Doing a real estate deal in Costa Rica is not so different than what you’re used to back home. However, one aspect that can make it seem so is the terminology. I’ve listed below ten Costa Rica real estate terms you ought to know. You will probably hear most of them during the course of your real estate activity in Costa Rica. Some are simply Spanish translations of concepts you’re already probably quite familiar with.

1. Escritura

My clients always ask me if they will get a deed to the property at closing. In the U.S. the “deed” is the legal instrument that grants title to a property from the grantor (seller) to the grantee (buyer). In Costa Rica it works a little differently.

The legal mechanism in Costa Rica for transferring title is known as the Escritura. It is the most important document you will sign at the closing. It is the document that will be recorded in the National Registry, so it must be in Spanish. The closing attorney, acting as a Costa Rican notary, has responsibility for drafting, executing and recording the Escritura. He will also translate the document to the buyer, verbally in English, at closing. The Escritura doesn’t include “magical language” as does our U.S. deed. It simply lays out the full detail of the transaction, including any mortgage or lease-back that might be involved. For that reason, it can be a very long document and the major (and most boring) time spent at closing will be having the attorney translate it into English.

2. Water Concession

In Costa Rica all water rights belong to the government and are held for the benefit of the public. And that includes water flowing across or bordering the property you are purchasing. In order for you to have the right to draw water from a source, either on or off you property, you must have a water concession. Usually in order to obtain a permit to build on your property, you will have to show access to a legal (or concessioned) source of water, or at least the ability to tap into a metered source (more on that with the term Asada below).

Concessions are not necessarily hard to obtain, but they are time consuming. It can take up to a year to get one. What can you do in the meantime? Well, you can use the water source available to you without one, it just won’t be legal. In some municipalities, you can obtain a building permit without a concession, as long as you can show that you have access to a water source that ultimately can be concessioned. In other municipalities, you can’t build until you have the concession. It pays to know what you’re up against in this regard.

3. Maritime Zone

In Costa Rica there is a law that has been around since the 70’s known as the Maritime Zone law. It is the major area of law in which Costa Ricans are favored over foreigners when it comes to property rights and ownership. The Maritime Zone is defined as the 200 meters from the high tide mark. The first 50 meters is public property. You cannot stop anyone from walking down the beach and accessing the ocean in front of your property. The next 150 meters can be “concessioned.” Here’s another use for that term, albeit a different one than the water concession noted above.

A Maritime Zone “concession” is basically a lease from the government, meaning the municipality where the property is located. It is normally granted for 20 years. There are costs involved, including an annual fee. If you misuse the concession, or fail to pay required fees, then you are in danger of losing the concession. If you have improved the area under concession and lose the right to it, you will also lose the investment in those improvements. Concessions are routinely renewed, but they don’t have to be.

Another thing about concessions is that they can only be granted to nationals, i.e., ticos, or to corporations for which a majority of the shares are owned by nationals. My understanding is that permanent residents of Costa Rica can also be granted concessions, if they have lived in the country for at least 5 years.

4. The SPA (Sales and Purchase Agreement)

Generally offers are made via a very informal letter of intent, often drafted by the real estate agent. However, once fully signed, the letter of intent will quickly be replaced by a more formal contract, which will be drafted by counsel. The is the Sales and Purchase Agreement, which is more commonly referred to in the biz as the SPA. It is drafted in English if the parties communicate in that language. It is never recorded, so does not need to be in Spanish. It will contain similar terms as do typical real estate contracts in the U.S.

5. Servidumbre

Servidumbre is simply the Spanish translation for easement and is legally defined much in the same manner as an easement on property in the U.S. There are many types of easements, such as rights of way, view, easements to power companies for maintenance of lines and equipment, etc., etc. A particular easement you are very likely to come across is known as the servidumbre agricola, or agricultural easement. It is law in Costa Rica that when a farm is subdivided, interior lots are automatically granted easements of access across lots adjoining public roads.

6. Plano Catastrado

This is the Spanish name for survey in Costa Rica. It is very important to ask for and review carefully the plano for the property you are purchasing. I recently had a situation in which the very astute buyer I was representing noticed that the property he had been shown was outside of the border of the plano for the property. He noticed the discrepancy by overlaying the plano onto a Google Earth map. It was not my listing, but another agent’s. Nevertheless, I had a hard time believing what the buyer was telling me. After sending a surveyor out to re-measure the lines, we discovered that the buyer was absolutely right. Needless to say, that deal cratered.

