We've all dreamed of the perfect home, including our ideal surroundings. Well, there's no more beautiful place than Costa Rica. This country has it all; scenic coastlines, peaceful mountains, even Rainforest. Crime is low and living is inexpensive. If this sounds like the perfect place for your new home, here's what you need to know about making it happen.

Buying Existing Property in Costa Rica

What is the process?

Just like in most other areas of the world, you'll house hunt with your realtor. When you find a home you're interested in, you'll make an offer and negotiate a sales price with the seller. Once you've agreed upon a sales price, you'll sign a contract and begin the process to transfer the title.

The instrument for transferring property title from one owner to another is called an escritura, or transfer deed in Costa Rica. The title transfer can be handled by a Notary Public, who is also an attorney, and who has broader powers than in most other countries. The notary/attorney will draft a transfer deed and register the sale in the Registro Nacional, or Public Registry, and handle the actual closing.

Selecting a notary/attorney is generally the option of the buyer when he is paying cash to the buyer. You will work with the attorney to determine how you wish to have the title read. You may choose to have joint ownership with your spouse or other party, or list the property in the name of a business. All of these options can be handled in the closing papers by working with your attorney. In this scenario, the buyer may be financing the property, but it is through a bank or mortgage company, so the mortgage is of no interest to the seller.

If the property is being financed by the seller, then he will be interested in ensuring that the mortgage paperwork is to his liking, so he may wish to use his attorney/notary for the entire transaction, or at least have his own attorney draft the mortgage portion of the transaction. The title transfer papers and mortgage can be in one document, or two separate documents, so the buyer and seller can negotiate who drafts these documents.

The notary/attorney will assure a clear title for you. Property titles are registered in the Public Registry, and have a folio real, or titled registration number. Through this number the attorney can find all the required information on the property, including the title holder's name, any existing liens, mortgages or easements and the tax appraisal. The buyer should have his attorney search this database and perform an independent title search before the closing to ensure a clear title.

One special circumstance exists for beach property. Beachfront property in Costa Rica is untitled in most circumstances because the shoreline is owned and governed by the Maritime Zone Law. This law states that the first 200 meters of beachfront beginning at the high tide markers is owned by the government, and the first 50 of these meters are public domain, and are not eligible for individual ownership. The remaining 150 meters can be leased to individuals by the government, but there are restrictions on foreign ownership of this property. The Maritime Zone Law makes buying beachfront property in Costa Rica a bit more cumbersome than other properties, so be sure that your attorney does a careful title search if you plan to buy a home on the beach.

Once the title search is cleared for your property, the transfer deed is prepared and the fees paid, you may close the transfer of property between you and the seller. However, once this has happened, the notary/attorney still has to present the deed and see that it is registered in the Public Registry. Once the notary presents the deed, the Public Registry will verify that the title is clear and that all fees have been paid and encumbrances removed. Only then is your deed actually registered and you are deemed the free and clear owner. The Public Registry will then return the original document to you with proper document stamps and seals. This process takes between 45 and 60 days, if there are no problems. It's critical to follow up with your notary to ensure that the deed is presented and begins this registration process. Failure to see that your deed was properly registered in the Public Registry can cause you big problems later down the road if you decide to sell your property.

What will it cost me?

There are several fees you'll pay to transfer your new property from the seller. Closing costs include the notary fee, mortgage costs and the government taxes and fees. Customarily, closing costs are split between the seller and buyer, except for the mortgage costs, which are paid by the buyer. Tax appraisal property values in Costa Rica are very low, and it is customary to base government taxes and fees on these values rather than the actual sales price. This will save you quite a bit of money, but the legality of this is questionable, so it's wise to discuss it with your attorney.

Notary fees are determined by Costa Rican law. The notary who drafts your contract and carries out your closing is entitled to 1.5% of the first one million Colones of the sales price, and 1.25% of the amount over one million Colones.

You'll also pay a Real Estate Transfer Tax equal to 1.5% of the registered value of the property and a Public Registry Tax of .05% on the documents presented with the deed. This includes having all the required documentary stamps affixed to your deed.

