Buying a Property in Costa Rica

The decision to purchase real estate in a foreign country can at first be a daunting proposition.  However, it is possible to safely buy property in Costa Rica with the assistance of a reputable REALTOR® and attorney.  Your REALTOR® should be able to help you to locate property suitable to your needs, educate you as to property values and other considerations in your chosen area, and assist you with negotiating a fair price. You should also use an attorney (Certified Public Notary) with a good reputation who can handle the financial aspects of the transaction and ensure that you will have legal title to your property.

Title Insurance is available in Costa Rica through well-known international companies such as Stewart Title and Fidelity Life, Chicago Title and Land America

Ownership: It is possible to purchase real estate through direct transfer where one or more individuals acquire property in their personal name.  Purchasing properties through a new or existing corporation is also very common in Costa Rica.  The process of setting up a corporation is not complicated or expensive, but requires the expertise of your attorney to follow the legal protocols involved.

The Public Registry of Properties: All property in Costa Rica should be registered in the Public Registry of Properties, whether the property is fee simple or concession. By means of the Public Registry of Properties your attorney will be able to confirm that the seller possesses ownership of the property, and to discern if there are any restrictions on the property before the deal goes through. Avoiding the purchase of unregistered property is strongly recommended.

Folio Real Numbers and Cadastrals: Each property registered in the Public Registry of Properties has a Folio Real number, which is the unique number assigned to each property to identify it.  The number is comprised of three parts, the first number indicates the province, the second group of six numbers is the number of the property itself, and the last group indicates how many owners the property has.  All properties must have this number in order for clear title to be obtained. Each registered property also has a survey plan, or Cadastral.  In order to transfer, mortgage, or acquire a property, the survey plan must be recorded at the Public Registry of Properties.

Property taxes in Costa Rica are very low, only ¼ of 1% of the registered property value.  Certain standard closing costs are required in Costa Rica to transfer the title of a property from the seller to the buyer, and this is always paid by the buyer.  Closing Costs include: (1) Real Estate Transfer Tax, which is 1.5% of the registered value of the property on the deed; (2) Documentary Stamps, which total approximately 1.25% of the registered value; (3) The Notary Fee, which is 1.5% of the first million colones and 1.25 % on the balance of the property sales price.  This means on the purchase of a $100,000 property, closing costs would be approximately $4,250, and property taxes $250 per year or lower.

Financing: If you need to borrow funds, it is generally far simpler and interest rates are usually lower in your home country. However, if your credit rating is impeccable, financing in Costa Rica may be available.  Some banks, such as the Bank of Nova Scotia, offer financing to foreigners. Usually the bank will finance somewhere between 40 and 50% of the purchase. Certain projects and/or private owners may also offer some kind of financing arrangement.

If you have any questions please don’t hesitate to contact me

Information taken from sources believed reliable but not guaranteed

As a REALTOR involved in International Real Estate I’m sure you know that I did have a business reason to visit Trujillo, Honduras!

As I mentioned in a previous blog during my trip I visited the developments of Campa Vista and Alta Vista.

If you have been contemplating buying a piece of paradise and think that you have missed the opportunity – take heart!

Honduras (in my opinion) offers a fabulous opportunity. It is estimated that property in Trujillo is probably about ⅓ the price of similar properties in Costa Rica.

To give you an idea of the price of some of the available lots:

• ½ acre – US $49,559
• ¾ acre – US $47,599
• 1 acre – US $54,300
• 1½ acre – US $63,299

What is included in the purchase price of your lot?  Services: water, electricity and roads as well as being graded and tested.  It is also located in an exclusive gated community with 24/7 security.

Foreigners can own property in Honduras as a result of a change in the law in 1990.

The process of transferring title is similar to how it is handled in Canada.  In Honduras there is a registry system and the title is held in ‘fee simple’ – in your personal or if you wish a company name.  You do receive a deed to your land.  As in Canada you are advised to get title insurance.

Another question a buyer will ask when considering buying a lot – do they have to build immediately or is it possible to buy a lot and hold?

Whilst the developer would prefer to see people building in the developments, with the exception of the lots located in the beach community where there is a requirement to build within 3 years, there is no requirement to do so in the other areas.

