Buying Property In Nicaragua

Discussion in 'Caribbean Real Estate' started by zackn, Mar 20, 2008.

  1. zackn

    zackn New Member


    Much has changed in Nicaragua in the last ten years and the purchase of real estate is no exception. Anyone can buy real estate property in Nicaragua. There is free access to the real estate and credit markets. However, the lack of clear title on some properties, both urban and rural, should be a major consideration for investors.

    Here is some information on how to buy and sell property in Nicaragua. This information is provided so you can understand how things have changed in this country. You should always consult a reputable attorney before buying and selling real property. To both foreign and local investors, this is a process that requires sound professional advice.

    From 1979 to 1990, Nicaragua had a command economy wherein a large part of the production of goods from factories and agriculture was controlled by the Sandinista government. One part of the new system was agrarian reform. Some houses and real property were confiscated from the original owners without just cause. In addition, between the months of January and April of 1990, the outgoing government, through executive decree, gave government-controlled property to individuals.

    In 1990 a new democratic government was elected and some of the original owners have attempted to legally recover property that was formerly theirs. Unresolved property disputes still exist. For this reason an investor in real property must secure the services of a competent attorney to be sure that their investment has clear title. Failure to do so could result in a future legal dispute.

    In Nicaragua today the construction, real estate and tourist industries are among the fastest growing sectors of the economy. Land prices are still low by US standards and good investments opportunities exist throughout the country. There is no need to be deterred from investing in Nicaragua as long as you secure the services of competent professionals.

    The Documentation You Need:

    Property Deed
    Property History (Abstract of Title) for the last 25 years. This is obtained from the Public Registry
    Property Map or Survey
    History of Property Tax Payments Year to Date
    Municipal Tax Payment History
    Try To Avoid Properties That Have:

    Agrarian Reform Titles
    Supplemental Titles Issued by Court Order
    Legal Considerations

    Check to be sure the property was not formerly purchase through "Law 85". This law distributed luxury homes and properties larger than 100 square meters.
    Check to be sure the property was not formerly purchased through "Law 86". This law distributed smaller homes in popular neighborhoods.
    Check to be sure the property was not formerly purchased through "Law 88". This law distributed land to poor people through agrarian reform.
    Check to be sure the property was not formerly purchased through "Law 209". This law was part of modifications to agrarian reform.
    Check that the Title and Deed meet all legal requirements.
    Check to see that the Title is properly registered in the real estate section of the of the Property Registry Office in the city where the property is located.
    Study the details and history of the property for the last 25 years in the Real Estate Property Office.
    Find out from neighbors if there are or have been any problems with neighboring properties.
    Verify that the owner is in full possession of the property.
    Exceptions: The only secure way to buy property that has been affected by Laws 85, 86, 88 and 209 is to have a Settlement Statement issued by the Territorial Ordinance Office, referred to as OOT, which is under the supervision of the Ministry of Finance, and verify that the ordinance is registered in the Real Estate Property Registry.

    Steps to Buying and Registering Property:

    Use the services of a real estate professional to find property that meets your needs and desires.
    Get all the property documentation
    Hire a competent real estate attorney to review the documentation and give you a legal opinion.
    Once verified that the property has no liens or encumbrances, have a notary prepare a sales agreement.
    After closing, have the attorney register the property in the Public Registry. To be considered the legal owner of property you should possess the property title which has been properly annotated by the registrar.
    Title Insurance

    Title Insurance is readily available on any property which meets the above requirements. First American Title Insurance Company's Caribbean and Central American Division, The First American Corporation will generally insure title to properties with the above qualifications. The Title Company relies on the legal opinion of the attorney handling the transaction, and has a list of attorneys whose opinions they will accept; so the attorney you select to issue the opinion must be on their approved list. The cost of a title policy is generally about $500 U.S. for every $100,000 insured.

    Transfer Tax

    The real estate transfer tax is 4% of the value of the property and is paid only once at the time of purchase. The seller pays this tax.

    Recording Fee

    The recording fee is ½% of the value of the property. This is paid only once by the buyer at the time the deed is recorded.

    Annual Real Estate Tax

    Real estate taxes are 1% of the value of the property and are paid to the Municipal Government. This tax is paid each year.

    Legal Fees

    Legal fees on real estate transactions are 1%.

