Buying foreclosures in Costa Rica could just be the lucrative investment deal you've been looking for in today's depressed real estate market. Property foreclosures in Costa Rica are just as common as they are anywhere else, and as always, they are an excellent option for a serious investor.
The down market which is currently taking its toll on the USA and UK is also hitting home in Costa Rica. This wonderful buyers market creates great opportunities to find excellent deals on foreclosed properties in Costa Rica, as banks are eager to relinquish ownership of the over abundance of properties they are burdened with.
Costa Rica has always been a strong market with both national and international investors fueling the real estate market for upscale and luxury housing, second homes, and large infrastructure in the city centers. A recession/depression may slow it down, but its growth has a momentum which will keep going for years and hopefully long enough to feel little effect before the market turns up again quickly.
Once the market goes back up, Costa Rica’s popularity will too, and the strong development drive will continue to thrive throughout Costa Rica’s provinces and coast line. Now is the time to invest in Costa Rica foreclosures and receive the best ROI possible in the natural cycle of the economy.
Buying Costa Rica Foreclosures
Costa Rica makes it easy for foreigners to buy property, weather they are foreclosures or not, a foreigner has the same legal rights as any Costa Rican. You can own property outright in your own name or you can register it in the name of a corporation. Anyone can set up a corporation in Costa Rica and it is common to buy property under the name of a Costa Rican corporation so that any profits from rentals or capital gain are taxed as a Costa Rican company rather than as personal income, although this may depend on where you are from.
Remember when buying foreclosures in Costa Rica as everywhere, it is important to be open to the best investment, and not enter into your search with something particular in mind. Spend your time browsing through the announcements looking for a property in an area you are familiar with, and a spending budget in mind. Wait for something to strike you as an opportunity in which you have a competitive advantage based on your resources, skills, and experience.
Costa Rica Foreclosure Listings
All bank foreclosures in Costa Rica must be publicly announced in La Gaceta, however it is commonly accepted that banks and other institutions may at times hold back properties while they offer them to friends and family. Making personal connections with your bank contacts may help get you addition property options however it's not guaranteed.
Foreclosures must be published twice in La Gaceta, so each one is published two days in a row, you will see a list of First and Second announcements updated each day. You can easily find information about upcoming foreclosure auctions on their website as well as in the National Newspapers, and many bank websites. Here is a list of some of the more common website offering listings of foreclosure properties in Costa Rica:
It is quite time consuming looking through all these listings every other day, especially in La Gaceta and even more so if your Spanish is a little shaky. If you would like to receive our free list of Costa Rica foreclosure properties simply email info@costaricarealestatepages.com and the current list will be sent to you by email.
Researching Costa Rica Foreclosure Properties
The website listings of foreclosures in Costa Rica are often very sparse, especially in La Gaceta, offering only the location, type of property, land size, construction size, and base price at the auction. It will also give you the all important Folio Real number, by which you can find the title documents at the Public Registry. As this is a foreclosure and the bank is not in the business of selling houses, there will be no friendly customer service available to give you additional information. You can find an outline of some basic terminology at www.Costa-Rica-Foreclosures.com to help you understand some of the terms used in the foreclosure listings.
It is advisable to hire a certified "Perito", or Assesor, who will assess the value of the foreclosure property for you. The easiest thing to do is have the perito go with you to visit the property. Generally he (or she) will see the location with you before charging you anything. He will then quote you a price for a certified evaluation. Once you agree, he/she will also then obtain the title documents from the public registry for you, and give you a document certifying his declared value.
If the property is a house the perito will use the land value per square meter, plus the square meters of construction, minus depreciation calculated using the College of Engineers and Architects depreciation schedule based on type of construction and age. Then there is the “L curve”, which effects the value of a property based on the demand for certain areas over others, and the educated guess of the periot as to the future resell value of the property.
You may also want to have a topógrafo visit the property and check the physical location against the catastro which is the graphical drawing of the property registered a the Public Registry. In addition, have the topógrafo check the catastro against the escritura which is the written title document for the property. It is important that these two documents match, however they most likely will have no problem as a property mortgaged by a lending institution should have been thoroughly investigated previously.
If you would like help with the process of gathering of information on the foreclosure properties you are interested in, CostaRicaRealEstatePages.com also offers this service, please contact Jennifer Cross at Jennifer@costaricarealestatepages.com
Costa Rica Foreclosure Auctions
When you find a property you are interested in you must deposit 30% of the base price into a government escrow account before attending the auction. You will find auction dates and locations on the listings in La Gaceta and CostaRicaRealEstatePages.com. If you do not win the bid, your money will come out of escrow. If you win the bid, you will have just 3 days to pay the remainder of your purchase price. If you do not pay it on time you will loose both the property and your 30%.
If you are looking to take out a mortgage on the property, the lending institution where the mortgage is held will often offer to lend you the rest of the money. You will have some time before the auction in which you can visit the lending institution and begin the processes or just do your research and make a contact.
Once the purchase is made and maybe loan established, a notary will draw up the purchase agreement as a ‘testimonio’, or public deed. Most likely the lending institution will reserve the right to designate the notary as a condition of the financing agreement. The notary responsible for the closing will draft the purchase contract, and be present at the closing.
For your records you can request an original copy of the deed, or testimonio, or a copy of the closing document with the seals showing the registration for your own verification and records. In addition, your property will have a folio real number showing you as the owner, which can be verified at the Registry.
Happy foreclosure hunting!
Jennifer Cross, September 2008
For more information or services related to buying foreclosures in Costa Rica please contact Jennifer at jennifer@costaricarealestatepages.com
Read an inverview with Jennifer here!
