WHY COSTA RICA

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 The Country

 Located in Central America, between Panama and Nicaragua. Although Christopher Columbus reached Costa Rica in 1502, Spanish conquest of the area did not begin until 1563. The country achieved independence from Spain in 1821 as part of Mexican territory and declared it self a sovereign republic in 1838.

Area: 19,730 sq mi (51,100 sq km) about the size of West Virginia. Population (2006 est.): 4,274,000. Capital: San Jose. Most of the people are of Spanish ancestry or are mestizos. Language: Spanish (official). Religion: Christianity (predominantly Roman Catholic [official]; also Protestant, other Christians). Currency: Colón. Costa Rica’s Pacific coast rises abruptly into central highlands and a volcanic mountain chain that forms the backbone of the country and descends gradually to the Caribbean coastal plain. The climate ranges from temperate to tropical, with the rainy season starting gradually in May and lasting till early November.

 Politics and Economics

Costa Rica is a Republic with three powers: The President, Congress and The Supreme Court. There are also two Vice Presidents and a Cabinet of ministries ( US equals to Secretaries, Defense, Treasury, etc ) designated by the President. The President, Vice Presidents and Congress representatives are elected for four-year terms. Costa Rica doesn’t have an Army.

The economy is largely based on coffee, pineapple, and banana exports. Sugar, beef and services are also important, but the tourist industry had become the fastest growing one and to be the biggest.

Costa Rica has one of the most stable democratic governments in all of Latin America, and an economy that has long attracted foreign investors. Multinational Corporations with branches in Costa Rica include Intel, HP, Johnson & Johnson, Colgate-Palmolive, Pfizer, Firestone/Bridgestone, Four Seasons, Marriot, etc. Companies come to Costa Rica because of the political and economic stability, highly educated workforce, the high standard of living and strategic location among others.

Investing in Costa Rica

 Costa Rica remains one of the safest and most attractive countries for foreign investment in Latin America. The Costa Rican government, its ministries and Congress, maintain a decidedly stance in regard to financial security and tax laws. The stated aim is to entice primarily high-tech corporations to take advantage of Central America’s most educated, computer literate and disciplined workforce, along with the modern production infrastructure the country is currently creating. The economy is being transformed from its long-time dependence on coffee, bananas and cattle raising to microprocessor production, high-tech telecommunications services and tourist industry. This investment-friendly climate and its government policies has enticed commercial leaders such as Acer, Microsoft, GE, Abbot Laboratories, Continental Airways, Intel Corporation, Four Seasons, Marriot Hotels, Hilton and others to make sizable investments here. Western Union has chosen Costa Rica to host its Latin American regional operations center. In 1998, for the first time ever, Costa Rica is poised to earn more from high technology exports than from coffee or bananas or even its lucrative, thriving tourism industry.

It’s easy for a foreigner to start a business here, you can do it even if you only have a tourist visa. Many foreigners work successfully in the booming tourist industry, starting restaurants, hotels, and tour companies. Many say that although there are of course regulations to learn about and follow, in general there are fewer constraints on businesses here than in their home countries.

Buying Real Estate

Buying real estate in Costa Rica or any other foreigner country can be very exiting, but stressful at the same time, so we strongly recommend using well establish professionals on the process. The following are the basic steps that a buyer should follows when buying a property:

1. Title search by your agent (review if property is free and clear)
2. Sign Option / Sales Agreement with seller.  Deposit funds into escrow. 
3. Title research performed by lawyer or title company and Title Commitment issued (review if property is free and clear of defects)
4. Closing – Execution of Transfer Deed, Endorsement of Shares and/or Mortgage Deed and deposit balance funds into escrow.
5. Register/record new owner at National Register
6. Follow up registration and confirm new owner at National Register.

Real estate related fees  

1. Transfer taxes, stamps and other charges: In order to record the transfer of the property, the government charges 1.5% of the purchase price and an additional 1% is charged for other stamps at the Public Registry.
2. Notary Fees: Notaries are required by law to charge 1.25% as their legal fees.
3. Survey fees: If you require or demand a new survey for your property, there are qualified and certified surveyors available to perform this function. Pricing depends on the location and size of the property.
4. Mortgage registration fees: The government charges aprox 2.36% of the mortgage value to register the mortgage deed on the property.
5. Title Guaranty fees: Guaranty fees are typically based on a sliding scale depending on the purchase price.
6. Escrow Fees: depend on the escrow provider.
7. Corporation: Fees for a corporation typically run between $500-$1000.
8. Yearly Property taxes are 0.25% of property value. 

Making a secure real estate investment

One of the biggest concerns of investors purchasing real estate in a foreign country is to ensure that the transaction will be executed legally and if the system can ensure the property. If the Costa Rican legal system is followed correctly, it will give protection to investors, but if the transaction is not executed properly, loss can happen. To guarantee the security of any real estate investment, there are three ways to do it:

a)     Proper legal representation and experienced Notary – While a notary’s primary duty is to provide Public Faith on a transaction, his/her job is also to act as the legal representative of the buyer, providing legal advice and representation throughout the process.

b)     Title Guaranty – As in the US, the title guaranty serves as a contract by which a third party (Guaranty Company) commits to indemnify losses due to legal situations that could affect the property, minus any exceptions or exclusions from the coverage. This legal document grants the buyer the security and peace of mind that the property has free and clear title to and is protected in the event of defect. The process of issuing a Title Guaranty includes the issuance of a Title Commitment before the closing to allow the buyer time to examine the legal status of the property and evaluate if the property is in proper condition for purchase. The final title guaranty is issued after the close and is based on the title commitment. The Title Guaranty is a new concept in Costa Rica and Latin America in general, but it has already proven to add value to initial real estate purchases, re-sales and has encouraged transparency and increased liquidity in the real estate process.

c)      Escrow – Most buyers from the US understand Escrow service to include not only the managing of funds for a property purchase, but all of the administrative work required to execute a closing. In fact, in states where an attorney is not required for a real estate purchase, the escrow agent becomes the central party responsible for ensuring that all documentation is in order before the close. In Costa Rica, the escrow agent performs many of the same duties. The primary function is the financial service to prevent manipulation or mishandling of funds prior to closing. The escrow agent is a neutral third party with responsibility for issuing checks and executing payments. This system gives confidence to all interested parties (e.g. attorneys, brokers, seller, buyer) that funds are protected during the buying process and that all funds will be disbursed appropriately to all parties at closing.