Costa Rica Property

Real estate transfer procedure and closing costs

The initial step in any transfer of property should be a National Public Registry (NPR) title search to determine the status of title and the characteristics of the property to be acquired.  Additionally, a municipality search should be conducted in order to establish if all real estate and other related local taxes have been paid. Real estate tax is assessed on land, buildings and other permanent structures, and is managed by the Municipalities having jurisdiction over the administrative district where the property is located. Municipalities or local governments are the beneficiaries of land tax proceeds. Currently, the real estate tax rate is 0.25%.  in addition minor municipal user charges may apply (i.e. garbage collection, street lighting, street cleaning, among others). These are normally paid on a quarterly basis. Furthermore, the municipality search is relevant to verify if the property is subject to a predetermined use in accordance with the approved regulatory zoning plan. The NPR and Municipal searches are normally conducted by the purchaser’s Notary Public, although these may be completed by any person based on the publicly available information.

The second step necessarily involves a Notary Public since all real estate title transfers must be completed before a licensed Costa Rican Notary. The Notary must transcribe the transfer deed in his protocol book (Protocolo), wherein the original deed is signed by seller, buyer and the Notary.

Once the deed has been executed, the Notary must issue one or more copies of it for recordation (known as a testimonio) and must file it with the NPR. Once recorded, the Notary should also send a copy of the recorded deed to the corresponding Municipality.

Before filing the deed before the NPR, all closing costs must be paid by the parties. Market practice dictates that seller and buyer pay all closing costs  in equal parts, although otherwise can be agreed. Closing costs and fees are currently establishes by statute. A Notary cannot freely increase nor decrease his statutorily established fees without incurring in professional and possibly tax liabilities.

Closing costs for a land transfer are:

Item	Amount
Notary Public Fee	1.25% of purchase price.
Land Transfer Tax	1.5% of the highest of: a) purchase price or, b) previous recorded value of land.
Registry Stamps	1.3% of the highest of: a) purchase price or, b) previous recorded value of land.

Usually, and provided all taxes are dully paid and no mistakes are made in the deed itself, a transfer deed will be fully recorded within the two or three weeks following date of filling with the NPR.

For more information write to contact@betterhomescostarica.com and to check properties in Costa Rica visit Better Homes Costa Rica.

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