When the development opened several years ago the price of construction was US $75 psf.  Today construction costs are approximately US $95 per sq. ft. Even at this price you will see it is still possible to build a home in paradise for a very reasonable price!  Building sooner than later would also make sense as it is anticipated that building costs will go up again in the coming years.

The developments are within gated communities and owners will, when it’s completed, have access to the Trujillo premier beach club which will feature swimming pools, hotel suites, full service bar, green areas.   Until the club is completed owners are able to use the Trujillo Campamento Beach Club and its facilities.

A question often asked when discussing real estate opportunities in Central America is about the political stability of a country.

Honduras has a democratic political system with a strong constitution that has been in place for 30 years.

Economic growth has been spurred on by the close ties established with the U.S. resulting in building business and infrastructure – a free trade agreement was signed with the U.S.in 2005 which has seen the amount of business increase.

Having visited Central America previously, thankfully, I did have some idea of what to expect of the driving and road conditions …

Along the highway to Trujillo my very capable chauffeur, Cathy, dodged potholes, maneuvered over some serious speed bumps, cows, goats, passed slow moving cars, buses & trucks as we rumbled along the generally asphalt highway.

Once we left the city of La Ceiba, the scenery along the road to Trujillo, was truly stunning.  Against a backdrop of magnificent lush green mountains, we passed through banana and palm plantations, fields of corn & sugar cane, orange groves, fields of pineapples, mango and papaya trees. Obviously much of Honduran exports are the fruits they produce, palm oil and of course they are famous for their magnificent wood – especially mahogany.

Upon arriving in Trujillo we drove straight to Casa Alamania for Oktoberfest.  Cathy and I sat down and were joined shortly thereafter by my host, Randy, his partner Cathy, her daughter Martine and her husband Mark (all Canadians).  A few minutes later some more folks joined us – more Canadians – everyone seems to know everyone here and before too long the atmosphere was festive!

The owners of Casa Alamania are a German gentleman by the name of Günter & his lovely Honduran wife (whose name I regret to say I have forgotten!) and they were wonderful hosts.  Günter was chef for the evening and the food was authentically German and  there was plenty of it!

It was a great, relaxed way to begin my visit to Trujillo and have the opportunity to meet and chat with Canadians who have made their home in Honduras – most of the folks at the table live in Trujillo year round and love it!

As it was dark when we arrived at Trujillo I really had no sense of the scenery – I could hear the waves coming on shore as we sat at the beach side restaurant and enjoy the fresh clean air – I’d have to wait until the morning to see where I really was!!

Casa Alamania, in addition to being a restaurant, is also hotel and a spa right on the beach in Trujillo that comes highly recommended as a place to stay when visiting Trujillo.  Günter’s proud new addition this season is a beautiful pool.

After a very enjoyable dinner we transferred my luggage from Cathy’s van to Randy’s truck and off we drove to my home away from home for the next 3 days.

I have to admit to having a couple of THOSE moments on the drive in the dark to Randy’s home – bumping along the rugged, unlit, unpaved and rutted road, past some shacks with tin roofs, splashing through the occasional, deeper than anticipated, water filled pot-hole before finally arriving at the gates to Campo Del Mar. The guard promptly let us in and we drove up the lengthy driveway & parked under the covered portal.  Bags were unloaded and I was shown to my room.  I took a few minutes to freshen up and then went back out to join my hosts at the ‘bar’ in the great room.

Looking around I couldn’t miss all the artifacts around the house so, being a curious sort, I asked about them.  Randy explained that he has been keeping anything that they had unearthed or find when building, putting in the roads, building homes or clearing the grounds.

These artifacts will eventually form part of the display in the Cultural Museum that he is going to build.  He has also discovered that part of the original 15^th Century Spanish Road runs through a portion of his  property.  He is planning to restore this section of road and build the Cultural Museum in the same area.  The cultural museum will be open to visitors as well as the residents of the communities that he is building in the Trujillo area.

After spending a short while with my hosts discussing the activities of the upcoming days I took myself off to bed.  It had been a long but very interesting day.