7. Proxy Letter

Many times buyers and sellers cannot be present for closings in Costa Rica. In that case a power of attorney must be issued to someone in Costa Rica who can sign for the non-present buyer or seller at closing. Getting a power of attorney executed in the U.S. that will be valid for use in Costa Rica can be difficult. You will have to have it notarized and then apostilled. A way around this is known as the “proxy letter.” If you have set up a corporation in Costa Rica to take title to the property, a proxy letter can be signed that basically authorizes the corporation to grant a power of attorney to someone in Costa Rica to sign for you. Execution of the proxy letter outside of Costa Rica is a much simpler process and only requires a notarized signature, but not the apostille. The use of proxy letters is very common in Costa Rica real estate closings.

8. Uso de Suelo

Many buyers are looking for properties in areas where there is no municipal zoning laws or regulations in effect. Sometimes they want to develop the property commercially, but there is no guarantee if such use is allowed. That’s where the “uso de suelo” comes in. It will be granted by the municipality where the property is located and will tell you, in very general terms, what use can be made of the property. It will also tell you things like what the setbacks are from water courses shown on the registered plano.

The uso de suelo can also serve as insurance against problems down the road. Development of land can get political in Costa Rica. If the use you want to make may be in competition with someone else’s project, especially a politically powerful someone else, you might have problems getting permits later on. Having the uso de suelo in place early on is a good way to guard against such problems.

9. Asada

In rural areas of Costa Rica, the public water supply for a given community is controlled and regulated by the local Asada. If you want to tap into this “metered” water source, you have to deal with the Asada. Many times properties will both utilize the Asada as a water source for human consumption, as well as sources located on the property itself for animals and irrigation.

10. Hectare

If you’re going to purchase property in Costa Rica you need to get familiar with the metric system, at least the part of it that most often applies to real estate. The metric term you will probably hear most often is the hectare. A hectare, or hectarea in Spanish, is approximately 2.5 acres. It consists of 10,000 square meters, whereas an acre is approximately 4,000. Visually, you can picture in your mind a hectare as being roughly equivalent in size to a regulation soccer field. When dealing with large farms in rural areas, you also might come across the term “manzana”, which consists of just under 7,000 square meters. Dimensions of homes in Costa Rica might be stated in square meters, rather than square feet. So, it pays to know that a square meter is 10.8 square feet.

There certainly are other and more exotic terms that you might come across in Costa Rica. However, knowing the above ten is definitely a good start.

Valuation is an art, not a science. That rings especially true in Costa Rica.

Before I ended up as a Costa Rica real estate agent…well, even going a bit further back than that…I was a business valuation consultant, as well as M&A dealmaker. I still remember a thing or two about valuing operating businesses. Granted, I never got into valuing real estate, which is another animal, if not completely all-together…

There are similarities. You generally value a property, be it an operating business or a real estate asset, based on its income, its replacement cost, on actual sales of comparable assets, or some weighted combination of those three methodologies. However, when it comes to Costa Rica real estate pricing, all three tend to break down, with the last one, valuation based on comparable sales, only recently becoming a bit more reliable.

Income-based valuations require reliable financial data. Such data is rarely available in Costa Rica. Owners of properties in Costa Rica just don’t have the “anal retentive” qualities that lend towards generating good hard data one can rely on. Remember this is the land of laid-back and pura vida! No one really pays income taxes down here, so tax returns are completely unreliable. The accounting profession down here is not up to the standards of either the U.S., or Canada. You can pretty much walk into any accountant’s office and get them to “certify” anything you ask them to. Now, if one is adept at evaluating a property based on discounting projected income, then that’s one way to do it. However, most aren’t and of course projections are what they are. The rarely tend to come through to fruition, especially in Costa Rica.

The replacement method is what many property owners want would-be buyers to focus on. I don’t know how many times I’ve heard the complaint that the price offered is not nearly what the owner has put into the property. Well, the problem is that a property is not necessarily worth what an owner invested in it…it’s worth what the market will pay at a given point in time. And it’s very easy to over-invest in Costa Rica. Property owners often get a bit ahead of themselves with their ideas and end up building something that no one would want to buy at anywhere near the price the owner put into it. Then when someone does come along offering a highly discounted price, you get the aforementioned complaint. It’s just not a reliable way to look at value down here, generally.

