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A Checklist to Stay Out of Real Estate Trouble

by Garland M Baker on September 5, 2005

Every day more and more foreigners are investing in all types of real estate in Costa Rica. All types are the caveat words. There are so many kinds of property in the country, investors need to be very careful when buying anything. There are titled and untitled land, beach and concession property, forest reserve and protected land to name a few varieties.

To buy real estate here it is a good idea to have a checklist. Here is a simple one to use:

The first item on the list is to know if a property has a title, who owns the title and what type of property it is. The Registro Nacional keeps the records on titled property.

Real property has a finca number. Finca means farm in English but does not mean a country farm with chickens. The term means a section of real property. Even houses on lots in the city are parts of fincas. Finca numbers or farm numbers have two basic parts. The first digit defines the district in which the property is located. The last six digits is a unique identification number. For example a finca number (or lot number) in San José would look something like this: 1-000000. The one is for San José, and the zeros would be a real number identifying the property.

Property District Numbers:
1 – San José
2 – Alajuela
3 – Cartago
4 – Heredia
5 – Guanacaste
6 – Puntarenas
7 – Limón

Property Types
F – Filial
M – Mother
Z – Concession

Farms can also be further broken down into undivided interests. In these cases, an additional three-digit number is added to indicate the number of owners.

There are four basic types of property listed at the national registry. The first is the traditional titled property. Condominium property is land divided from fincas matriz or mother properties into fincas filial or filials and concessions. Concession land is leased territory controlled by municipalities and the Instituto Costarricense de Turismo.

Properties not listed at the national registry include untitled homesteaded land, beach land within the maritime zone, forest reserve, condominiums that do not qualify for true title and others.

Most Costa Rican land is titled, and it is the safest investment. However, other properties hold opportunities too. It is crucial to obtain expert advice when considering any of these properties, including condominiums that do not provide true title.

One example: Developers are selling forested land on maritime zones along the Pacific. However, getting permission from the Ministerio de Ambiente y Energía to cut down any trees on these properties is nearly impossible. So buyers either cannot build or must engage in illegal cutting of trees.

Second on the list, is a company to hold your investment. Own nothing in Costa Rica personally. It is just too dangerous. It is too easy to lose to professional crooks or have ownership strangled by a lengthy probate process.

The best company structures to use for holding property are sociedades anónimas known as S.A.’s or sociedades de responsabilidad limitada or limited liability corporations. Both offer the convenience that shareholders are responsible for the assets and not individuals. LLC’s are the best for property because stock cannot be transferred by endorsing the certificate to someone else without a shareholders’ meeting and minutes in the legal books.

Third on the list is to shop for fees. Transferring property can be very expensive. Attorneys can charge as much as 1.25 percent of the true market value of the sale. However, others will negotiate. Transfer taxes are .26 percent of the sale price.

Most sales in Costa Rica are not registered at the national registry at the true sales price, but lawyers charge their fees based on the full price. This is an amazing contradiction: some lawyers do not care about pulling a fast one on the government but do not want to lose one colon of their fees. Sale values sometimes are declared at a laughable several hundred thousand colons.

Here is the last item on this short list. Verify that any property purchased is ultimately registered. Lawyers play with the transfer taxes and sometimes just do not fulfill their obligation to their clients and never register the sale.

There are many other points to consider when buying property in Costa Rica. This list is to illustrate you should have a list. Many people do not and just show up at the property-closing table as trusting souls. Many later find surprises that turn a dream investment into a horror story.

{ 9 comments… read them below or add one }

Sheila Samalin September 5, 2005 at 11:03 am

I read your article with great interest. Is there a Bar Association in Costa Rica that has a listing of attorneys and their background and specialties?


Garland Baker September 5, 2005 at 9:19 pm

Yes, it is located at:

If you are looking for an attorney Lic. Allan Garro is great, reliable and honest. He can be reached at



Greg M October 4, 2005 at 3:46 pm

What is your opinion of Stewart Title. I am concidering using them when I purchase a condominium,
Thank you


Randall Hood March 13, 2011 at 9:00 am

The escrow process is not the same as the USA. If there is any problem with the legality of the property Stewart Title does not give your money back. You have to go into arbitration. I was promised the lot I was buying had water and the seller could not produce the legal documents stating that it had water. Stewart now requires a letter from the seller to give me my funds back. Once you send them money your are at risk of an extended law suit. The only issue they protect you from in a problem with the title, but in reality they can create many more problems since they have your money. Make sure you have all the legal documents first before sending any money. Do not let a Real Estate agent pressure you into sending any money.


Garland Baker October 4, 2005 at 9:09 pm

Dear Sir,

I do not believe in title insurance in Costa Rica. Theoretically, all the title insurance companies are illegal because Costa Rica has a governmentally owned insurance monopoly. More importantly, the contracts of title insurance are so restrictive in Costa Rica, I know no one ever receiving money on a claim. Title insurance is something popular in other countries and is sold here to people who just have to have it because of their beliefs coming from somewhere else. There are better and cheaper ways to protect your property in Costa Rica. Read post

Garland M Baker.


Arcelio Hernandez October 8, 2005 at 12:03 pm

Title transfer tax is 1.5% of the property value, that is, the price of the purchase, or the fiscal value, whichever is HIGHER. There are also stamps to be paid for recording a title transfer or mortgage. I advise my clients to obtain a Title Guarantee when they can afford it, as it gives them extra protection, and adds value. It is not illegal in Costa Rica.


Richard Morris December 23, 2005 at 6:01 pm

Mr Baker

First, I want Thank-you for this Great Resource Site! and your expertise! I am interested in a piece of property in Dos Brazos, in the OSA. I understand that the town is in the Reserva Forestal Golfo Dulce. I also understand that there is no title to this property and that I’m buying time not title. Can you perhaps direct me to further resorces so that I can understand what I’m looking at and avoid a pit fall, or should I just stay clear???

Season Greetings!


Lic. Arcelio Hernandez Mussio August 16, 2009 at 2:59 pm

The insurance monopoly no longer exists in Costa Rica. But title companies here, such as Stewart Title, do not technically sell insurance policies, but rather they sell title guarantees. The difference is that the guarantee protects against past problems with the chain of title transfers. Again, a title policiy adds value to a property, but it is not necessary. The best way to protect your property title against fraud, is to check the title at the national registry regularly.


Prudential Utah May 31, 2011 at 1:51 am

If the investors will continue on their journey, I am sure, costa Rica will improve. Costa Rica now is a little bit in the same status of Utah. Utah has now many investors because of the real estates that are all in demand because they are all affordable.


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