How to Purchase a Real Estate Property in Nicaragua - Guide for Foreigners
- Legalities for Foreigners Purchasing Property in Nicaragua
- Due Diligence Procedure
- Procedure to Proceed with the Sale
If you're a foreigner interested in purchasing a property in Nicaragua, you're in luck! It is legal for foreigners to own real estate in Nicaragua, and there are several ways to do so. However, the process can be confusing and overwhelming. In this article, we'll provide a comprehensive guide on how to purchase a real estate property in Nicaragua, covering everything from the legalities to the step-by-step process.
Legalities for Foreigners Purchasing Property in Nicaragua
Before diving into the buying process, it's important to understand the legalities surrounding foreign ownership of property in Nicaragua. While foreigners can purchase and own property in Nicaragua, there are some limitations. For example, foreigners cannot buy land or property located within certain kilometers of the border or coast.
Foreigners can register their property under their own name, under a Nicaraguan company, or under a foreign company or trust. It's important to note that unlike with motor vehicles, where foreigners cannot register them under their names without a residency permit, foreigners can register their real estate property without a residency permit.
Due Diligence Procedure
Before purchasing a property in Nicaragua, it's crucial to perform due diligence. The first step in this process is to request a certificate from the Immovable Property Registry from the department (state/province/canton equivalent) where the property is located. This certificate will show who the current registered owner of the property is.
It's important to note that there are cases where the "owner" has not requested to be registered as the owner in the Public Registry. This does not necessarily mean the seller is not the owner, but it's recommended to only purchase a property where the owner is registered in the Public Registry. If you still want to proceed with the purchase, even if the owner is not on the Public Registry, it's crucial to draft a strong agreement and terms to protect your investment.
Procedure to Proceed with the Sale
Assuming that the due diligence process is successful, the following are the steps to proceed with the sale:
1. Sales Deed
After due diligence is performed and it has been verified that there is no barrier to transfer the property, you must appear before a notary to sign the Buy and Sale Deed. If you are buying a property that is going to be divided, like a piece of land, you will need to hire a Certified Topographer to draft a land plan. The information of this plan will go in the Deed.
2. Cadastral Certificate
After the deed is signed, You (or your lawyer/proxy) will need to request a Cadastral Certificate in INETER. This procedure takes around one month if everything is in order with the property. In case there needs to be a Plan Approval, you have to add an extra month to the timeline, in case everything is in place. All payments are done in cash and in this public institution.
3. Request Town Hall Solvency
This Solvency Certificate is issued by the town hall where the Estate is located and it certifies that the property does not owe any Estate taxes. In most cases, if the seller does not appear as the owner of the property in the town hall, a certificate of ownership from the Public Registry of Real Estate Property will be needed. If the Seller does not appear as the owner of the property in the town hall this does not mean Seller is not the owner, but appearing as the owner in the town hall will only affect who the Real Estate Tax Bills are invoiced to.
4. Pay Capital Gain or Loss Tax
This tax is paid to the DGI (Dirección General de Ingresos, the tax authority) and is calculated based on the real estate transfer price on the deed or a property value they do based on where the property is located and size. You get this value at the moment, the same day.
After the DGI gives you your tax bill, you pay the tax at a local bank. The payment receipt or voucher has to be attached in the folder described in Step 5 below.
5. Request Registry of the Deed in the Public Registry of Real Estate Property
In this step, you have to attach all the certificates and deeds obtained from the last 4 steps. You have to give a “folder” to the Public Registry when submitting the registry request. If the property is not located in Managua, your lawyer has to most likely insert a transcription of these documents at the end of the transfer deed signed in step 1.
These documents are:
- The Transfer Deed
- Cadastral Certificate issued by INETER
- Municipal Solvency issued by the Town Hall
- Gain and Loss Tax Payment Voucher and Valuation
The fee you have to pay at the registry is 1% of the value of the property issued by the DGI (step 4), but there is a top maximum limit of around 30,000 córdobas. After you submit the documents, the Public Registry will take 30 days to give you a response, and it will either (1) register the property under your name or (2) request you to remedy a problem with the deed or whole procedure.
If you want a faster procedure, you can pay an extra 0.5% of the value of the property issued by the DGI to the Public Registry, and the Public Registry will give its response within 7 days.
Purchasing real estate property in Nicaragua as a foreigner can be a complex process, but by following the steps outlined above, you can ensure that you're doing it legally and efficiently. Remember to perform due diligence and work with a trusted lawyer to ensure that your investment is protected.
- Can foreigners own property in Nicaragua? Yes, foreigners can own property in Nicaragua.
- Are there any restrictions on foreign ownership of property in Nicaragua? Foreigners cannot buy land or property located within certain kilometers of the border or coast.
- Can foreigners register their property under their own name? Yes, foreigners can register their property under their own name, under a Nicaraguan company, or under a foreign company or trust.
- What is the due diligence procedure for purchasing property in Nicaragua? The due diligence procedure involves requesting a certificate from the Immovable Property Registry from the department where the property is located to verify the current registered owner of the property.
- How long does it take to complete the purchasing process for a property in Nicaragua? The entire process can take around 2-3 months, depending on the specific circumstances of the property and the buyer.