides to buy property understands the potential pitfalls and the correct processes for investing here. The team at Nosara Realty Collective consists of local real estate experts and legal professionals who can safely guide you every step of the way, ensuring that your purchase is safe, smooth, and confusion free. And so we’ve put together the following informative guide as a means to inform potential buyers as to how to invest in a way that will ensure a stress free, safe, secure transaction.
So, you’ve found the home of your dreams, congratulations! Although you’re probably excited and con’t wait to walk through the door before that happens you’ll need to wade through paperwork and red tape. The answer to this is simple…find a lawyer…a good one! Although technically you do not need a lawyer to complete the transaction only a fool wouId choose to do this, and the vast majority of buyers who get ripped off are those who chose to go through a transaction without legal counsel.
STEP ONE: FIND A LAWYER
In Costa Rica there seems to be a lawyer around every corner so finding one isn’t who says they can handle your purchase isn’t difficult. However, finding one who can actually do what they claim they can may be a little tougher. At Nosara Realty Collective we work exclusively with IBL Consultores, who’ s lawyers and notaries are considered by many Nosara locals and expats to be by far the most experienced, professional legal service in town. If you choose to find a lawyer independently be sure to ask around and look for the following characteristics:
Are they notaries? Your property will need to be registered with the Costa Rican National Registry. To do this a notary will require the services of a notary. Although a lawyer (particularly a property lawyer) may also be a qualified notary this is not always the case so it is important to check beforehand.
Are they bilingual? This ones a no-brainer. Luckily, Costa Rica is one of the most highly educated countries in the Americas and the English skills of most natives, particularly professionals is excellent. Remember, any contract will unltimately be in Spanish. Unless you speak Spanish perfectly a bilingual lawyer capable of word perfect contract translations is essential.
Word of mouth: Speak to those you trust with a track record of purchasing property in Costa Rica. If they recommend someone, ask that lawyer to produce testimonials or contact details for previous clients they have worked with.
STEP TWO: Forming a corporation
When buying property in Costa Rica, it’s highly recommended that the purchase is made in a corporations’ name. In addition to simplifying the entire process, it will ensure lower capital gains tax and pave the way for increased flexibility in future transactions ranging from buying a vehiclt to opening a business. Although forming a corporation may sound complicated it’s actually a simple, straightforward process. The basics to setting up a corporation are:
Decide on an original name
Select a board of directors (president, secretary and treasurer) The initial incorporators may occupy these positions.
Decide how the capital profits of the corporation will be divided among the incorporators.
STEP 3: Due Diligence
If by this time you have the services of a good lawyer then the following steps can be handled by them.
Title search: Each property is given a ‘folio real’ number. This number is specific to one property and is an essential requirement in ascertaining whether the property is debt free, has no liens against it, and is not subject to dispute.
Plano: This is the land survey document. The details contained therein must match those on the title search. If they don’t then run for the hills.
Suleo: Building a structure on your land requires a ‘use of land’ (suelo) letter from the local municipality that provides specific legal permission to build.
The fine print: Check whether the land or property comes with basic utilities such as electricity, telephone and access to water.
STEP FOUR: Make an offer
Submit an offer taking into account the items present on your last visit to the property. This will ensure that any verbal agreements concerning exactly what is included are adhered to. Often an offer may be written up with a minimal ‘good faith’ deposit that may be be raised to 10% within a month. The offer must be submitted on a genuine Costa Rican legal document.
STEP FIVE: Stock checking
Make sure the legal purchase details includes the following:
A due diligence schedule including provisions regarding what happens if the property fails the due diligence. Lay out clearly the due diligence period and provisions if it fails to pass.
A detailed schedule of all closing costs
Full names of buyer and seller.
Terms and conditions of sale
Legal description of the property
Full payment schedule including amounts to be credited and withdrawn from from the escrow accounts on the agreed dates
STEP 6: Open an escrow account.
If you are not a Costa Rican citizen or resident, you will not be able to open a bank account until you become one. In the meantime, an escrow account is the safest, most reliable way to transfer your money to Costa Rica. Nosara Realty Collective can do this for you.
STEP 7: Close the deal
Prior to closing:
The seller must produce receipts detailing payment of any fees attached to the property including, but not limited to:
Receipts showing that utilities have been paid.
Any applicable fees such as condominium or HOA.
If everything is running smoothly then the deal closure should proceed something like this:
The signing of the legally drafted Transfer Deed takes place.
Buyer makes payment as per the agreement of purchase .
In order to update the property tax record, the buyer’s attorney must advise the Municipal Government of the transfer.
You’re almost home. Although the property is now yours, in order to have it fully signed, sealed an delivered don’t don’t forget to square away the following:
Buyer’s attorney records the Transfer Deed in the public registry.
When registered, official ownership documents are delivered to the buyer.
Buyer informs the municipal government of the property transfer so that they may update the municipal property tax record.
STEP 8: Congratulations, and welcome home…..Pura Vida!!!!