Introduction
Buying property in Costa Rica offers a unique opportunity for investors and lifestyle seekers alike. Whether you’re looking for a second home, a retirement retreat, or a rental income property, the country’s natural beauty, political stability, and welcoming culture make it a prime destination. But behind the lush rainforests and beachfront views lies a real estate process that requires careful navigation. Enter the essential practice of due diligence.
Due diligence is a thorough legal, fiscal, and technical review conducted before purchasing real estate. It ensures that the property is legally owned, debt-free, properly registered, environmentally compliant, and physically in sound condition. For foreign buyers unfamiliar with Costa Rican law, language, and real estate norms, skipping this step can lead to costly surprises such as title disputes, unpaid taxes, construction violations, or unusable land.
While Costa Rica’s legal system grants foreigners the same property rights as locals, its bureaucratic landscape can be complex. Understanding how to verify property ownership, tax obligations, zoning compliance, and infrastructure permits is crucial to avoid making an expensive mistake.
This article is your in-depth guide to the due diligence process in Costa Rica. We’ll explore the critical steps, common risks, key documents, professional roles, and practical tips to ensure your investment is safe and sound. Whether you’re buying a beach villa, a jungle retreat, or a city apartment, this guide provides the information you need to buy with confidence—and peace of mind.
1. Understanding Real Estate Due Diligence in Costa Rica
Due diligence in Costa Rica is a structured process that involves verifying a property’s legal, fiscal, physical, and environmental status before closing the sale. Foreigners can buy property freely in Costa Rica, and they enjoy the same ownership rights as nationals. However, this does not mean the process is without risk. Due diligence helps identify and mitigate these risks.
The starting point is the National Registry (Registro Nacional), which maintains all legal property records. Each parcel has a unique identification number known as a “folio real.” This allows a legal professional to check the property’s title history, confirm legal ownership, and identify any liens, encumbrances, easements, mortgages, or pending lawsuits.
A licensed Costa Rican attorney, preferably bilingual and experienced in real estate law, should be hired to manage this process. The attorney will also ensure that the seller has the legal authority to sell the property, especially in cases of inherited land or multiple owners.
Another critical component is reviewing municipal and national taxes. Property taxes, waste collection fees, and other local dues must be up to date. Failing to pay these could result in fines or transfer restrictions.
Cadastral verification is another must. The property’s physical boundaries must match its official land survey. Any discrepancies may require a new survey and corrections at the municipal level, especially if the land is intended for construction or subdivision.
For properties near the ocean, it’s vital to know about the maritime zone (Zona Marítimo-Terrestre). This 200-meter-wide strip from the high tide line is government-owned. Only the inner 150 meters can be granted via a concession, not purchased outright, and they come with specific legal limitations and expiration dates.
Finally, a technical inspection by a civil engineer or architect is strongly advised. This includes checking the building’s structural integrity, plumbing, electrical systems, roofing, and potential termite or water damage—especially in humid or coastal areas.
All these verifications ensure that your future property is not only legal and registered but also functional and ready to enjoy or rent out.
2. Common Risks When Skipping Due Diligence
Costa Rica’s real estate market is dynamic, but its complexity means there are several pitfalls for buyers who don’t conduct due diligence. The tropical dream can quickly turn into a bureaucratic nightmare if precautions aren’t taken.
One of the most significant risks is unclear property ownership. Properties passed down through generations may not have clear title. A seller may have only partial ownership or may lack legal authority to sell the land. Without proper verification, buyers could face lawsuits from heirs or co-owners disputing the sale.
Another frequent issue is errors in cadastral records. The land you walk through might not match its official map. Neighbors may have built fences across borders, or the registered land size may differ from the actual size. This is especially problematic if you intend to build or resell in the future.
Unregistered easements—rights of passage, water access, or agricultural use—can also affect property value or usability. If an easement exists but isn’t listed in the registry, the new owner may inherit legal obligations without knowing it.
Properties in ecological or restricted zones come with their own complications. Costa Rica’s robust environmental protection laws prohibit building near rivers, wetlands, mangroves, and certain forested areas. Buying land in these zones without knowing the restrictions could leave you with an unusable plot.
Fraudulent developments are another concern. In tourist hotspots, some developers sell lots in subdivisions that lack proper municipal approval or building permits. These “phantom projects” often lack basic infrastructure and are built on environmentally sensitive or unbuildable land.
Language is also a barrier. All legal documents are in Spanish. Buyers unfamiliar with legal terminology may miss key clauses that affect their rights or financial obligations. That’s why having a trusted, bilingual attorney is crucial.
Due diligence eliminates these risks by exposing them before money changes hands. It’s a modest upfront investment that can prevent substantial losses, lawsuits, and emotional distress later on.
3. Key Steps in the Costa Rican Due Diligence Process
To ensure a safe real estate transaction in Costa Rica, the due diligence process should follow these key steps:
1. Hire a specialized attorney: Choose a real estate lawyer registered with the Costa Rican Bar Association. They should speak your language and have experience handling international clients. Crespo Agency collaborates with trusted legal experts who assist clients through every legal checkpoint of the purchase.
2. Property title check at the National Registry: The attorney retrieves the property’s folio real and obtains a title certificate. This confirms the legal owner and discloses any liens, mortgages, litigation, or easements.
3. Cadastral verification: The property’s official land survey is compared with its physical boundaries. Any discrepancies may require a new topographic survey. This ensures accurate legal boundaries, which are essential for construction permits or future resale.
