What are Closing Costs?
Closing costs are additional costs incurred by both buyers and sellers and are paid at the completion of the transaction.
There are two scenarios to transfer property:
Share Transfer Agreement - Corporation Owns the Property
A Share Transfer will occur when the corporation that owns the property is purchased from the Seller by the buyer. The corporation will remain as the owner of the property and, at the Closing, the board of directors will be modified to remove the Seller and include the Buyer. New shares of stock will be issued, and the Buyer will be on the corporation of the property. The owner (the corporation) will not change so. Therefore, you avoid fees connected with registering the new owner with the Costa Rica National Registry.
Closing Costs for a Share Transfer
Legal Fees: 1.00% - 1.25% plus 13% sales tax
Transfer Taxes 1.50%
National Registry Stamp: 0.50%
Notary Fee: 1.00%
Escrow Service: $600 – this varies depending on the amount of the transaction
Property Transfer - Property Titled "Registered" Under the Owners Name
Property Transfer occurs at closing when the new owner is recorded in the Costa Rica National Registry, the "Registro." Your attorney will draft a Transfer Deed. The title should be registered in the National Registry 45-60 days after closing. You must follow up with your lawyer to be sure it has been recorded.
The difference in cost between the Share Transfer Agreement and the Property Transfer is due to the higher cost to record a new owner. Due to the changes in the law, it is now required that the transfer tax be paid whenever a property is sold.
Today it is more common to register your property under your name due to the new laws that took place on July 1, 2019, which requires all shareholders in a corporation to be transparent.
To get a better understanding of the closing costs, you can use the closing calculator