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Why corporations are used to buy homes in Costa Rica

In Costa Rica, properties are typically owned by corporations rather than individual persons. Find out why, and the ins and outs of how to buy homes in Costa Rica.

Buy homes in Atenas Costa Rica
You can buy homes in Costa Rica like this one in the town of Atenas.

Most people who are new to buying real estate in Costa Rica are surprised to learn that almost all real estate purchases by expats are done by corporations. Different than in the U.S., expats in Costa Rica buy properties and houses in the name of a corporation rather than in their own name.

 

“This is a common practice to protect the home and property from any individual liability,” said Costa Rica real estate attorney Pablo Arias. “And if you aren’t a legal resident of Costa Rica, the corporation can open a bank account and obtain utility services for the home, while you as a foreigner cannot.”

As a foreigner, you can buy titled property in Costa Rica without restrictions – except for concession land along beaches which do have a few restrictions. Once you buy, if the land or house or apartment/condo you’ve bought is worth more than $200,000, you qualify for Costa Rican residency as an investor.

Buying a new home in Costa RicaWhen buying a home or land with a corporation, you can either buy the company that owns the property you want or set up your own new corporation. If you have any doubt about the reputation or liability of a particular corporation, you should set up your own that will have a clean slate.

The two kinds of non-commercial shell corporations in Costa Rica most often used for property titles are an S.A. (Sociedad Anonima), like a C corporation in the USA, or an LLC (Limited Liability Corporation). An S.A. has a four-person board of directors and shareholders, whereas an LLC only has managers; however, you can have as many as you want.

Arias, who practices real estate law in Atenas, Costa Rica, said he prefers using the LLC format “because in any situation, liability is only for the corporation and not the shareholders. In an S.A., if there is a problem and the shareholders can be identified, someone can come after the shareholders as well as the company for legal responsibility.”

Another advantage of using a corporation for Costa Rica real estate purchases is that a family can buy a property together as a joint asset, listing the different family members as legal representatives of the corporation.

“If an LLC or S.A. is created as such, it is a great estate planning tool that can help you avoid probate if one of the family members passes away. Adult children, for example can be part of a company, then if their parents pass away, they just need to show a death certificate and can execute their powers. Or, if they already have power within the S.A. or LLC, then it's not an issue,” commented Costa Rica realtor Dennis Easters with Pure Life Development of Atenas.

“I always recommend that our clients consider using an LLC for its multi-functionality in that it limits personal liability and can be a great estate planning tool when used properly,” Easters added. “Really, it's an inexpensive insurance policy. In addition, for expats who are not residents, it is the only way to have local utilities transferred to them.”

Atenas Costa Rica homes
It's a beautiful life living in Atenas, Costa Rica!

It costs about $500 to $600 to set up a new corporation, Arias said, and the newly re-instated corporation tax (2017) is about $120 a year for inactive companies.

One small downside to using a corporation to own your house in Costa Rica is that ICE electricity service and AYA water service are always in the name of the homeowner, which in this case is a corporation. Any time you need to do anything official – change something with your electric or water service, etc. – you have to obtain a legal document called a “Personaria Juridica” which shows that you are the legal representative of the corporation and able to act on its behalf. You can do this online on the National Registry for about $5 each time; documents are only valid for between 15 and 30 days, depending on the agency receiving it.

When buying real estate in Costa Rica, you want to be certain to use a reputable experienced real estate lawyer who is also a notary, for efficiency and to save costs. In Costa Rica, all notaries are lawyers, but not all lawyers are notaries.

You also want to make sure your local realtor, who knows the best areas to buy and the best deals, is licensed with the Costa Rican Chamber of Real Estate Brokers (CCCBR), like Pure Life Development realtors Dennis Easters and Gerardo Gonzalez.

Article by Shannon Farley

Costa Rica Realtors Chamber

Tours in Costa Rica


Pure Life Development of Atenas is a full service tour company. We feature full vacation packages and day trips for the family. Our tour director Nelson Conejo is very experienced and provides a personal service and attention to detail second to none in Costa Rica. Please write Nelson or give him a call to arrange your next Costa Rican vacation at (506)2446-0447 or

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