Pura Vida!—this famous phrase reflects the essence of Costa Rica, a country that attracts thousands of local and international buyers every year. From beachfront lots in Limón, to modern apartments in San José, to mountain estates in Heredia, the Costa Rican real estate market offers diverse options with enviable potential returns.
However, the path to your dream home or that lucrative investment can be fraught with obstacles if you don’t proceed with caution. At Momentum Real State, we have guided hundreds of clients through their purchasing process and have identified the most common pitfalls that can turn an excellent opportunity into a costly nightmare.
To ensure your investment is solid, secure, and above all, satisfying, we have created this definitive guide to the 10 most common mistakes when buying property in Costa Rica and, most importantly, how you can avoid them.
Mistake 1: Skipping Due Diligence
The most serious and frequent mistake is falling in love with a property and rushing into a purchase without a thorough investigation. Assuming everything is in order is a risky gamble.
- The Problem: You could end up buying a property with hidden debts (mortgages, liens), boundary disputes, or one that legally does not belong to the person selling it.
- The Professional Solution: Before signing any documents or handing over a single colón, it is imperative to conduct legal due diligence. This involves:
- Title Search (Estudio Registral): Your trusted attorney must request a comprehensive title study from the National Registry (Registro Nacional). This document will reveal the legitimate owner, whether there are any encumbrances or annotations that limit its use.
- Survey Plan Verification (Plano Catastrado): Ensure the property’s survey plan is registered, approved by the municipality, and matches the physical reality of the land.
- Tax Review: Verify that the property is up to date with its property and municipal taxes. An outstanding debt could lead to serious complications.
Mistake 2: Underestimating Closing Costs
Many buyers, especially first-timers, focus solely on the property’s sale price, forgetting a significant percentage in additional expenses.
- The Problem: Lacking a budget for closing costs can unbalance your finances and jeopardize the transaction in its final stage.
- The Professional Solution: In Costa Rica, closing costs typically range from 3.5% to 5% of the property’s actual value. This amount is generally split between the buyer and seller and includes:
- Transfer Tax: 1.5% of the registered purchase value.
- Registry and Documentary Stamps: Approximately 0.5% of the value.
- Notary Fees: The law establishes a fee of around 1.25% – 1.5%.
At Momentum Real State, our advisors will provide you with a detailed estimate of these costs from the beginning so you have complete financial clarity.
Mistake 3: Not Hiring a Specialized Notary Public
Thinking that the seller’s attorney or a notary without real estate experience is sufficient is a critical error, especially for foreign investors.
- The Problem: A non-specialized lawyer might overlook important clauses in the purchase agreement, fail to identify legal risks, or not properly advise you on the best structure for acquiring the property (personally or through a corporation).
- The Professional Solution: Hire your own Notary Public, one who is a proven specialist in Costa Rican real estate law. This professional will look out exclusively for your interests, review every detail of the process, and guarantee your legal security.
Mistake 4: Ignoring Zoning and Local Regulations
Buying a piece of land in a dream location like Guanacaste or the Southern Caribbean (Limón) with plans to build a boutique hotel, only to discover that the zoning is exclusively residential, is a devastating mistake.
- The Problem: Acquiring a property without knowing the municipal zoning plan regulations can prevent you from developing the project you had in mind.
- The Professional Solution: Request a Zoning Permit (Certificado de Uso de Suelo) from the corresponding municipality. This document is fundamental and will tell you what can be built on the property, height restrictions, maximum coverage, and other essential guidelines for your project.
Mistake 5: Not Conducting a Professional Property Inspection
Photographs can be deceiving. A property that looks impeccable at first glance may hide costly structural, electrical, or plumbing problems.
- The Problem: Hidden defects that are not apparent during a casual visit can lead to repair expenses that far exceed any savings on the purchase price.
- The Professional Solution: Invest in a professional inspection. Hire an architect or civil engineer to perform a technical evaluation of the property. They will check the structure, the condition of the roof, electrical and plumbing systems, and the presence of moisture or pests.
Mistake 6: Falling for “Too Good to Be True” Offers
If a property’s price is significantly below market value in areas like Curridabat, Escazú, or in sought-after beach locations, it’s an immediate red flag.
- The Problem: These “bargains” often hide scams, such as the sale of properties without a real title, in protected areas, or with unsolvable legal issues.
- The Professional Solution: Be skeptical and double-check everything. Work with a trusted real estate agent like those at Momentum Real State. We know the true market prices and can identify when an offer is suspicious. Never hand over money without a formal purchase-sale option agreement and without having completed due diligence.
Mistake 7: Not Verifying the Agent’s or Developer’s Reputation
In such an active market, there are unfortunately individuals who pose as agents or developers without proper accreditation or with a questionable track record.
- The Problem: You could fall victim to fraud, lose your deposit, or receive poor advice that puts your investment at risk.
- The Professional Solution: Only work with reputable professionals. Verify if the agent is affiliated with the Costa Rican Chamber of Real Estate Brokers (CCCBR). Research the developer’s history, look for online reviews, and ask for references from past clients.
Mistake 8: Underestimating the Importance of Location
The mantra “location, location, location” is universally true, and in Costa Rica, it’s crucial.
- The Problem: Buying in an area with poor access to services, security issues, or low appreciation potential can negatively affect your quality of life and your return on investment.
- The Professional Solution: Thoroughly research the area. Visit it at different times of the day, talk to neighbors, and analyze its proximity to schools, supermarkets, health centers, and main roads. A Momentum Real State advisor can offer you a detailed analysis of the growth potential of different locations, from the dynamic Greater Metropolitan Area to promising coastal zones.
Mistake 9: Not Planning for Annual Taxes
Being a property owner in Costa Rica comes with recurring tax responsibilities that must be included in your budget.
- The Problem: Ignoring or forgetting these payments can lead to fines and interest.
- The Professional Solution: Be aware of the Property Tax (Impuesto sobre Bienes Inmuebles), which is paid quarterly to the local municipality. Additionally, if the construction value of your property exceeds an amount set by the Ministry of Finance, you may be subject to the Solidarity Tax for the Strengthening of Housing Programs, known as the “luxury home tax.”
Mistake 10: Being Guided Solely by Emotion
It’s easy to fall in love with an ocean view or an architectural design. However, a purchase decision based purely on emotion is a recipe for regret.
- The Problem: Emotion can cloud your judgment, causing you to ignore warning signs or overpay.
- The Professional Solution: Maintain an objective approach. Rely on your team of professionals (real estate agent and attorney) to analyze the hard data: the real market value, the potential return on investment (ROI), maintenance costs, and legal aspects.
Your Investment in Costa Rica Deserves the Best Guidance
Buying a property in Costa Rica is one of the most significant financial decisions you will make. Avoiding these common mistakes will not only protect your assets but will also ensure a transparent and successful buying experience.
At Momentum Real State, our commitment is to provide you with the security and confidence you need. We have a team of expert advisors and a network of legal professionals ready to guide you every step of the way.
Are you ready to safely take the next step toward your ideal property in Costa Rica?
Contact us today! A Momentum Real State advisor is ready to answer all your questions and help you find the perfect investment opportunity for you.