The next few days were going to be very interesting as I was about to discover what it is about Trujillo that has so many Canadians decide to make it home.

to be continued …

I flew to San Pedro Sula airport in Honduras via Miami and then took a short flight (less than half an hour) to La Ceiba

Upon arrival in San Pedro Sula the Honduran Customs and immigration staff were efficient, and friendly.  I left the baggage claim area and maneuvered my way through the mass of people waiting for their friends and family and found the SOSA airlines counter where I was to pick up my ticket for my flight to La Ceiba.

The friendly Honduran ground staff found my reservation … “Susan (very informal – no Mrs. Miss or Ms. Coleman – just Susan), be at Gate 7 by 11.50 a.m”.  She wrote this information on the inside of my boarding envelope into which she placed my laminated re-usable boarding card … hmmm … a little unusual.

I went to the currency exchange to pay my Honduras airport departure tax of 38 Lempira (US $2) and change some US cash into the local currency of Honduras, the Lempira, as I find it handy to have at least little local currency on me.

I cleared security and went into the waiting area.  It was small, however there was a duty free store, a couple of souvenir shops, a snack shop and a small bar.

Whilst waiting for my flight I decided to indulge in a local Honduras beer called Port Royal Export (knew my Lempira would come in handy). It was a nice light beer – perfect for a thirsty traveler!

I found the sticker on the hand dryer in the ladies restroom reassuring!

Time to board so off I went to Gate 7,  handed in my boarding pass and followed the other 14 passengers out onto the tarmac and towards the small dual propeller aircraft – it reminded me of a plane from an Indiana Jones movie!

Given the size of the plane I couldn’t help but wonder where the luggage would be stowed? As I boarded the plane my question was answered – at least some of it was behind the last row of seats with a net thrown over it!

I made my way to the only seat left – in the first row – right behind the pilot.  Although awkward to get to it worked out well as there was a little extra legroom where I could put my computer bag on the floor and just have my purse on my lap.

The pilot and co-pilot were last to board and climbed into the cockpit.  It was interesting to listen to them run through their preflight check.  There were no announcements to turn off electronic devices, fasten seat belts, etc. it all felt a little surreal especially given what I’m used to dealing with when flying these days!

A few minutes later we were on our way.  We reached the runway, the propellers began to whine, the pilot released the brake and we started rumbling down the runway and, a few short minutes later, we were airborne.

Cruising altitude was not very high as evidenced by the pilot opening his window to get some air – the air-flow was appreciated – until it started to rain and I started getting wet!  The pilot apologized and closed the window.

It was a very short flight – took a look out at the lush green scenery passing below, started reading my book and the next time I looked out we were just about to touch down on the runway at La Ceiba!

Within a few minutes of our arrival the luggage was offloaded from the plane from the nose compartment and also the interior of the plane.

I picked up my luggage and quickly found Kathy, my contact in Honduras (and originally from Alberta).  It was easy to find her – there were not too many blonde N. American women in the terminal area!

We loaded my luggage into the van and set off for my final destination of Trujillo on the North coast of Honduras – a drive of about 2 hours.

Having visited Central America several times previously, thankfully, I did have some idea of what to expect of the driving and road conditions ….

To be continued …

I came across an article on www.prensa.com by Edith Castillo Duarte ecastillo@prensa.com on the banking situation in Panama.

Panamá, sábado 10 de septiembre de 2011 (article has been translated from the Spanish article written by Edith Castillo Duarte in prensa.com)

ENVIRONMENT STRATEGY REQUIRES CHANGES – The restructuring of the banking center

Although there are fewer banks than at the end of 1980, the essential foundations of activity has remained robust over time.

The Panama International Banking Center, which in 1983 recorded its peak in the number of participants has remained stable over the decades, despite the vagaries of the global economy.

This activity, which grew at the same time that the Republic, but was strengthened in 1970 with the enactment of the first banking law, is one of the pillars of the Panamanian economy, with a contribution of more than 10% gross domestic product.

In 1983 the Panamanian banking center was composed of 125 banks, 68 of which operated under general license, 43 licensed and 12 were international representative offices. By that date, total assets amounted to $42,785 000 dollars, the loan portfolio, $26,380 000, and deposits $34,195 000.

