Buying Property in Nicaragua - 14 Things to Know
14 Things to Know About Buying Property in Nicaragua
We often get asked what the process is like buying real estate in Nicaragua as a foreign citizen. So I put together this guide that will hopefully answer most of your questions!
1) Buying as a Foreigner
Want to purchase property in Nicaragua but worried about restrictions? You're in luck. With a couple small exceptions there are no restrictions on foreigners owning land. The legal and registration process is the same for expats as it is for local residents, and with a good lawyer and realtor it's easy. There is no need to have a local partner and you can have the Escritura (deed) free and clear in your name. All you need is a passport and an address and phone number in your home country.
2) Mortgages in Nicaragua
So you want to buy real estate in Nicaragua. Let's get your financing in order! In country financing does exist for foreigners, however the interest rates are much higher than Canada, the United States or Europe. Interest rates in Nicaragua on mortgages are around 8.5% to 9.5%. Thus we highly recommend clients secure financing in their home country and then transferring the money to Nicaragua. Lafise Bank is the best choice for a home mortgage in Nicaragua if you do want go that route. Check out the article Getting a Mortgage in Nicaragua as a Foreigner for more details.
3) Where can I buy property Nicaragua?
The short answer is almost everywhere, with two exceptions. The first proscribed area is land that lies within 50 meters of the high tide line. The "Ley De La Costa" (the Law of the Coast) states that all land within this area is property of Nicaragua and it's citizens. Many older properties developed before the law came into effect have been grandfathered in and are permitted. For more on that check out the article Buying Beachfront Property In Nicaragua.
The second area with restrictions is near the international borders. From 15 to 5 kilometers of the border foreigners must apply for and receive a waiver permit in order to register the property. Within 5 kilometers of the border, for security reasons, foreigners are excluded from purchasing land. So if you are looking at a property directly on the ocean, or within 15 kilometers of the border, you should first consult with an experienced lawyer and realtor to determine its status and if it right for you.
3) Finding Your Property
In Nicaragua there is no Multiple Listing Service (MLS) Therefor your best option is an experienced local realtor who can help you in your search. Since you are reading my article I hope that would be myself at Century 21 Nica Life Realty ;) However there are many other good realtors in the country as well. Just make sure that you ask around about both their company and their individual reputation before choosing one. Your real estate agent is the most important decision you can make when buying land in Nicaragua.
Most property prices here in Nica are somewhat negotiable. Your realtor will investigate the property to determine how long the property has been on the market, its condition,and how motivated the seller is. They will then help you craft an attractive opening offer.
5) Making an Offer
Found your perfect property for sale in Nicaragua? Awesome, time to make an offer! In order to put an offer in we at Nica Life Realty require $1000 in earnest money. We accept cash, national check and PayPal. This refundable deposit ensures that you are truly interested in purchasing a property. If the seller accepts your offer this $1000 transfers over and become part of your 10%, non-refundable deposit. If we cannot come to an agreement on the property with the seller the money is returned to you, minus the small transfer fees. Simple as that.
6) Hiring a Lawyer
You've found your dream property in Nica, made an offer, and had it accepted. Now it's time to get a great lawyer. Dr. Javier Quinto from the firm of Salazar & Bendana is an excellent choice. He is a New York Times quoted expert on real estate and corporate law in Nicaragua. You can reach Dr. Quinto at email@example.com . If you are going to be returning to your home country during the sale process we recommend getting a Power of Attorney. This way your legal team can perform all of the tasks necessary without you having to fly back down. Your lawyer will also open an escrow account just for you. This serves to protect your investment in the event of any issues discovered during due diligence.
7) Signing and Deposit
Now that we have an accepted offer and a lawyer to complete the transaction we can sign the agreement. Once you and the seller have provided your signatures, we require a minimum 10% deposit within ten days. Your $1000 in earnest money described above is part of the deposit. This ten percent deposit is non-refundable, assuming the seller meets their conditions. It serves to secure the property and take it off the market while the due diligence is ongoing.
8) Transferring Money
How do you transfer money down to Nicaragua? There are two options. You can open your own bank account here and transfer to yourself from your home country. We recommend Lafise Bank for its professional service and international network. Opening your own account for the transaction, however, normally takes a couple weeks. Most clients choose instead to make use of the lawyers escrow account. In either case we at Nica Life Realty will help walk you through the wire transfer process and ensure your transfer arrives smoothly in the account of your choosing.