Finally you have comparable sales. Nowadays, our informal MLS has developed to the point where there actually is hard data on past sales. The problem is that this data is invisible to would-be buyers. The ones who possess that information are the real estate agents. And that is one reason among many why having a good real estate agent to help you in your property sale or purchase is a very good idea in Costa Rica. I know that sounds self-serving, coming from an agent. But it’s true.

I went out the other day to look at a couple of properties owned by a Costa Rican couple now living in the U.S. Both were nice properties. One was a commercial building and the other a very nice home. I wanted to list them. However, once I heard the prices they were willing to list them at, I backed off. I am not going to waste my time listing something at a price that no one in his or her right mind would pay for a property. So, why do some owners grossly over-price their properties? Well, partly because of their focus on “replacement” value and partly because of a lack of good information.

If you come here with a firm budget in mind, don’t be shy to look at properties north of that budget. There’s a good chance that there’s plenty of give in those prices. You might be able to buy a property priced at, say, $500,000 for $400,000, which would be a 20% discount! I know that’s pretty much unheard of up north, but down here it’s really not that uncommon. By the same token it’s best not to come to Costa Rica with the idea of “stealing” a property either. The frontier days when gringos would come down and buy huge farms for pennies on the dollar from clueless Costa Ricans is over. In fact, it’s beginning to go the other way now. I’ve noticed that Costa Ricans are the ones who tend to grossly overprice their properties, hoping to cash in on the foreign investment wave that has swept the country in the last decade.

I should say something about the lingering effects of the 2008 crash. Yes, that world-wide economic event did have its effect in Costa Rica. Before it happened the speculative bubble had inflated to unreasonable proportions, especially in hot areas like the “gold coast” of Guanacaste. That bubble did burst, but a decade later it’s gradually beginning to inflate again. I would describe the current market, at least the one I operate in, the Southern Zone, as in transition from buyers’ to sellers’ market. There are some areas where prices are already on the rise. Those are popular beach areas like Ojochal. In the mountains, less then an hour from the coast, the market has been slower to rebound.

The Costa Rica real estate market may no longer be the “frontier” that it was back in the good ole days of not so long ago. However, it’s still one in which pricing is certainly more of an art than a science.

This post probably has not met the challenge of its title in terms of “unraveling” Costa Rica real estate pricing. But I hope it has at least served to clear up the muddy waters and give you a bit more visibility.

I realize posts like this are a dime a dozen on the countless blogs out there providing advice on moving to Costa Rica. I hope this one offers a slightly different twist on a well-worn topic…

In my humble opinion, the Costa Rica expat living mistakes to avoid generally come in three different flavors and those are mistakes of mindset, money and (for sake of continuing the alliteration), misanthropy (or developing a negative attitude about your fellow humans)…

Also, please note that I am, again generally, writing about mistakes that “Americans” (er, expats from the U.S.) make, since that’s where I’m from. And after almost 20 years here, I can tell you that I’ve made most of the mistakes revealed below…

Mistakes of Mindset

Risk Aversion (American Style)…

I believe America is unique in the world when it comes to risk aversion. It’s probably because we are also unique in the world when it comes to ratio of personal injury lawyers and insurance agents to total population. Down here we’re just not that way. The personal injury lawsuit doesn’t even really exist here at all. Costa Ricans do things, routinely, that make the average American tourist, or newly minted expat, gasp in horror. An example is the “station-wagon” motorcyle…with the dad navigating, the mom sitting in back, and the toddler sandwiched between them. What horrible parents, correct? Wrong! It’s just the most efficient way they have at their disposal of getting from Point A to B.

And that risk aversion filters through to the manner in which some expats choose to live their lives in Costa Rica. A prime example is an over-abundance of caution when it comes to security. Since they have more stuff than the average tico, these risk-averse gringo expats are absolutely convinced that the locals are out to take some of it from them. So they go to obscene measures to avoid that…making their expat homes look more like drug-lord compounds complete with razor or electrically charged wire and video cameras to capture what is going on in every corner at every minute. For some, even armed guards are deployed. It just gets downright ridiculous and probably invites more problems than it avoids.

