MORTGAGES – Costa Rica

Ivan Granados - FEB 01, 2017
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Unlike some other countries, anyone can buy real property in Costa Rica. You are not required to have CR citizenship, residency, nor even be permanently present here to own land in Costa Rica.

If you want to buy real property here, you might need to get a mortgage (hipoteca). In Costa Rica, you can get this type of financing from either: i) the banks (most require CR legal residency), ii) private lenders or iii) the real estate seller, who will grant a loan directly to their buyers.

The mortgage must be granted and executed as a Public Deed (escritura pública) before a CR Notary Public, then recorded at the National Registry as a lien (gravamen hipotecario) against the property. The borrower pays all the fees and expenses. The Lender’s Lawyer/Notary Public is responsible for the drafting, execution and recording of the mortgage deed.

The mortgage shall clearly state all terms and conditions governing the financing, including for example: term of the loan, interest rates (current and default), whether fixed or variable interest (example: based on US Prime rate plus x points), payment due date, whether the installments include principle or only interest, any balloon payment, mode of payment (cash, wire or bank transfer, certified check), contractually agreed domiciles so the parties can be legally notified, permissions for pre-payment without penalty, the extent to which the security includes future improvements, the insurance policy (fire, natural disaster, contents, etc.) to cover the loan amount and any new construction, options to rent or lease out, and permission requirements before selling.

To avoid any errors in the terms and conditions agreed between the parties, it is highly advisable to verify, within the National Registry, that the mortgage deed was duly and correctly registered.

If the Debtor defaults, the Lender is entitled to enforce the mortgage and can proceed with foreclosure proceedings before the respective Court, following CR Law.

Ivan Granados is the Managing Partner at GM Attorneys. He specializes in real estate and corporate law. Contact Ivan at igranados@gmattorneyscr.com

GM Attorneys is a premium boutique Law Firm with offices in Tamarindo, Flamingo Beach and San Jose. www.gmattorneyscr.com

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