How to buy a property in Costa Rica: Essential Tips to Pay Attention to

In Arkcon, after more than 30 years of experience as a company specialized in architecture, engineering and construction, we know that investing in real estate correctly can become an odyssey.

In Costa Rica, there are many variables such as legislation, permits from public institutions, environmental protection measures, fight against overpricing, and even the topography itself, that must be considered to ensure the purchase of the ideal property for your development project.

For that reason, today we are going to share with you a complete guide of 15 steps to follow to prevent future inconveniences and make a successful purchase.

Complete guide to buying and maintaining a property in Costa Rica

Hire the right real estate agent.

Start by hiring an agent who focuses on a particular area, has extensive experience and hopefully is bilingual, to advise you on the best properties available.

Understand the growth path

Find out where the growth path of real estate development in that community is going; in other words, where new construction is occurring, given the lay of the land. Just by looking at a map, you can find out a lot of information.

In Costa Rica we have many mountains, rivers and canyons that get in the way of real estate development and tend to force the path of growth to follow a certain route. Ask local experts for help.

Know the location and zoning

You must define the type of land you want to invest in and where it is located; are you looking for commercial or residential land and in which community? 

It is important that your real estate agent knows if there is a regulatory plan in that canton and what it indicates regarding the area where you are interested in buying.

These types of plans limit certain constructions, regulate density and determine commercial, industrial or residential use for anyone buying land in Costa Rica.

Also, ask the current owner for a certification of being up to date with the payment of municipal taxes and make sure that the appraisal is reasonable with respect to the fiscal value of the property.

Identify old and abandoned areas

In many cities around the world, old and abandoned areas tend to be redeveloped eventually.

Land development with higher densities and more efficient land use to generate more revenue per square meter is easier to manage in older and abandoned areas of the city.

A good tip is to find out if the city has plans to renovate those areas and to find out if good land is available in the area.

Analyze the topography

In Costa Rica it rains a lot, so it is always better to be at the top of a hill and not at the bottom so as not to have drainage problems. Also, carefully analyze the erosion on the property.

If you plan to do any land development in the future and plan to alter the topography of the property, hire a surveyor and, if necessary, a geologist, or have studies done with accredited soil laboratories before buying land in Costa Rica. This will save you a lot of trouble.

Conduct soil studies

Many areas of Costa Rica have layers of topsoil and you will need to replace this layer of soil before building. Or maybe the current owner used the lot to dump soil from somewhere else to make it a nice, flat looking lot? Some even use trash or construction waste materials and then backfill; such land cannot be built on.

Faced with a possible scenario like that, first look at the lay of the land. To an experienced eye, it is fairly easy to see if there is a landfill or not. Next, find out where on the property you, or a prospective buyer, would like to build and ask the owner for permission to put markers on it and do a soil survey.

Inquire about facilities and utilities

Is electricity and water available at the front of the property so that you can apply for a water and power meter with the utility company and be connected within a week?  If your land purchase is a short-term investment, you should also check with Internet and cable TV providers in the area.

Some areas in Costa Rica have water problems and in order to obtain a building permit from the municipality, you need a statement from AyA or ASADA that water is available for that particular property.

As for sanitary sewerage, very few areas of Costa Rica have urban sewerage and most of the country is with septic tanks and drainage ditches. If you buy land in a condominium, find out if there is a sewage treatment plant installed with the respective operating permits.

And also check with the municipality to see if garbage collection service is available in the area.

There is no doubt that knowing if you will have access to potable water, electricity, internet, sewage and garbage collection is indispensable before investing in a property.

Find out about easements

Ask your attorney to check to see if the title includes any easements, which give others certain rights with respect to the property, and ask him or her to explain them to you. These may include water easements, power easements, rights-of-way, oil or gas pipelines.

Make sure you are not buying property that grants an easement to someone else that may not allow your land to develop as you would like.

Investigate if there is a clear title

Hire an attorney who specializes in real estate and have him or her perform a complete title check before buying land in Costa Rica. Is the property fully titled or is it a concession in the maritime zone?

Have the lawyer also check for liens and encumbrances. If you feel comfortable, obtain title insurance.

Also, check that the property is not affected by legal litigation such as: encroachments, eventual inheritance, or division of assets due to divorce, civil or criminal lawsuits.

Avoid setbacks on the property

If there is a river or stream, a well, a spring, on the property, or on the boundaries, there will probably be setbacks, that is, areas where you cannot build within a certain distance from the water.

You can have the setbacks or protection zones reviewed and certified at the National Institute of Housing and Urbanism (INVU), by requesting a “Alineamiento fluvial de ríos y quebradas” (fluvial alignment of rivers and streams). It is also necessary to verify the viability to have environmental permits for construction.

Protect the view

If you are thinking of buying land in Costa Rica for the view, make sure that the view cannot be taken away by new construction or neighbors letting trees grow too tall.

If possible, have your lawyer create a view easement on neighboring properties to prevent your view from being blocked.

An additional suggestion to maintain the beauty of the landscape is to clear the property of wildfires at least twice a year, and to make sure the land is properly fenced and the fence is maintained in a timely manner.

Paying taxes

The municipality where the land is located will charge the owner once a year (payable quarterly) 0.25% of the cadastral value but will not notify you. In other words, 4 times a year you need to approach the local government and pay the respective taxes.

If you own your land through a partnership, you must, in addition, pay the corporate tax.

Prevent squatting

Squatting by people who do not belong there generally occurs when a property appears abandoned: no one stays there, there is no fence, and the grass has not been mowed in a year. Failure to pay property taxes can also be a green light for squatters who are alerted by sources within the municipality.

Protect yourself against squatters by establishing a physical presence on your land, erecting fences, maintaining the property and paying your property taxes.

Ensure legal protection

Ask your real estate attorney about the possibility of placing a “mortgage certificate” on your property to protect you from others mortgaging your property or transferring title without your knowledge.

Review any insurance restrictions on the real estate and any situations that may affect insurance premiums on future buildings (INS), buffer zones, slope slides, geologic faults, flood risks, etc.

Have a will and power of attorney.

Ask your lawyer to write a will and give your heirs the power of attorney to sell in the event of your death. A will from another country can get bogged down in red tape in Costa Rican courts.

In addition, make copies of all of the following documents and provide them to your attorney and heirs, in paper and digital files:Una copia de la escritura

  • A certified title search
  • A copy of the topographic map
  • A copy of your will
  • A copy of the powers of attorney
  • A copy of the incorporation of the company owning your property
  • A copy of the passport or residency documents you used when you purchased the property
  • A copy of the certificate of “Uso de Suelos” (Land Use)

By following these steps, you will surely find the best property and you will be able to protect your investment over time. If you are thinking of building, contact us to help you make your dreams come true. We have ample knowledge and capacity to build commercial and residential projects in any part of the country. Arkcon will be pleased to assist you.