The Perpetual Vacation Mindset…

Most of my expat and/or real estate clients first arrive to Costa Rica “on vacation”, usually to a beach destination, which in my case means Dominical, Uvita or Ojochal. There they encounter a gorgeous coastline and lots of entertainment options, with many other tourists doing them same thing they are doing…vacationing.

Have you every stepped back and observed the way people behave on vacation? I have. I grew up on the beach, in the major U.S. tourist destination of Myrtle Beach, S.C.

People generally don’t act on vacation like they do back home. And they shouldn’t. After all, they might only get the opportunity to be tourists once, or maybe twice, a year. Why not let the hair hand down a little? People on vacation in our Costa Ballena do what people on vacation do all over the world, they have a good time.

The problem is that when you settle as an expat in one of those beachy touristy destinations and then try to live full-time in that type of mindset, you tend to get the idea that life is one big vacation. Well, I guess we could argue philosophically as to whether, or not, that’s actually the case, but…

Life has a way of ultimately bringing one back down to earth, if you know what I mean.

Let’s face it, the body and mind can only stand so much of being “on vacation.”

Mistakes of Money

Straining Credulity (by accepting really bad advice)…

I have clients constantly make the following comment to me, or something to its affect…

“well, so and so told me such and such…”

You get the idea, right? Here’s some sage advice, don’t take advice from anyone who hasn’t lived, full-time as an expat, in Costa Rica for at least 5 years. Otherwise, the odds are highly likely that they haven’t the foggiest idea of what they’re talking about.

We Americans like to think that our “friends” (usually fellow Americans) know best and have our best interests at heart. They might be well-meaning and all, but bad advice is bad advice. And it can get you in a world of trouble down here and that especially portends in financially-related matters.

Showing Off (American Style)…

Some expats come to Costa Rica with the idea of changing their consumptive habits. After all, Costa Rica is one of the most naturally pristine places on Earth and over 25% of its entire territory has been set aside and preserved. All that provides wonderful inspiration for living a more sustainable and less consumptive lifestyle.

Others come here to try and turn Costa Rica into a tropical version of back home. They build lavish homes and drive exotic vehicles. They bring the keeping up with the Joneses mindset with them and if they settle in the right area, such as an expat enclave in a tourist destination, they’ll be surrounded by plenty of Joneses to keep up with.

I’ve always tried to steer clear of that, partly because I don’t have the money to even try to keep up in the first place, but mostly because I really wanted to get away from that down here. I really don’t see the point in coming to Costa Rica and trying to live an American lifestyle of over-consumption. It tends to mess things up for those of us who came for something entirely different.

Mistakes of Misanthropy

Cynicism is NOT Your Friend in Costa Rica…

Making the Costa Rica expat living mistakes alluded to above can give rise to a very unhealthy case of cynicism. Costa Ricans, by and large, are not cynical. This is a very happy-go-lucky culture…the so-called “pura vida” culture you’ve heard about. Sometimes that sense of “getting it done when it gets done” mindset can rake the nerves of the newly-minted gringo like fingernails on a chalkboard. However, resisting will only exacerbate the issue. Costa Rica culture is also very passive-aggressive and if you express your discontent too openly, it will be met with reactions that will only fuel that discontent even more.

The best way to react? Go with the flow and avoid cynicism at all costs.

Minding Others’ Business…

The best way to make it to bliss as an expat is to get involved in positive and impactful endeavors. Many expats who live here simply have too much time on their hands. Some utilize that time by meddling…we call that being a “chismoso” or “chismosa” here in Costa Rica. Yea I know, minding the business of others can be great fun, anywhere, can’t it? But did you really come to Costa Rica to do that? Can’t you find better things to do out there?

If not, you’ll more than likely end up in the aforementioned gringo bar drinking your poor liver into oblivion.

Immersion Therapy…

The simple solution to all of the above Costa Rica expat living mistakes is to engage in immersion therapy.

I know it sounds cliche for me to advise you to “learn the language.” But it just seems funny to me that the gringos in said bars complaining about the ticos not being able to speak their language are the same ones who decry, along with Trump, the fact that many of the Latinos back in America can’t speak perfect English.

If you’re going to live in a foreign country and be surrounded by a foreign tongue, it’s better to switch than fight…learn the language and you’ll get along much better and that will help serve to guard you against “cynicism creep.”

