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Legal Aspects To Consider When Relocating To Costa Rica

by Federico Altamura Arce
Alpha Legal

Over the past decade Costa Rica has attracted thousand of expatriates that are enchanted by its natural wonders and by the relaxed lifestyle of our people. I share the same amusement and truly think that we are very fortunate, living in the happiest country in the planet with no army, abundant biodiversity, political stability and universal healthcare.

However, I have had the opportunity to provide legal counsel to foreigners that come in search of the Central American dream, and have realized that without proper guidance, relocation hurdles can rapidly turn the fantasy into a nightmare.For illustration purposes only, allow me to further explain my statement with an real life example: Some time ago I was hired by an American “ex-pat” that came to this country for altruistic purposes (he is a missionary). He brings in part of his life savings from the US to purchase a small house, since he was set to come for several years. When he finds exactly the property he was looking for, he hires an Attorney/Notary Public to take care of the paperwork required.

A few days later the Notary schedules closing, my client gives the seller a cashier’s check for the full price of the property and they both execute the purchase and sale deed. At this point, my client walks out of the meeting and heads to his new house thinking that the transaction was over.

Unfortunately that was not the case, since there was one additional step that had to be performed by the Notary in order to perfect the sale: registering the deed at the Real Estate Department of the Public Registry.

Property rights in our legal system differ substantially from common law jurisdictions. The general rule in Costa Rica is that a title deed of real property is enforceable to third parties only if it is filed for registration at the aforementioned public office.

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By now you probably realized what happened; the Notary did not file the deed (as he was supposed to) and my client lived in the house for years not knowing that the title was still registered under the previous owner’s name. When his mission is over in Costa Rica, he decides to list the property
for sale and finds an interested buyer that places an offer.

After my client accepts the offer, the buyer’s attorney performs a due diligence and reports back to my client that the property is not registered under his name. In addition to this horrid news, he then discovers that the property now has several liens due to judicial collection proceedings, carried out by a bank against the previous owner for unpaid debts.

My client had no way of knowing at the time (without doing some research on his own) that real estate transactions in Costa Rica have this additional requirement, and he obviously trusted the Notary to do his job accordingly.

As I mentioned before, this example was given for illustration purposes only, but it provides a valuable lesson: whenever you deal with legal aspects in a foreign country, make your best effort to understand the rule of law and ask the professional you are hiring to layout the steps required to achieve each goal.

In an attempt to prevent these (and other) types of situations to expats in Costa Rica, I would like to share with you some tips regarding legal aspects you will probably encounter, in order to help you ease the process:

I) Hiring vendors

First off, try to engrave in your mind the Costa Rican proverb: “lo barato sale caro” or it’s english verbatim translation: “cheap works out expensive”. When it comes to professional services (e.g. lawyers, accountants, architects, etc) try not to base your hiring decision solely on price, but instead perform interviews until you feel comfortable enough to trust him/her with your money.

When it comes to “blue collar” vendors (e.g. car mechanic, electrician, plumber, carpenter), if they are “one man” companies then make sure they come well referred. If you don’t have the possibility to get good referrals, be sure to give him/her a very small upfront fee (just to buy the raw materials) and leave the majority of the price to be paid when the problem is entirely fixed.

II) Residency

Keep in mind that individual residency applications (as opposed to corporate applications) take up to 1 year to be revised by the government authorities from the moment you file. You can ask you immigration lawyer to certify that your residency application is “pending revision” and keep that document in hand. If you are ever stopped by a police officer you can show it to prove that you are not over-extending your visit as a tourist.

Furthermore, keep in mind that you will need to bring several documents from your home country (e.g. marriage certificate, criminal records) duly apostilled (with a stamp that gives the document validity abroad). Often many foreigners arrive not knowing this and they usually have to spend a lot of money either to fly back home to obtain the documents or hiring somebody to get the documents for them.

III) Banking

Banking is certainly not what it used to be. There was a time when you could just go to a bank with your passport and come out with an account. This is no longer the case due to new banking regulations that have risen to fight against drug trafficking and money laundering. If you show up at any bank today, they will most likely refuse to open an account for you unless you have a DIMEX card (residency I.D. number). This is unfortunate and there is no clear way around it.

You can set up a Costa Rican corporation and open an account under the name of the entity, but you still need a CR citizen/resident as legal representative at least to open the account.

On another note, if you plan to wire substantial amounts from your home country to a Costa Rican account, be prepared to provide proof of the origin of the funds, meaning any kind of documentation that can serve to show how you earned the money (e.g. bank statements, copy of a property sale agreement, etc).

IV) Purchasing assets

If you are planning to buy real estate, vehicles, boats or aircrafts, you will have to do so with the aid of a Notary Public. As it was mentioned before, Costa Rica has a Public Registry that keeps a record of the owners of these types of assets, and Notary Publics are the only ones that can register a deed of transfer of title.

Make sure to have the Notary send you proof of the registered document after the contract is duly executed (it shouldn’t take longer that 1-2 months).

V) Importing goods

If you intend to import a container with your personal goods, the only advice I can provide to you is to hire a reputable logistics firm to help with the customs aspects as well as insurance. Make sure you send them a detailed list of all the goods you plan to send, since every single item might be subject to specific regimes that require additional permits and/or tax payments. I hope these tips will help you in your relocation process, and allow you to spend more time focused on the many good things about coming to this blessed country.

For more information please contact:

Alpha Legal
Federico Altamura Arce
Tel: (506) 2253-3060
Cel: (506) 8836-4617
Fax: (506)22246679

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