Buying Property in Costa Rica 101 – A Primer
You have visited Costa Rica, possibly making several exploratory trips and you love it and you are ready to buy your own place in Paradise, great, you are making a wonderful decision! Few places have all the pluses that Costa Rica can offer for retirees, relocators and investors, as long as you do your homework properly! Do it right and you will be very happy but if you don´t do your due diligence and work with expert real estate and legal help to guide you, then you are basically rolling the dice and hoping to win. A big plus is that the foreign owner of property in Costa Rica has the same constitutional rights as do Costa Rican citizens.
In Costa Rica, most land is titled, and those titles are registered and kept at the offices of the Public Registry in San José (the Capital city) in the Property Section (Registro de la Propiedad). Most titles are currently organized by means of a computerized system called the ¨Folio Real¨, although there are some, mostly older ones, for properties that have had no transfers or other transactions affecting them for a long period of time, which are not organized in the computer system and are still registered the old-fashioned way, in physical books with a system for locating them based on specific books, pages and entries, located at the Registry.
A property ownership transfer requires that both the buyer and the seller sign a deed before a Costa Rican Notary Public (whose concept is different from the ones in many other countries such as Canada and the United States and is required to formalize all transactions dealing with real estate transfers) and that the deed is then recorded at the Public Registry.
¨Folio Real¨ and ¨Book-Page-Entry¨ Systems - Title Searches
All titled land in Costa Rica, whether it is registered following the newer ¨Folio Real¨ system or the older book/page/entry system, can be accurately and safely title-searched in order to determine all relevant aspects on the specific property, such as ownership, mortgages, liens, annotations or other issues, that may affect ownership rights or the possibility of transferring said property to a third party.
Title searches on ¨Folio Real¨ properties may be initiated in the computer system, which is accessible online but will then possibly require a follow-up in the book/page/entry system, particularly when the computer search shows liens, encumbrances or other property characteristics that were ¨inherited¨ from older transactions on that land before it was transferred to the ¨Folio Real¨ system. Additionally, although the computer system will indicate a list of liens and encumbrances, in most cases a thorough and complete title search will require the review of microfilmed or scanned documents indicating the details of such finds, which are not accessible online and can only be obtained at the offices of the Public Registry.
Although, as indicated, the ¨Folio Real¨ is accessible online, generally private parties do not have the legal training to be able to accurately interpret the information acquired, as well as to know how best to follow-up any required further steps. This is why it is highly recommended that a knowledgeable legal professional be used to perform and report on the title search.
In addition to the title search, if the property is owned by a corporation, it is essential to undertake a corporate search at the Commercial Section of the Public Registry. Only by doing so, can you verify that this corporate entity transferring the property is in good standing and also that the proposed signatory of the transfer deed actually does have the legal power to do so.