The following guide is intended to answer some of the most commonly asked questions about buying Real Estate in Costa Rica. This is only a basic overview, and we cannot stress enough, that no property transaction should take place without the benefit of professional assistance.

Why San Ramon

While the economy has become more global in nature, real estate tends to reflect more local factors. The news from the U.S. is dominated by foreclosures, the subprime mortgage mess and home values plunging in many areas. Costa Rica on the other hand has a booming real estate market with strong demand as the world discovers this special country.

Until recently most of the boom was at the beach, especially the Guanacaste region on the Pacific Ocean and suburbs of San Jose like Escazu. The prices there started to look more like those in the developed world with little local culture to speak of. English and dollars became predominant and the international scene seemed like it could have been in any number of continents or countries.

This is my 7th year living in San Ramon and when I got here, I could count the number of English speakers around town on one hand. Having experienced every part of Costa Rica and every country in Central America, this Central Valley town clearly won my heart. In the last year or so, San Ramon has begun to be discovered by an increasing number of international seekers looking for the perfect place to invest and call home.

There are many reasons for the recent attention being paid to San Ramon. San Ramon has a rich history as the home of many of the architects of the modern Costa Rican state as well as the home of 4 former presidents. We have a good hospital, a branch of the University of Costa Rica, pure mountain water, and mild year-round weather. Being less than an hour from the SJO Airport and the Pacific, San Ramon’s central location is a real asset. And … it’s still quite affordable.

After years of mild real estate demand, prices have just begun to go up fueled by foreign investors. They come for the small city atmosphere that is friendly yet full of activity. And they come for the natural beauty. Just 10 minutes from the center of town there are sweeping ocean views, lush green mountains, and farms with fruit and coffee. After a vacation at Jaco, Tamarindo, Manuel Antonio etc., San Ramon is a breath of fresh air as a potential hometown.

In recent months, our company Paradise Management has sold property to buyers from Europe, India, Central America and North America. The newest Ramonense (locals) have been welcomed by this warm community and are excited to have found an authentic interesting slice of Costa Rica.

I have often gone to beautiful places and said I wish I had bought a house or land years earlier before the boom. This time ... no 20/20 hindsight. I have come to the right place at the right time. I got a little carried away and bought 4 properties. With the weakening dollar, volatile stock market, and sinking yet expensive U.S. real estate… San Ramon property seems like a safe smart move.

The most striking thing of it is … it’s a wonderful place to live in an often crazy world.

Ownership of land

Costa Rica�s laws and constitution, based on a well-developed tradition of Democratic government, include secure property rights for the private ownership of land. These laws are extended equally to foreigners as well as residents. Neither citizenship, nor residency, or even a presence in the country is required for land ownership. There are almost no restrictions to the ownership of land in Costa Rica, with the exception of direct beachfront.

To a prospective off-shore investor, the receptiveness of the host country to be invested in, is an important consideration of the investment. This is especially true for Real Estate. Few countries in the world welcome foreigners so well, and have such magnanimous laws that allow for, and protect, the property rights of foreign investors the same as citizens. Costa Rica�s open door policy to foreign investment combined with secure property rights, has made it a number one pick for foreign Real Estate investment.

Land Records

Costa Rica boasts a safe form of title registration to protect buyers from hidden claims. In many ways, the Costa Rican system of maintaining property records is far superior to systems in use by more developed countries such as the United States. All documents are centered in the National Registry, where both titles and surveys are recorded. Records are kept in a central computer system as well as on microfilm, and in original form. Duplicates of all records are updated daily, and sent to two separate fireproof vaults in separate locations from the registry. Any change in the status of a title, or any claim that might affect it, must also be noted on the title registry page, thus making it easy to verify.

Those who purchase land in Costa Rica should get professional advice, which includes a search of the title in the Registry, so as to confirm there are no liens or encumbrances on it, and to establish its proper ownership. Once the deal is completed, the purchaser should receive documents to prove the sale was registered in the Registry.

Property Taxes

The yearly taxes on properties in Costa Rica are very low. Yearly property taxes based on 0.0025% of the declared value of the property. This declared value is a common law practice in which a property�s value according to the government is very low, almost always lower than the sales price.

Closing Costs

Closing costs for a sale include a land transfer tax, a stamp tax, and attorney fees. The transfer and land taxes are assessed based on the declared value, while legal fees are charged based on actual sales price of the property. Closing costs typically run a total of 3-5% of the actual sales price, including the attorney fees. Closing costs are customarily split 50/50 between the buyer and seller. Costs of obtaining and registering a mortgage are the buyer�s responsibility.

Financing

Most property sales in Costa Rica are paid in full at closing. Bank financing in Costa Rica is difficult to find at economically feasible rates. Owner financing is often available, and typically requires at least half down with a 1-3 year note. Many people, who need financing, find they can obtain financing in their own country faster and at a lower rate than in Costa Rica.

Purchase Contracts

Costa Rica�s legal system is based on a "civil code" system, as opposed to a "common law" system like that of the United States. Under Costa Rica�s civil code, there is less interpretation of the law by judges, because the civil code is more restrictive. For this reason, land contracts in Costa Rica are far less comprehensive, than the common law contacts most foreigners are used to. Under the civil code system, the contact covers only what is not regulated by law, and thus can be very simple.

In Costa Rica a land purchase contract is achieved through an "option to purchase". An option to purchase gives the buyer the right to purchase a described property in a set amount of time. Typically 10-20% of the purchase price is paid to the seller through a broker or attorney (after verifying the property can be legally transferred), for the purchase of the option. Most closings can take place in a matter of days if the property is already registered in the National Registry; however, most options are written for 30-90 days.

A purchase agreement or option to purchase under civil code has far less components but should include:

The names and identification numbers of the buyer and seller, whether held by a corporation or personally. A description of the property, which includes boundaries and size (if know at time of sale) and all numbers identifying the property in the National Registry. Properties being subdivided from a larger property can be sold based on agreed upon boundaries, or based on the square meters of land to be divided off. The price in either colones or dollars. The dates for the option period. Terms or mortgages to be recorded at closing, if any. An agreement to the payment of closing costs; usually split 50/50 between the parties. An agreement to provide for a registered survey prior to closing, usually the seller�s responsibility. Any other agreements or clauses.

Title Insurance

Title insurance is not necessary in Costa Rica due to the laws of the civil code. The buyer� attorney should make a thorough title search prior to closing; after which, one can safely purchase the property. To pay a title company to perform the exact same task prior to closing is redundant and expensive. Additionally, when a property is transferred to a new owner in Costa Rica, all past claim that were not properly registered in the National Registry, can not be placed on the new owner, thus eliminating the need to insure against past problems coming to light. Many properties are held by corporations (S.A.), and in these cases, more thorough research is required if one wants to assume the existing corporation, which can save money on closing costs.

After the Sale

The purchaser should verify, through his broker or attorney, that the property was properly registered in the National Registry, and receive originals or copies of the documents showing all the proper stamps from the process.