8) Due Diligence
Time for the lawyers to get to work. During the due diligence process the lawyers will go deep into research about the property. They research the Escritura (deed), the existence of liens against the property, and also tax records. Should any issues arise during the process, such as property taxes owing, the seller would pay the balances before we proceed. Should the issues be significant enough to compromise the sale the buyer has the option of declining the purchase and receiving the 10% deposit back.
Escrow usually lasts between 30 and 90 days. During that time the lawyer performs the due diligence and makes sure the property is ready to be transferred. We recommend transferring the remainder of money down before closing, so that once the lawyer has stated the property is clean and ready to be transferred we can complete the transaction. In that way we can transfer the property to you on closing day!
The closing costs vary based on the valuation of the property. The fees include:
Municipal Tax: 1% of the deed price
Property Registration Fee: 1% of the deed priceor 1% of the appraisal performed by the municipality, whichever is greater.
Legal Fees: minimum 1 and up to 1.5% of the purchase price plus between $100 -$250 in costs
Transfer Tax: Based on the deed price and the tax assessment, whichever is higher. The government will perform a survey and assess a value after closing. The transfer tax is then applied based on whichever figure is higher. The tax rate is 1% for properties $50,000 and under, 2% for properties between $50,000 and $100,000 and under, 3% beteen $100,000 and $200,000 and 4% over $200,000.
11) Closing Costs
Escrow Service: 0.5% of the purchase price plus 15% tax. If closing is carried out by the García and Bodan law firm, you get a discount of the 50% on the escrow fee.
Translation Fees: Varies on the document needs of the buyer
Power of Attorney: $50 to $100 depending on the law firm
Survey and Cadastral Certificates: Between $150 to $250 depending on the surveyor and size of lot
Wire Fees: They are applied when wiring money to Nicaragua, varying from $25 to $100, depending on the bank
12) Registering the Property
Congratulations, you are now the proud legal owner of a piece of the paradise! Now it's time to complete the registration process. Some of the steps to finalize the ownership process can only be completed once the contracts have been signed and the property has been paid for. Your lawyer and realtor will complete the final steps over the coming months. Usually it takes 90 days after closing for your property to be registered with all of the government agencies in Nicaragua.
13) List of Important Documents
Escritura: The deed. Here in Nicaragua the escritura is equivalent to the title or deed in other countries. It demonstrates who holds legal ownership of the property.
Plano: The plot map. It is a physical map that shows the boundaries of the land.
Solvencia Municipal: Municipal solvency. This document shows that the property is free of taxes
Libertad de Gravamen: Certificate of no liens. This document shows that the property has no liens, outstanding loans or other encumbrances
Historia Registral: This document shows the public history of the land for the previous thirty years.
Promesa De Venta: Promise of sale. If there is seller-financing this document secures the property and defines the terms of payment and schedule.
14) Other Terms to Know
Catastro: Office where the plano is kept (measurements, physical description)
Registro Publico de Propiedad: Public real estate registry. Office where equal copy of the Escritura is kept
Impuesto de Bienes y Inmuebles: Annual real estate tax. Typically 1% of value of the property. If this is paid before March of each year there is a 10% discount
HOA: Homeowners Association Fee. If you are buying in a private development there will usually be a monthly fee to cover road maintenance, and possibly security and utility services. Check with your agent to compare fees and services to and determine which development is right for you.
Don't worry, this is what were here for. Our job as realtors in Nicaragua is to help you navigate the process and ensure you are comfortable every step of the way. Myself and the team at Nica Life Realty Century 21 are here to support you, and our efforts go beyond just finding you the perfect property. With decades of combined experience in the local market we will put our expertise to work for you today.
Want to know more?
Get in touch with me today, I love to help people invest in Nicaragua, and make the move down here. You can contact me any of the ways listed below. I usually respond to most messages before the end of the day as long as I'm in signal range. Thanks for reading, hope this was helpful!
Joel Stott-Jess is an agent with Century 21 / Nica Life Realty in San Juan Del Sur. Originally from Alberta, Canada he has been doing business in Nicaragua since 2014. A serial entrepreneur, surfer, and outdoor enthusiast he is an expert on both the real estate and investment markets in Nicaragua. Thanks to his lovely Nicaraguan wife, a medical doctor, he is also well informed on health care services in the country.
Century 21 / Nica Life Realty
San Juan Del Sur
(+505) 8176 8624