Buying Property in Nicaragua
The most important part of buying property in Nicaragua is the due diligence that is required to ensure that you purchase property with a valid title. Many property disputes are ongoing today due to invalid titles issued to foreign property buyers. Property Price Transparency is another thing that you should look for if you use a Real Estate Agent. You should be able to see the property advertised on a website with the price listed. Following are a few tips that will help you if you are interested in purchasing property in Nicaragua.
You can either buy property in Nicaragua by using a Real Estate Agent or you can buy directly from an individual. Using a Real Estate Agent is easier, but more expensive. They agent will set up the sale transaction and provide the legal services required. Buying from an individual requires that you know someone who can recommend a lawyer. There is a large ex-patriot community in Nicaragua and it’s best to talk with several ex-pats to get opinions on lawyers and their competence/integrity. The best policy is to obtain the services of an attorney once you have picked a property, either from an agent or an individual seller. In any case, you should know what documents are required to transfer the title from the seller to the buyer. You need to actually SEE the documents and get copies of important documents. The owner or agent should be able to provide the following documents for you, and your attorney, before any money changes hands:
– Copy of the property Title. The original is kept in the District Property Registrar’s office. The Title should be examined by your attorney in the registrar’s office before payment is made.
– Property registration certificate (Catastral Certificate)
– “Constancia de Solvencia” document provided to the current owner at the time of purchase. This document indicates that all taxes have been paid on the property when previously purchased.
– Property tax receipts for three years made out to the current owner.
– Some attorneys will obtain a “History” of the property which describes the changes in ownership going back as much as 100 years. This information is available in the registrar’s office. The “History” is a good document to have, but not absolutely necessary.
At the time of closing and money changing hands the following fees are due:
Normally by the Seller but Buyer & Seller are free to agree that the Buyer pays these fees:
– Commission to the Real Estate Agent if one is used. Maximum commission under Nicaraguan Law is 8%.
– Transfer Tax paid to the DGI (Nica IRS). This tax is 3% of the property value.
– Municipal Tax called IMI paid to the local municipality. This tax is 1% of the property value.
– New “Constancia de Solvencia” document indication that no past taxes are due. (Included in Seller’s attorney fees)
– “Libertad de Gravamen” which states that there are no liens on the property. (Included in Seller’s attorney fees)
– The Seller’s attorney fees can be up to 1% of property value.
By the Buyer:
– The buyer is responsible for registering the property in their name. Title preparation and registration can run from 1% to 5% of property value, depending on the difficulty. That is why it is important to see and validate the seller’s documents prior to closing.
– Survey cost of around $100
– Title Insurance is the responsibility of the buyer.