Buying real estate in Costa Rica: The Basics

In Costa Rica, the seller transfers land to the buyer by executing a transfer deed (escritura) before a notary public. Unlike common law countries, such as the United States and Canada, in Costa Rica the notary public has extensive powers. The notary public must be an attorney and may draft and interpret legal documents, as well as authenticate or certify the authenticity of documents.
In order to close on the property, the buyer and seller must select a notary/attorney who will draft the transfer deed and register the sale in the Public Registry (Registro Nacional). Locally it is customary for the buyer to select the notary/attorney who will draft the transfer deed if paying cash for the property.
If the purchase price is financed, there are 3 options for selecting the notary/attorney:
A. If the seller is financing a large percentage of the purchase price and a mortgage needs to be drafted to guarantee payment, then the seller may request that her or his notary/attorney draft the transfer deed.
B. If a property is purchased 50 percent cash and 50 percent financed, it is common for the buyer's attorney and seller's attorney to jointly draft the transfer deed and mortgage in a single document.
C. Finally, the buyer may insist that his or her notary/attorney draft the transfer deed and let the seller's notary/attorney draft a separate mortgage instrument. In this case, because the mortgage is being drafted separately, it carries a higher registration fee.
Closing costs for land purchase:

Government taxes and fees on land for sale

This includes a real estate transfer tax of 3 percent; a registration fee of 0.5 percent; and documentary stamps (agrarian, hospital, municipal, bar association, national archive and fiscal stamps) totaling approximately 0.55 percent.
Notary fees on Costa Rica property transfers
The notary who drafts the transfer deed is entitled by law to charge 1.50 percent of the first one million colones of the sales price, and 1.25 percent on the balance. However, many attorneys will accept much less since a property with a high value involves the same work as a lower priced property.
Mortgage costs
It is customary for the person who is receiving financing to pay the mortgage costs. A mortgage can be created simultaneously at the time of sale by adding a mortgage clause in the transfer deed or a separate mortgage instrument can be drafted. A mortgage within a transfer deed pays registration fees of 0.25 percent in registration fees and approximately 0.53 percent in documentary stamps. The notary will also charge for drafting the mortgage instrument and that fee can range from approximately 0.525 percent to 1.25 percent of the amount of the mortgage, depending on the circumstances involved.
You should know that Costa Rican real estate transactions commonly operate on a two-tiered system. Since Costa Rica land has a low property tax appraisal base in relation to market value, it is a customary practice to run property sales through at the registered value, which may be substantially lower than the actual sales price of the property. In such a case, all transfer taxes and fees discussed above would apply to the registered value as opposed to its sales price, with the exception of the notary fee. Ask your attorney about the potential risks of this practice.

Registration of transfer deed:

Once all the fees have been paid, it is the obligation of the notary who drafted the transfer deed to ensure that the deed is presented (anotado) and registered (inscrito) in the Property Section of the Public Registry. You should be very sure to follow up with the notary to ensure registration! Although presentation guarantees your priority (i.e., first in time, first in right), it does not automatically guarantee registration. The Public Registry will not register a transfer deed unless all taxes and registration fees are included; a certified copy from the Finance Ministry (Ministerio de Hacienda) is provided certifying that the seller's property tax (impuesto territorial) payments are current; and a municipal certification is provided from the municipality where the property is located certifying that both buyer and seller are current on municipal tax payments. Likewise, any prior instruments that encumber the property (i.e., mortgages, liens, judgments, etc.) must be lifted before your transfer deed will be registered.
Once a transfer deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry with 45 to 60 days after presentation. It is therefore important to follow up with the notary to ensure registration.
All of the above can be handled by the Samarillo sales staff in conjunction with Chicago Title Co. who offer a wide variety of mortgage products.