4. Verification of property taxes and debts: The lawyer will check municipal and national databases to confirm that all taxes are current. It’s equally important to verify outstanding debts with utility providers such as electricity (ICE, CNFL), water (AyA or local ASADAS), and potentially landline phone services. These debts can sometimes remain attached to the property and become the buyer’s responsibility if not cleared prior to the sale.
5. Review of building permits: If the property includes a structure, permits must be checked to ensure it was built legally. A lack of permits can prevent future renovations or obtaining insurance.
6. Technical inspection of the property: A licensed engineer or architect conducts a full physical inspection. This includes foundation stability, roof condition, plumbing, electrical systems, and general maintenance. For land-only purchases, the topography and soil condition are also analyzed.
7. Environmental clearance: If the property lies in or near a protected zone (coastline, river, forest), the lawyer will consult agencies like SETENA or SINAC. A lack of environmental compliance can block development entirely.
8. Drafting a preliminary purchase agreement: After successful checks, a conditional sale contract is drafted. It defines the transaction terms, deposit schedule, contingencies, and obligations of both parties.
Each step should be documented and shared with the buyer. The process typically takes 2 to 5 weeks, depending on the property’s complexity. A notary public finalizes the deed transfer.
4. Crucial Documents to Examine Before Purchase
During the due diligence process, your legal team must obtain and verify the following documents to ensure a smooth and lawful transaction:
1. Title Certificate (Certificación literal): Issued by the National Registry, this confirms legal ownership and lists any encumbrances, such as mortgages or lawsuits.
2. Cadastral Plan (Plano catastrado): This land map must match the physical property. If outdated or incorrect, a new land survey may be required before proceeding.
3. Historical title review: Your attorney should review previous transactions involving the property. This reveals inconsistencies, disputed inheritances, or improper transfers that could lead to legal issues.
4. Property tax receipts: Ensure that all municipal taxes are paid. Request receipts for property tax (Impuesto sobre Bienes Inmuebles) and any applicable municipal fees like waste collection.
5. Building permits and blueprints: If there’s a structure on the property, verify it was constructed legally with approved permits and complies with zoning laws.
6. Land use certificate (Uso de Suelo): This states the permitted use of the property—residential, agricultural, commercial, or protected. Issued by the local municipality, it’s vital for development projects.
7. Environmental compliance certificate (SETENA, SINAC): For properties near rivers, forests, or coastal zones, verify clearance from environmental authorities to avoid future development bans.
8. Utility payment records: Ask the seller to provide recent receipts for electricity, water, and landline services. Any unpaid balances can complicate utility reactivation or transfer.
9. Preliminary sales contract: This agreement outlines the deposit, purchase price, timelines, and conditions. It must reflect all contingencies discovered during due diligence.
Verifying these documents is essential. Your attorney must authenticate each one, cross-reference details, and request updates or corrections when necessary. Neglecting any of these can result in legal entanglements or unexpected costs post-purchase.
5. Practical Tips for a Secure Property Purchase
Investing in Costa Rican real estate can be a rewarding experience, but only if approached wisely. Here are expert tips to guide your purchase:
1. Never sign without legal review: No matter how trustworthy the seller seems, have your attorney review all documents before signing. Many disputes arise from misunderstood clauses or informal agreements.
2. Use an escrow account: Always make payments through a licensed escrow provider. This protects both parties by ensuring funds are released only when all contractual conditions are fulfilled.
3. Visit the property multiple times: Don’t rely on photos or listings alone. In-person visits reveal neighborhood conditions, access roads, topography, noise levels, and potential risks like flooding.
4. Vet agents and developers: Research your real estate agent or developer. Reputable agencies like Crespo Agency offer client testimonials, legal transparency, and a track record of successful transactions.
5. Don’t rush the process: Be wary of “limited-time” deals or pressure tactics. A proper transaction takes time—typically 30 to 60 days. Patience prevents mistakes.
6. Hire local experts: Costa Rican engineers, architects, and surveyors understand local building codes, zoning laws, and terrain issues. Their reports are invaluable for decision-making.
7. Budget for additional costs: Besides the purchase price, factor in legal fees (1%-1.5%), notary fees (1%), registry fees (0.5%), and escrow service charges (0.25%-0.5%).
8. Double-check environmental status: If near sensitive areas, request updated environmental assessments. Building restrictions can block your plans even after purchase.
By following these tips and conducting full due diligence, you reduce your risk and gain confidence in your purchase. The key to a successful investment is information, preparation, and professional guidance.
Conclusion
Due diligence is not a bureaucratic hurdle—it is the foundation of a secure real estate investment in Costa Rica. By thoroughly examining a property’s legal status, ownership, environmental conditions, and physical integrity, you protect yourself from future financial and legal issues.
Costa Rica offers an unparalleled blend of natural beauty, stable governance, and real estate potential. But these opportunities come with responsibilities. The due diligence process is your safeguard against fraud, errors, or environmental complications. It gives you the peace of mind to enjoy your new property without fear of hidden liabilities.
Crespo Agency is committed to supporting international buyers through each step of this process. With our network of vetted attorneys, engineers, and escrow professionals, we help ensure that your property purchase is legally sound and financially secure.
Buying property abroad can be daunting—but with proper due diligence, it’s also one of the most rewarding decisions you can make. Invest smart, protect your future, and make your Costa Rican dream a reality—with clarity, confidence, and compliance.