    Other Documents

    In addition to the documents list above, the seller should provide the following:

    Sellers Tax ID Number (RUC)
    Land Registry Certificate
    Land Registry Survey
    Power of Attorney (if not the property owner)
    1% Withholding Tax
    Verification that all taxes have been paid to date
    The buyer should provide either a RUC number if Nicaraguan or a Passport number.

    Homeowner's Insurance

    Insurance policies covering fire, earthquake, other accidental damage, and theft are readily available from reputable insurance companies within Nicaragua. The cost of these policies is roughly the same as you would expect to pay in the United States.

    If you have any immediate legal questions, please let us know and we will be happy to refer you to a local, reputable, certified lawyer!

    Credit for this article to :
    Patrick Cunnane
    International Real Estate Consultant
    First Central America Real Estate
  2. jvizman

    jvizman New Member

    I do not agree that it is safe if you have a good attorney. The gov't has a Sandanista as president! A GOOD friend of Mr. Hugo Chavez!!!!! NEED I SAY MORE!!!!!
  3. revealrealestate

    revealrealestate New Member

    Four tips when thinking about buying real estate in Nicaragua. 1) Make Title Insurance a Non-negotiable and 2) Don't leave your brain behind 3) Choose a good attorney (the title insurnace companies produce lists of approved firms) and 4) Buy only what you see.
  4. Kjarkata

    Kjarkata New Member

    Does Nicaragua offer residence permit to foreigners who buy property or citizenship
  5. zackn

    zackn New Member

  6. zackn

    zackn New Member

    safe no safe.....mmm

    look @ a matter of fact most central American and some south American countries are not safe politically BY WESTERN STANDARDS , THE SAME GOES TO PROPERTY RIGHT IN CASE OF NATIONALIZATION......:elefant:

  7. CoomigogAlite

    CoomigogAlite New Member

    Hello all

    Hi i am a newbie here. Hopefully i mighnt be able to contribute to this board.

  8. Dillinger

    Dillinger New Member

    The problem with all ex Spanish colonies is the actual title.

    You can pay the registrar for a 'refresco' and register land that is not actually private as 'private'. Then sell that to a foreigner. That foreigner is living on quicksand as the locals will arrive with a 'comunal' certificate and claim whatever you built as theirs. And ... it is.

    I lived in Mexico for 5 years and know what I am talking about.

    So what can you do? Well, only buy from Government backed resorts or from areas that have been publiclly private for a long time. Years have past and noone has had a problem.

    Put a search in Google for "Playa X title problems" that will tell you much needed info.
  9. zackn

    zackn New Member

    I tend to agree with Dillinger....South central America is very tricky in term to land rights and ownerships. In some places they registered titles in folders and system are not computerized and send back to mainframes in Capital city or regional cities. Lack of supervision and security in title room allow for abuse , changes...god knows what. Title insurance policies can be revoked by First American and the policy is good as the information provided to obtain it....if for instance ,the info required by FA can be later found to be false one runs a risk of revocation ...
  10. chalespinosa

    chalespinosa New Member

    Nicaragua - Real Estate

    Have been in Nicaragua for 19 yrs, have been GM of 2 commercial banks, consultant for World Bank, IADB, USAID, Austrian Aid and CABEI, investor & broker in Real Estate. To purchase property in any country an investor must do his/her due diligence starting with choosing the right Real Estate Brokers and attorney, keep a healthy misstrust, you have it at home. Have had experience with investor that initially "left their brain behind" or lost their common sense got swindled by a collusion of REA & attorney. Suggestions, use your network of friends who are in or have friends in country, in my case I graduated from Valley Forge Military Academy Wayne, Pa. and have had referrals from classmates.
  11. chalespinosa

    chalespinosa New Member

    Nicaragua - Real Estate

    There is no need to purchase property to pursue resident status in country, they are minimal and easily attainable.
  12. chalespinosa

    chalespinosa New Member

    Property Sn Juan del Sur - Nicaragua

    Were you able to sell the referenced properties, pls let me know.

    Thank you
  13. Afrodesia

    Afrodesia New Member

    Some great info here.

