Due Diligence in Real Estate
| DUE DILIGENCE | DESCRIPTION |
| 1. Property Title | What is it?
Certification of property ownership issued by the National Registry of Costa Rica. What is it for? To know who’s the owner of the property and thus be able to carry out all the procedures below. |
| 2. Survey
(Plano catastrado) |
What is it?
Cadastral plan What is it for? It gives a precise sense of size about the characteristics of the land and the property lines (legal boundaries of the property) to avoid confusion and future disputes. |
| 3. Property tax statement issued by the Municipality | What is it?
A statement indicating that the property is current on its taxes What is it for? It proves that no property taxes are owed or pending |
| 4. Property tax payment receipt up to closing date | What is it?
Receipt or invoice of last property tax payment before the closing date. What is it for? To make sure that all property taxes are up to date. |
| 5. Property tax declaration filed before Municipality | What is it?
Filling and presentation of the “Declaración de Bienes Inmuebles” form. What is it for? It allows the Municipality to know the value of the land and the construction on the property in order to established the tax pay amount from the taxpayer.
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| 6. Construction permits | What is it?
If the property has a construction on it or a construction is going to take place, a list of documents is requested by the corresponding Municipality where it’s located the property. Once all that have been approved, the Municipality will grant the construction permits. What is it for? It allows the construction of the property to be carried out in compliance with the legal requirements of Costa Rican law. |
| 7. Blueprints | What is it?
Architectural and construction drawings that allows a more detailed visual representation of the construction. Those would have to be approved by the ¨Colegio de Ingenieros y Arquitectos de Costa Rica¨ (CFIA) What is it for? These are requested from the architect or engineer to see how and under what conditions the property was been built. |
| 8. Luxury tax return and payment receipt up to closing date | What is it?
Annual tax on high-value construction. What is it for? All houses with a declared value of ¢137 millions are object to this tax. What is the tax rate? According to the Luxury Home Tax Law, the tax rates are the following:
0.25% – over the excess of ¢137 million 0.30% – over the excess of ¢344 million 0.35% – over the excess of ¢691 million 0.40% – over the excess of ¢1.036 million 0.45% – over the excess of ¢1.383 million 0.50% – over the excess of ¢1.726 million 0.55% over the excess of ¢2.073 million |
| 9. Luxury tax assessment
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What is it?
Luxury tax valuation of the property What is it for? Completion of the form called “Formulario Único de Inscripción” |
| 10. Utilities services: water and electricity, | At closing or during due diligence, seller must comply with giving all services numbers to the buyer |
| 11. Utilities last payment receipt | Payment of utilities: seller must show last invoice or receipt on utilities to make sure they are current. |
| 12. internet, telephone, WiFi, password and gate or access codes | If applicable, seller must grant numbers of these services and last payment
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| 13. Special power of attorney to transfer utilities | What is it?
It is a legal document that allows the attorney to act on your behalf to transfer the utilities to the actual owner of the property. What is it for? It´s a buyer´s preference to change the name on the invoices of those utilities under his/her name |
| 14. HOA letter attesting condo obligations are current and HOA fee amount | A letter by the HOA board stating the condo obligations and condo fees
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| 15. HOA by-laws | The rules and regulations of the particular condo or housing development that are established by the Homeowners Associations (HOA).
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| 16. HOA meetings for previous and current year | Latest agreements of the HOA board |
| 17. Lease agreement copies and/or short-term rentals proof (if applicable) | If applicable |
| 18. CCSS certification attesting Seller is up to date with social security obligations | If share purchase to take place |
| 19. Tax agency certification attesting Seller is up to date with taxes and obligations | If share purchase to take place |
| 20. Employees, identification numbers, salaries, antiquity, personal files and dismissal letters (if applicable) | All employees must be severed upon closing |
| 21. Seller representative’s identification document | Proper and current identification document by the seller must be presented during due diligence |
| 21. Seller’s company bankwire instructions | This is to be provided to escrow to perform payment of purchase price |
| 22. Liquidator appointment certification | If applicable |
| 24. Seller´s company meeting authorizing the liquidation process | When seller is a holding corporation an authorization to allow the President or other Board members to sell the asset. |