The debt crisis that affected the 1980 Latin America and Asia in 1997-98 had their impact on the system, but also the activity went through a process of mergers and acquisitions that consolidated the industry.

As a consequence of these three elements, the number of banks fell in 2004 to 73, including 37 general license, 28 licensed international and 6 representative offices. The lowest number in the history of Panama’s financial center.

Despite the contraction of players, the essential foundations of this activity has remained robust over time.

What happened, according to the manager of the risk rating Equilibrium, Raul Castrellón is that the bank has demonstrated its ability to finance and strategic adjustment to any threat to its stability.

“The market has been very good way to overcome the crisis based on a strategy that is adjusted, however not all banks have been able to,” the analyst said while stressing that the internal activity of the composition portfolio has undergone significant changes.

This process has seen winners and losers, and many players have had to withdraw.

At the end of June the main activities of the domestic credit portfolio are: trade (28.6%), housing mortgage (27.7%) and personal consumption (21%) composition has changed in the last two years as a result of the crisis financial.

The managing partner of consulting firm Indesa Philip Chapman, said the banking sector continues to grow credit disbursement driven by good economic times in the country.

And although the situation in the U.S. and Europe is complicated, yet no alarm bells have sounded.

Edith Castillo Duarte

ecastillo@prensa.com

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It would appear that the Banking situation in Panama is good, which of course is good news.

If you are contemplating buying a 2nd home, vacation home or retirement home in Panama or anywhere else ‘off-shore’ please give me a call.  There are plenty of fabulous opportunities available.   The banking situation in Panama may be in good shape however, there are many property owners who have found themselves impacted by the banking situation in the US.

Please keep in mind that whilst the Banking situation in Panama is good you still need to be careful when buying off shore and remember to do your due diligence.

I have a detailed checklist of what you need to keep in mind that is available to you, the banking situation is certainly on this list!

If I can be of assistance please don’t hesitate contact me by email me or on my toll free number 1-800-209-3214.

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Blog Post (Translation of) Edith Castillo Duarte article in www.prensa.com regarding Banking Situation in Panama

I had a short but wonderful trip to Nicaragua and thought I’d share some of my experience with you.

The airport at Managua was modern & well organized.  The Customs & immigration officer was efficient but very friendly & welcoming (btw – you need US $10 for the tourist visa), luggage arrived very quickly and they have officers as you exit the baggage claim area double checking that you have the right luggage with you.

Exiting the airport there was the usual expected amount of chaos as passengers stalled at the exit doors searching the signs for their name on placards being held up by a driver, causing those of us behind them to play bumper cars with baggage carts as we try to move around them.

Outside the terminal I waited for my travelling companions and thoroughly enjoyed waiting in the glorious hot, sunny weather.  A few minutes later our ride arrived and we loaded up the car and off we went.

The trip to Salines Grandes from Managua was about 1 hour, pretty straight forward and once out of the city, with the exception of the road down to the beach, was on a great paved highway.

Upon arrival at my friends home in Salines Grandes I was greeted with an amazing view of the ocean & invited to pull up a large wicker rocking chair under the large rancho and enjoy an ice cold local beer (Tono).  We spent the rest of the afternoon relaxing, later in the evening we enjoyed a lovely local meal, prepared by Jessica the housekeeper, and enjoyed the sunset.

Here are some photos of the beach, rancho and sunset – enjoy – more to come!

Woodbridge, Ontario,  1 November 2010 -  Life Rich Real Estate™ has completed training of the first group of Certified Life Rich Real Estate™ Advisors. These licensed REALTOR®’s are now equipped to assist their clients in searching for and purchasing second properties in Canada or abroad for vacations, 2^nd homes,  retirement homes or  investment as an expansion to their current real estate practice.

The Life Rich Real Estate™ program is designed to help Canadians in matching people with place with purpose based on a scientific approach to understanding and defining the qualities in real estate purchases that will deliver enduring satisfaction and happiness.  Their approach is based on the best selling book “Life Rich Real Estate” by Richard Dolan and founded on the emerging principles of the psychology of happiness in the work of Dr. Martin Seligman (University of Pennsylvania) and Dr. Daniel Gilbert (Harvard University).

