The popularity of Costa Rica has grown significantly over the years. That demand has made it a dream destination for many expats, with its stunning beaches, great climate, and very welcoming people. Many expats move to Costa Rica and rent first but many others prefer the idea of owning property for many different reasons. There is the appeal of the beaches, a mountain retreat, or an investment property that provides them with a monthly income.
However, buying property in Costa Rica isn’t without its challenges. To help make your purchase smooth and trouble-free I have compiled a list of the top mistakes to avoid when buying property in Costa Rica.
1. Skipping Due Diligence
One of the biggest mistakes expats make is failing to conduct thorough due diligence before buying property. In Costa Rica, not all properties have clear titles, and some may have legal or zoning issues that could cause complications. Always ensure the property has a clear and transferable title. Although you can access the Costa Rica National Registry records for free you should have a Real Estate Attorney review the content for you so you understand exactly what is being detailed in that report. This is crucial step to verify the property’s legal status.
2. Not Hiring a Qualified Lawyer
Many expats assume they can navigate the property buying process on their own or rely solely on a real estate agent. This can lead to costly mistakes. In Costa Rica, only a licensed Notary Public who must be an Attorney can legally draft a property transfer deed and record it in the national recording office. The Notary Public is the gatekeeper to the title office. As such, it’s essential to hire a qualified lawyer who specializes in real estate transactions to guide you through the legal requirements, verify documents, and record the title for you. Since having a legal expert is required anyway make sure it is somebody that is looking out for your best interests.
3. Not Understanding Property Ownership Laws for Foreigners
While Costa Rica is very welcoming to foreign investors, it’s important to understand the country’s property ownership laws. In most cases, foreigners can own property outright in Costa Rica without requiring residency or any special requirements. However, certain areas, such as beachfront properties, fall under the Maritime Zone Law, which limits foreign ownership. Properties within 200 meters of the high-tide line may be leased from the government, not owned outright. Also purchasing rural farmland involves an understanding of agricultural laws that may be unique to that type of property.
4. Ignoring Property Inspections
Costa Rica’s climate can cause wear and tear on properties, especially in coastal and rural areas. Skipping a property inspection is a mistake that could cost you thousands in repairs later. Always hire a professional to inspect the property for structural issues, water damage, mold, and other problems. Many properties in Costa Rica run on a septic system so be sure that is inspected as well. An inspection will give you a clear picture of the property’s condition and alert you as to any expenses required to repair it.
5. Overlooking Additional Costs
When budgeting for your property purchase, it’s easy to focus solely on the purchase price. However, there are additional costs you should account for, such as closing costs, legal fees, notary fees, surveyor, inspectors, property taxes, and utilities. Additionally, some properties may require extensive repairs or renovations. Make sure to factor in these costs to avoid financial surprises down the road. As a quick rule of thumb expect the closing costs which include legal, notary, government transfer taxes, recording fees and documentary stamps to be around 4% of the closing costs. For more details check out our online closing costs calculator here.
6. Relying Too Much on Real Estate Agents
While real estate agents in Costa Rica can be helpful in locating your property, it’s important to remember that they work for the seller who is the one that is paying their commission. Their goal is to close the sale, which might not always align with your best interests. Take their advice, but always cross-check information with independent experts. Be sure to hire a Real Estate Closing Attorney that represents only your interests 100%. Don’t rely solely on the agent’s word when making decisions
7. Not Visiting the Property Multiple Times
Buying property based on one visit or, worse, online photos, is a common mistake made by many expats. The first impression of a property may change once you’ve visited it multiple times or spent time in the area. It’s essential to visit the property during the summer season as well as during the rainy season to compare the different weather conditions to get a full understanding of what living there will be like. Check how the neighborhood feels at night, how loud it is during weekends, or whether any local construction is planned.
8. Falling in Love Too Quickly
It’s easy to fall in love with a beautiful property at first sight, but rushing into a purchase without fully considering all factors can be a big mistake. Be sure to take your time, explore multiple properties, and weigh the pros and cons of each option. Costa Rica has a variety of locations that are quite different from each other, from the beaches to the mountains, and finding the right one that suits your lifestyle and investment goals is key.
9. Failing to Consider Long-Term Sustainability
If you’re buying property in Costa Rica with the intention of living there full-time or for an extended period, it’s important to consider the long-term sustainability of your choice. For example, how accessible are healthcare facilities, grocery stores, and other essential services? Will you need to drive long distances for basic amenities, or is there public transportation nearby? Consider not only your immediate needs but also how the property will serve you in the long run.
10. Underestimating The Climate
Costa Rica’s climate can be quite different from what many expats are used to. Consider how these differences will affect your experience as a property owner. For example, coastal areas will have warmer weather and higher humidity levels, leading to faster wear on the home. There are significant differences in climate between Northern Guanacaste which receives the most amount of sunshine during the year to the Caribbean side of Costa Rica which receives the most amount of rain during the year. See the graph below which highlights the rainfall in different sections of Costa Rica to determine which part of the country will be the right fit for you.
Conclusion
Buying property in Costa Rica can be very rewarding, but it’s essential to avoid these common mistakes to ensure a smooth and successful transaction. By conducting thorough research, hiring the right professionals, and carefully considering all aspects of your purchase, you can make your dream of owning property in Costa Rica a reality. You can download our FREE Costa Rica Real Estate Buying Guide here to keep you out of trouble.
