Buying Beachfront Property In Nicaragua
Buying Beachfront Property in Nicaragua
Looking for an affordable slice of ocean front real estate in Nicaragua?
There isn't much left of it around the world. At least not in beautiful & tropical locations. But don't worry! You can still invest in beachfront real estate in Nicaragua, even as a foreigner. Here is a guide to sea side property in Nica.
Property in Nicaragua within 200 meters of the ocean is governed by law 690. This law states that all land up to the high tide line, and 50 meters beyond, is property of the country. Though here are some exceptions and variations for properties which have been grandfathered in. From 50 to 200 meters beyond the high tide line properties are still governed by some conditions of law 690, but they may be privately titled and owned, or held in what is called a “concession”.
What is the difference between a titled and a concession property?
The two types of oceanfront properties in Nicaragua, titled properties and concessions, are quite different.
Titled properties are just what you would imagine, fully owned by either individuals or corporations. These properties can be sold, willed to heirs, and subdivided - provided that community rules and municipal regulations allow. Foreigners can purchase titled properties using their passports and have the same rights as locals in property ownership, though there are large benefits to purchasing using a corporations which I’ll go into below.
Concessions are, essentially, permanent leases from the municipality or the regional council. In order for a foreign citizen to own a concession he or she would open a corporation using a local attorney. Then the corporation, an artificial person with the same rights and responsibilities as a Nicaraguan citizen, could purchase and hold that concession.
Why are titled properties more valuable?
There are fewer titled beachfront properties in Nicaragua than concession properties. In addition both foreigners and locals prefer the security of a fully titled property. The lower volume of inventory, combined with increased demand for titled beachfront, means they are normally valued much higher than concession properties.
Benefits of using a corporation for both concessions and titled properties
To purchase a titled ocean front property in Nicaragua it’s not mandatory for a foreign citizen utilize a corporation. However there are still large advantages to its use, especially for more valuable properties.
At the time of purchase a buyer would open a corporation or purchase an existing one. They would then purchase and hold the titled property within that corporation. Should the new owner decide to sell in the future they would only need to sell the shares of the corporation. This process would enable secondary buyers to avoid the transfer taxes, fees, and most of the legal expenses involved when purchasing a property under ones name.
Check out the article Buying Property in Nicaragua - 14 Things to Know for the full description on the expenses involved in purchasing. They currently run between 4 and 8%.
Thus a beachfront property, held in a corporation would be 4-8%, more valuable than a comparable property not in a corporation. For that reason we recommend corporations for larger property purchases.
In addition, at the time of writing of this article - March 2019, there is a new property tax law being debated by the Nicaraguan National Assembly. The law may increase the top tier for the property transfer tax alone to 7% for properties valued at more than $500,000. This would push up the total purchase expense for the top tier of properties to over 10%, a significant amount.
Thus if you plan to purchase a premium beach property in Nicaragua, or develop one, we strongly recommend doing so in a corporation. A qualified lawyer can make setting up a corporation a breeze.
All this legal terminology got you confused? Don’t worry, there are great lawyers who can make it simple and easy for you. Dr. Javier Quinto from the law firm of Salazar & Bendana is an excellent choice for all of your incorporation and property needs. He is a NY Times quoted expert on property law in Nicaragua and offers free initial consultations to see whats right for you. You can reach him at firstname.lastname@example.org
What is involved with a concession property?
Concession on beachfront property in Nicaragua generally renew every twenty years. For larger projects individuals and business may apply for a maximim length of 59 years. Owners of concessions pay the municipality an annual fee, which is analagous to property tax.
In order to hold the concession the owner must also commence some activity on the land within 90 days of receiving the concession. They must not allow the property to be unused for a period of more than one year. They may not sublease the property, violate environmental laws, prevent citizens from using the publicly owned beach in front, or prevent government inspectors from checking to make sure those requirements are followed. Provided that the owners of the concession pay the annual fee, and follow the above requirements, the concession is always renewed.
A concession property is also not as easy to sell or transfer as a titled property. In order to sell or will a concession, the transfer must be approved by the municipality. While generally a formality, it does add another level to the transaction process. For that reason, even if the buyer is a foreign nation with Nicaraguan residency, we recommend purchasing using a corporation. This has the benefit of making it possible to sell or will the shares of the corporation on to third party.
As with titled properties the corporation continues to be the owner of the concession and all improvements on top of it. During the sale process only the ownership of the shares in the corporation has changed. This also avoids the legal and registration fees of the change of ownership.
The legal aspects of investing
As with investing in property in any country, quality legal services are important. Dr. Javier Quinto is a lawyer with the firm of Salazer & Bendana was a great help in the preparation of this article. He is a New York Times quoted legal expert on all aspects of the property purchase process in Nicaragua. For quick reference you can always check out the general requirements for purchasing property in Nicaragua here.
Want more information?
Century 21 / Nica Life Realty
About the author:
Originally from Alberta, Canada he has been doing business in Nicaragua since 2014. A serial entrepreneur, surfer, and outdoor enthusiast he is an expert real estate and investments in Nicaragua.
Century 21 / Nica Life Realty
San Juan Del Sur
(+505) 8176 8624