Closing Procedures and Costs
Once you have found a property in Santa Teresa or Mal Pais or Manzanillo that you want to buy, you will need a Costa Rican attorney/notary to execute the transaction. As with real estate agents, it is typical for an attorney to represent both the buyer and seller.
It is the buyer’s right to select the attorney. Ask around and get a good recommendation by others that have had a good experience. Again, you may want to ask for client references. Most legal documents are in Spanish so if you don’t speak and read Spanish, make sure your attorney can translate them for you. Only a state certified Notary can authenticate a real estate transaction. In Costa Rica, a Notary must also be a lawyer. However, some practicing lawyers are not Notaries but work with a partner that is the official Notary. The purchase contract/option contract can usually be written in English, so, for English speakers, this will alleviate some of the stress oft he deal.
It is the lawyer’s role to draw up the contract (Carta de Venta). However, before the real estate sale document is executed, the lawyer must verify the documents in the public domain, including liens, mortgages, etc, and make sure all back taxes and government fees are paid up to date. Keep in mind that a lawyer may not cover all the issues in some real estate transactions, which may need to be considered in the sales contract. In most cases, the lawyer never even sees the physical property and can’t advise you on issues such as describing physical access, which may differ from access shown on the real estate survey, or whether the survey map coincides with the physical borders like fence lines, and in some cases, as with possession property, organize notarized statements with bordering neighbors stating there are no boundary disputes or usage agreements with third parties. Also critical is describing and guaranteeing water rights, and how to handle existing tenants or crops. Ocean front concessions in Costa Rica also require additional due diligence. The lawyer’s job is basically finished when the documents are presented at the local municipality. Who will follow up to make sure the transfer is approved? A good real estate agent will. Your real estate agent plays a vital role in the entire process. Get a good one and remember – getting a lawyer is often not enough.
Unless agreed otherwise, it is customary for the buyer to pay the closing costs and transfer fees. If the seller chooses to hire his/her own attorney to represent him/her, then those charges are the seller’s responsibility.
- Attorney/Notary Fees – The state sets a national fee, which most lawyers abide by. However, fees may vary between a San Jose lawyer and a small town lawyer and may also reflect other work performed by the lawyer that is outside a typical transaction. Established fees are set at 1.5% of the sale price for the first million colones, 1.25% between one and ten million colones, and 1% above 10 million colones.
The following fees apply only to titled real estate and it’s subsequent recording at the national registry. They do not apply to untitled or beachfront property:
- Transfer Tax – 1.5% of the declared value
- Public Registry Fee – 0.50% of the declared value is paid to the registry for recording the documents
- Document Stamps – 0.55% (approximately) of the declared value for stamps affixed to the documents