Of course, there are many other ways to immerse than just learning Spanish. This blog post is already running a bit long, so I won’t begin to list them here.

I grew up at the beach. When I was seven my family moved to a small barrier island off the N.C. coast, Holden Beach. Later, before the start of my junior year in high school, we moved to Myrtle Beach, where I lived off and on for the ensuing 20 years.

When I first moved to Costa Rica I was of the opinion that in order to do business here I had to live in the big city, which meant San Jose. To be honest back in those days the communication infrastructure was not where it is today, so in some respects I was right. And I wasn’t one of those expats who arrived with enough money not to have to worry about making any more.

After a decade in San Jose I was ready for a change. I moved to the southern zone, to the town of San Isidro de El General, in the canton of Perez Zeledon, about 8 years ago. Then in 2015 I made a disastrous decision to try repatriation back to the States. That lasted about 6 months, when I returned “home” with my tail tucked. By that time there was only one place in Costa Rica I considered “home” and that was San Isidro. I got involved in real estate shortly thereafter, joining the Coldwell Bank team in Dominical.

I came under a lot of influence from the agency to focus on beach listings, even though I lived in the mountains. After a while trying to do just that, I finally decided to go in a different direction. I decided I would only take my listings in the mountains, but would attempt to serve my buyer customers as an agent/consultant who would expose them to both worlds…mountains and beaches. And that’s still what I’m all about.

So, with that bit of background, let me get to the seminal point of this post. And that concerns what I regard to be the Costa Rica beach bubble…

Here’s how that works…and it works in other areas, not just my area of real estate coverage, which encompasses the mountains of Perez Zeledon and the Costa Ballena…

Most of our real estate buyers first arrive to Costa Rica “on vacation”, usually to a beach destination, which in our case means Dominical, Uvita or Ojochal. There they encounter a gorgeous coastline and lots of entertainment options, with many other tourists doing them same thing they are doing…vacationing.

Have you every stepped back and observed the way people behave on vacation? I have. Probably because, as first alluded, I grew up on the beach, in the major U.S. tourist destination of Myrtle Beach, S.C.

People generally don’t act on vacation like they do back home. And they shouldn’t. After all, they might only get the opportunity to be tourists once, or maybe twice, a year. Why not let the hair hand down a little? People on vacation in our Costa Ballena do what people on vacation do all over the world, they have a good time.

The problem is that when you live full-time in that type of environment, you tend to get the idea that life is one big vacation. Well, I guess we could argue philosophically as to whether, or not, that’s actually the case, but…

There’s no doubt about it, the beach is where the money is. And if you arrive to Costa Rica with a pocket full of cash, you’re probably going to gravitate towards that. We all like to show off a bit, don’t we? And what better way to show off one’s success than with a gorgeous beach home in Costa Rica!

So, what do I mean by the “Costa Rica beach bubble?”

Well, all of the above tends to give rise to one.

For starters, it tends to isolate those at the beach from what life is really like for the average Costa Rican. It also tends to raise the prices for everyone down there, including the locals.

In short, you get the Costa Rica beach bubble.

Now if that sounds like your kind of lifestyle, then by all means go for it. It’s readily available and I’m more then willing to expose you to it and help you become a part of it.

However, there is an alternative and, in my market, it’s less than an hour away.

It’s called the mountains.

There you will find a much more entrenched middle class of ticos, interspersed with the occasional gringo expat, living an authentic Costa Rican life. They work and they play, but they don’t do it so much for the “show factor” as for the simple joy of living in one of the most beautiful and happy countries on earth factor. There’s not a lot of showing off that goes on up here in the mountains. People are, for the most part, content to live quiet and humble lives…the kind you’ve heard that goes on down here…the real “pura vida” life.

I know this probably sounds awfully critical of the beach. I don’t mean for it to come off that way…well, maybe a little bit. In all honesty, I just want my readers, and certainly my would-be clients, to know how things really are down here.

You see, there is a Costa Rica beach bubble. It exists in all major beach tourist areas throughout the country. It’s not any different from the one I experienced for my teenage and young adult life on the Carolina coast. For some, it’s the preferred lifestyle. For others, not so much.

For those of you who’d rather live in the mountains and visit the beach, here’s a site with a few properties to peruse…

Costa Rica Expat Properties