Certified Life Rich Real Estate™ Advisors are trained to introduce their clients to the Life Rich Real Estate™ discovery methodology, and to work with Life Rich Real Estate™ in identifying properties that match clients’ interests.  This is a vitally needed service as many offshore destinations including most Caribbean countries  do not have an open market like our MLS® system. As a result, many purchases are made based on a very limited search, or in an enthusiastic moment during a vacation.  Life Rich Real Estate™ has the goal of making these important purchases subject to the same full disclosure and wide search range as residential properties in Canada.

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Background on the Life Rich Real Estate Program

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Life Rich Real Estate™ is dedicated to meeting the needs of Canadians like you in matching people with place with purpose as you plan the next years of your life. We are not affiliated with any specific development or destination, and through our extensive network of brokers in other countries, can assist you in finding properties that match your specific interests and goals.

The Life Rich Real Estate™ program includes:

• Life Rich Real Estate™ Certified Properties:  We have already executed a due diligence review of the title, permits, valuation, home owners association structure and financial status of the developer and of the property.  These documents are all on file with Life Rich Real Estate™ and can be viewed by prospective buyers and their lawyers.
• Life Rich Real Estate™ Certified Advisors : The REALTOR® who is sharing this newsletter with you is a Life Rich Real Estate™ Certified Advisor  and can provide you with access to the entire suite of Life Rich Real Estate services.
• Life Rich Real Estate™ Publications:  Our approach and methodology is completely described in the book “Life Rich Real Estate” by Richard Dolan.  This book is available for free as a pdf or audio book from your REALTOR®.  There may be a modest cost for a paperback edition.
• The Life Rich Real Estate™ Website: The website will profile a variety of properties including both Life Rich Real Estate™ Certified Properties and other properties currently listed for sale.
• Life Rich Real Estate™ Transaction Services: We provide trained, licensed REALTORS® who will work with you through each step of your exploration and purchase.
• Life Rich Real Estate™ Education: We make available education sessions for people considering the purchase of a new property to guide them through a self-discovery process designed to identify the true requirements and constraints that will be important in making a choice.
• Life Rich Real Estate Discovery Trips: From time to time we offer guided travel opportunities to destinations of interest where you will meet a variety of developers and tour a variety of properties as well as local markets, entertainment areas and neighbourhoods as part of your search process.

There is no subscription charge, and our services are offered without additional fees to you.  Some specific events such as the Life Rich Real Estate™ Education sessions, and Life Rich Real Estate™ Discovery Trips may be offered from time to time with an enrolment charge  to offset our costs, however none of these are required to participate in our program.  Your REALTOR® will keep you aware of all upcoming events.

Welcome to the world of Life Rich Real Estate™

Given serious escalation in detached housing values, condominium apartments and towns have now emerged as the first step to home ownership, says RE/MAX Ontario-Atlantic Canada.

Here is the full RE/MAX Fall Condo Report

Information taken from sources believed reliable but not guaranteed

Foreigners can own property anywhere in Mexico. Recent changes to Mexican laws now permit foreign ownership of Mexican Real Estate. The way the title of the property will be held will depend on its location.

If the property is in the “Restricted Zone” it will have to be held with a Fideicomiso (Bank Trust). The Restricted Zone is defined as any property that lies within 100 KM of an international border or 50 KM from the coast. The international borders are the United States, Guatemala and Belize. A Fideicomiso is a bank trust that holds title to a property in the Restricted Zone with the foreigner as the beneficiary.

What is a trustee? In México there are Banks which are authorized to open fiduciary accounts and conduct trust operations. The Trustee holds legal title to the real estate property during the term of the Mexican trust contract, and is also empowered with rights and powers necessary to achieve the objectives to the contractual agreement creating the Trust.

What exactly is a Mexican Bank Trust? The Fideicomiso or Mexican Bank Trust is a mechanism that enables foreign persons or companies to purchase property in Mexico. The trust mechanism was created to allow foreign investors to participate in Mexico’s rapidly expanding sectors, while exercising complete and legal control over their investments while complying with Mexico’s investment laws.