If you need a mortgage, you will be responsible for paying the costs of having the mortgage paperwork prepared. The mortgage document is sometimes part of the transfer deed paperwork or can be prepared separately. When prepared separately, the mortgage paperwork will be charged separate fees, including notary fees of somewhere between .625% and 1.25% of the mortgage amount, a registration fee of 1.0 Colon for every 1000 Colones, and the fees for the documentary stamps.

Building in Costa Rica

As in most, countries, building codes and laws can be confusing, so be prepared for building a new home in Costa Rica to be more complicated than buying existing property. Your first step should be to find a reputable licensed architect or civil engineer. You will be required to submit your application for a construction permit through them, and they can guide you through the rest of the process, as well.

What's the Process?

First, you'll need to find and purchase property to build on. When you're searching for property, keep in mind that you'll need to be able to get a construction permit to build. You must ensure that the property does not have any restrictions that will prevent a construction permit from being granted. There could be environmental restrictions, or problems with basic needs such as electricity or water that you need to be aware of. Check with the local municipality, the Ministry of Health and Ministry of Public Works to make absolutely certain there are no encumbrances that would prevent you building on your chosen property. Once you've investigated and purchased your property, you're ready to find someone to build your home for you.

Once you've hired your architect or civil engineer, you'll need to meet with them to discuss the project and have initial drafts, including site plans and preliminary work drawings. From these initial drawings, the construction plans and technical specifications can be created. Four copies of these plans are submitted to obtain the construction permit. In addition to the plans, your architect or civil engineer will need to present four copies of the property cadastre plot plan, four copies of the permit checklist, two copies of your property deed, one copy of your contract with the architect or civil engineer, approval from the water company and a copy of the electrical design plan.

Your application for a construction permit must be filed with the Permit Reception Office. You must also request a building permit from the municipality in which your home will be located. The Municipal building inspector will review your construction project periodically to ensure that your house is being constructed according to code.

Once your permits are granted, construction can begin. You will work with your architect or civil engineer to determine how much time he will personally spend on the project. His fees will be dependent upon this, so it's critical to come to an agreement that suits your needs. If you have some construction knowledge and are free to visit the construction site regularly, you may need a smaller time investment from your architect or engineer. In Costa Rica, construction regulations allow for three levels of involvement in the project. You will need to agree with your architect or engineer which level you require. The levels are:

• Inspection - This means the architect will visit the construction site at least weekly. He will ensure that the plans are being followed and that the materials being used and invoices being presented are correct.
• Supervision - This level of involvement requires that the engineer or architect be involved in the day to day operation of the project
• Administration - At this level, the architect or civil engineer takes complete responsibility for completion of your project.

What will it cost me?

Costa Rica requires that architects and civil engineers be licensed, and it regulates the fees that they charge. The fees are a percentage of the value of the home, and are charged on a per phase basis. The breakdown is as follows:

Phase 1 - This is the planning and permit phase. For preliminary studies, which are not always required, the charge is typically 0.5%. Pre-project design includes preliminary and final drawings and the permit applications. The charge is typically 4%, though additional charges of 0.5-1.0 may be added for creating general or itemized budgets of labor and materials. In addition, you may be responsible for fees charged by the government for the required permits.

Phase 2 - This is the actual construction phase. This is the phase where the architect and civil engineer will charge you based upon the level of involvement they will have in the project, as mentioned above. The breakdown goes like this:

• Inspection - 3% of the total construction value
• Supervision - 5% of the total construction value
• Administration - 12% of the total construction value.

Keep in mind that the costs listed in this document regarding construction do not include the actual cost of building the house, such as labor and materials. Your civil engineer will provide you with the budget for these, and you should work closely with him to ensure that there are no surprises. They key to building your Costa Rican dream home is choosing a reputable architect or civil engineer. Before you sign a contract, ask to visit two or three homes built by your architect or civil engineer, and talk to the owners about the process and their satisfaction with the results. One thing that you'll often find when architects advertise in Costa Rica is that they'll say that they build "American style houses". You'll find, however, that most Americans would not concur with this description!

A Costa Rican home can be a relaxing haven in which to spend your vacations or even the rest of your life! Take care to know the system before you begin, and you'll soon be enjoying your Costa Rican palace.