Planning on living in Costa Rica? This Costa Rica Real Estate Guide is a series of articles will discuss all aspects of purchasing real estate in Costa Rica.
ABC’s to Incorporating, Buying Property and Becoming a Resident: Many of our foreign clients have similar concerns when we first discuss their investment plans and buying property in Costa Rica. Almost everyone we have met wants to know about incorporating, buying property and obtaining residency.
We believe these three issues are the main components of what we would call the “typical investment package”; which, just by following some basic steps would make your Costa Rican investment venture a very successful one.
Incorporating in Costa Rica
The incorporators must choose a name (which must not be similar to any existing corporate name); appoint a Board of Directors (which, by law, must have a minimum of three members, President, and Secretary) and a Comptroller. Each one of these positions must be occupied by a different person; however, the initial incorporators may occupy them.
The typical liability company (Sociedad Anonima, or “S.A.”) must be incorporated by at least two people before a Costa Rican Notary Public. After such incorporation the shares may be transferred and it is legally feasible to have a corporation in which one person is the owner of all shares.
The Owner(s) must decide the capital of the corporation (the higher the capital, the more registration taxes are to be paid); the number of shares composing such capital (a share cannot be divided according to Costa Rican Law- fractions of shares are not acceptable; thus, it is advisable to have a number of shares that would permit future distributions of the participation in the company ) and the representation of the newly formed company (there must be at least one representative of the company with powers of attorney to act on its behalf; however, at the time of incorporation, or late on, the powers of the company’s representatives may be limited, for example, to specific actions or amounts).
Costa Rica has what we like to call a “hybrid” corporate system. The incorporation deeds, as well as all changes to the company’s By-Laws, are to be recorded in the Public Registry, where any person has access to them. However, all transfers of the company’s shares are recorded in the Shareholders Registry Book, which is kept by the corporation and is only available to company’s shareholders and officials; all other parties can only Review it with a Court Order.
When you are buying real estate, it is advisable to do it on a corporation’s name. In this case, transfers could be made easier and the structure may be more flexible for other transactions and for organizational matters.
Buying Costa Rica Real Estate Basics
Check the Folio Real: Most properties in Costa Rica are registered in a computer system called Folio Real. This system is centralized at the offices of the Public Registry in San Jose. Before buying land (or even before seriously considering an offer to buy land) a title search in Folio Real should be performed. Such title search will show all data on the property, including area, ownership, boundaries, location, mortgages and other liens.
A few properties have not been incorporated to the Folio Real system yet. They are still registered in special books kept in the Public Register. Such properties may also be accurately title searched in the Public Registry.
When considering buying land, the first question to be asked is if you are being offered ownership rights (derecho de propiedad) or occupation rights (derecho de ocupación).
- Occupation Rights: You would be dealing with land that has not been registered, Cannot be title-searched and must go through a long process in order to be registered.
- Ownership Rights: They are registered and are equal to the concept of owning land in the United States or Canada.
Another situation one may encounter regarding land, especially in beaches, is the concession. In this case, the government gives a private party the right to use the land for a specific period of time. In general terms, the concession may be considered as a lease.
The concessions registration system is different than the one for regular land, and has particular requirements regarding zoning, terms, occupation, etc. In conclusion, before buying, before offering or even before seriously considering a piece of land, inquire about its status and perform a title search: these simple steps could save you a lot of money and effort, and will definitely make your Costa Rican investment worthwhile.
- Costa Rica Real Estate Buyers Guide: Part I, Planning To Invest in Costa Rica
- Costa Rica Real Estate Buyers Guide: Part II, Property Ownership and Forms of Possession
- Costa Rica Real Estate Buyers Guide: Part III, Purchase Process & Legal Vocabulary
- Costa Rica Real Estate Buyers Guide: Part IV, Purchasing Methodologies
For more information on Costa Rica real estate and investing, use the contact form above, and we will have one of Customer Service specialist help you.
[quote_box_center]Costa Rica Real Estate Buyers Guide is a multi-part article series to provide a comprehensive guide to real estate investing in Costa Rica. The Costa Rica Real Estate Buyers Guide was complied by one of Costa Rica’s leading real estate consulting companies – Day Group Services[/quote_box_center]