The trust is a property interest held by a Mexican bank. The purpose of the bank is to manage the property for the benefit of the owner of the trust. Real estate investment trusts enable foreign entities to invest in Mexico’s coastal and border areas which were once restricted from foreign investment of any kind.

Only Mexican banking institutions authorized and regulated under Mexican laws can serve as trustees. The beneficiary of the trust, the foreigner, retains the use and control of the property held in trust and makes the investment decisions with respect to the property. This can include the decision to transfer such property interest to another foreigner realizing all of the economic benefits that accompany equity ownership in Mexico’s attractive coastal properties.

Trusts are established for initial 50 year periods and can be renewed indefinitely for additional 50 year periods. The beneficiary may transfer or assign his beneficial interest to any person and keep the profits from the sale of the property subject to applicable tax laws and expenses for the sale. Property held under a trust can be passed on to future generations and the person to whom the bequest is made is not burdened with an inheritance tax.

Fideicomisos are an easy and safe way for you to own property in Mexico. They are government sanctioned and offer strong protection. Potential investors are encouraged to contact us for assistance in setting up your Mexican bank trust.

To get a Fideicomiso you or the seller must provide to the bank the following information:

A) A copy of the real estate title or deed indicating the exact surface area and boundaries. B) A copy of a draft of the property. C) The name (s) of the beneficiary (ies), nationality, address and phone number. D) The agreed purchase price.

Upon receiving the information and documents, the bank shall proceed to apply to the Mexican foreign affairs ministry, for the Trust Permit; once obtained at the Bank, they will proceed to execute and legalize the Mexican Trust Contract before a Mexican Notario. Notaries in México have far greater legal authority than those in the United States. The Mexican notary public is an attorney at law, who is authorized by the Government to give final formality to the title transfer process in his protocol Book. The resulting document taken from his protocol book is registered at the public registry of the properties, and it will give evidence of the title in the name of the buyer.

As the Trust Beneficiary, you will have the use and possession of the property, that is, you may live on the land, undertake any alterations and improvements. You also have the capacity to instruct the Trustee on mortgaging the real estate, renting it, selling, transferring your beneficial interest to another person or corporation.

If you sell the property to another foreigner, you may assign your beneficial interest to the new purchaser. This assignment of rights must be formalized before a Mexican Notario, prior to the payment of the federal and local taxes and fees that arise from the transfer of beneficial rights.

You will have the obligation to pay the duties on the property such as annual property tax, condominium fees, maintenance fees, water, electricity, annual Trustee fee, etc.

The fees which the Trust Division of the bank you chose to issue your Fideicomiso will vary. Here is an example of one bank’s fees.

A) A one time charge for Trustee acceptance, $500.00 USD, payable upon the signing of the Mexican Trust Contract.
B) A yearly fee of $500.00 USD for the handling and servicing of the Trust, payable in advance. This fee will be increased by the Trustee every two years, according to the United States inflation rate. Every year, on the anniversary date of the Trust, the Bank shall mail to your address the bill of the annual fee for keeping the property in Trust. All the Trust fees will incur the value added tax (IVA) and are subject to change.

You can expect other expenses that the beneficiary must meet upon the celebration of the trust deed. You must pay out the fees, taxes and expenses that arise from the purchase as well as the formalization of the Trust deed before a Mexican Notario. Also, you will pay the cost of the permit that must be obtained from the Mexican foreign affairs ministry to acquire the property in Trust, and the recording of the Trust deed at the National Registry of Foreign Investments.

The Beneficiary has the right to appoint a substitute Beneficiary who will receive all the rights and obligations that arise from the Mexican Trust contract, if the Beneficiary dies during the life of the Trust. With this designation of substitute Beneficiaries, your heirs will not need to follow any probate proceeding before the Mexican courts, which could take time and attorneys fees. They would only have to give notice to the bank of the deceased and show the death certificate and their identifications. Then, the bank will give instructions to a Mexican Notario as to the proper protocol of the documents and with the resulting deed registering them as the new owners (Beneficiaries) of the Trust property.

(From Baja123.com)

Information taken from sources believed reliable but not guaranteed.