    I have just started to look for some land in Nica & fist thing I find is that people are very slow to respond to my interest. I guess I operate on American time-frames & fast internet service ; )

    I have searched on a site that allows people to post what they are selling, I assume, by owner. Is there any way for me to check on the previously mentioned title issues, etc. on my computer from the U.S. ? Is it a bad idea to buy property this way? I cannot afford very much & the budget I am looking at isn't represented too much by realtors/brokers/etc. If I find something, I will enlist professional assistance but I can't afford to do it before I have a particular parcel in-mind.
  14. chalespinosa

    chalespinosa New Member

    Purchasing Property in Nicaragua

    Let me suggest the following;
    • Prepare budget
    • Search for property within budget in areas that are of your preference
    • Once property have been identified search title insurance company they will have list of recommended attorneys
    • Hire attorney & realtor to do due diligence on property (30 yrs) might take time & $$$
    • Heed atrorneys advise if he says not buy it eventhough price is a bargain Dont Buy it
    • Once due diligence has been completed and title is clean, get title insurance they do their independent search
    The above process will save you time, money and aggravation.
  15. Afrodesia

    Afrodesia New Member

    Gracias! Another question


    What does it mean when a property is 'unregistered'? The owner says it is a clear title & property is his but the new owner would have to 'register' it.

    Thanks for the info. I am preparing everything but I'm used to buying in the states & am a bit nervous, especially since my Spanish is only passable (and better in the kitchen...I'm a chef in California ; )
  16. Afrodesia

    Afrodesia New Member

    Thanks for relevant info

    Great info from all...thanks!

    I am hoping someone may be able to recommend a reputable attorney w/refs for me on a purchase. The agent says that he has one he works with but I think it still best to enlist one of my own as well just to be safe.

    To be honest, I can't fault local citizens who have been displaced by govt. wanting to reclaim their property. I'd do the same. ..I just don't want to be the one who has to get booted-out = \
  17. surfranch

    surfranch New Member

    san juan del sur

    I have bought 2 acres of land in san juan del sur and used 3 seperate lawyers to secure my land in my name and make sure everything is titled and now I am untouchable with regards to the government trying to seize land if they ever did.

    Ortega realizes he makes a lot of money with tourism, so seizing foreign investors land is the last thing he would ever do.

    I haven't been happier with my decision as land value doubled since I bought it as they installed a new paved road out front, etc...
  18. raffles97

    raffles97 New Member

    I purchased a house (villa) in Granada over a year ago and extremely happy with location, people and value. HOWEVER, I dealt with a local English speaking (not perfect but good) lawyer and title was very clear, checked before one dollars changed hands by my lawyer. Even with everything on the up and up it took ages to get stamped registration papers and title documents back.

    A lot of properties change hands for CASH and with understated values (so less transfer tax paid). Sellers expect a minimum of 10% on signing of purchase documentations at which time they lodge title documents with your lawyer. Balance is usually to be paid in as little as 30 days and then your lawyer prepares and files everything for registration/payment of fees.

    Lawyers in Nicaragua just are not regulated like they are in North America so you better be able to trust the one you're dealing with.

    OK, my deal was for a house in a City not rural area and that made it far easier to trace valid title back to the guy who built it. In the countryside or beach front it's a lot scarier and even more important to have lawyer/agent you can implicitly trust.

    NO WAY can you do any deals over the internet or telephone. Best you can do is search, find someone you want to work with and take a vacation to check the place out. I mean spend a few weeks to see if you like the place and the people you're dealing with.

    My wife and I spent two weeks walking all over Granada and checked out San Juan del Sur for Pacific view property. Long enough to fall in love with Granada and the great people who live there as well as an agent to keep looking. A month or two after our return home I got the call to 'here is the place you want so get down here fast with cash in hand'. Flew down, handed lawyer down payment and signed papers came home and wired closing dollars to lawyers bank to close. (Bit more to it but having right agent and right attorney made it possible).

    One thing to remember is that yearly property tax is a trivial amount in Nicaragua as it's based on some weird number the assessor calculates and not 'market value'. In addition renovation and building costs are a fraction of N. American costs. My wife wanted new kitchen and total renovation of 2 bathrooms and while harder to source exactly what you could in N. America the results are awfully good for the dollars involved.

    Oh, I concur with the comments of 'surfranch' in that Ortega is not a nice man nor is he a socialist but totally out for what is best for him and his family. That includes keeping the doors open to foreign investors.
  19. Dave_Velasco

    Dave_Velasco New Member

    How is Nicaragua's housing market working these days? Are there possibilities that housing prices may improve more? And - can foreign buyers have the chance or allowed to buy properties and invest properties inside Nicaragua?
  20. revealrealestate

    revealrealestate New Member

    @Dave_Velasco - Yes foreign buyers can purchase properties in Nicaragua. (The only recent change to this came in the last year when the law was changed so that property within 5 km of national borders can no longer be purchased by a non-Nicaraguan citizen).

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