Legal Process/Buying Property in Nicaragua
Real Estate Investment In Nicaragua: How To Avoid Common Mistakes
Buying real estate investments in Nicaragua does not have to be difficult,
stressful or even risky. However, you need to do your homework and follow
some simple rules and steps before committing to buy. Skipping one step
or bending one rule makes the process of buying real estate investments
in Nicaragua riskier than it needs to be. This is why you often hear stories
from angry foreign investors and local property sellers. The process of
buying real estate in Nicaragua is unique, and you need patience if you’re
going to make a successful real estate purchase.
The most common mistake buyers make when purchasing real estate in Nicaragua
is that they stumble on their dream land; ocean view, several acres, inexpensive
and near their favorite surf spot. The owner of the property says he has
two other offers, and if they really want the property they will have to
give him a 10% deposit; which they do immediately. Now the seller has gained
control of the process. The seller then proceeds to demand the remainder
of the money within 30 days. So, the buyers quickly go out and find a lawyer.
The lawyer discovers that the Historia Registral (Property History) is not
correct and recommends the buyers not go through with the process.
At this point, it is almost impossible to get the deposit money back from
the seller, but because he ‘guarantees’ the property is free and clear,
the buyers go ahead with the purchase, using half of their life savings.
This goes against the will of their lawyer, because they will be unable
to get Title Insurance with a bad Historia Registral. So, the Deed is signed
over and all the cash turned over to the Seller. A couple days later, the
buyers go to visit their ‘dream’ property only to see their nightmare begin.
Standing on the property is a guard that has been hired by someone who claims
to be the rightful owner of the “propiedad”.
Rule number one
Never give the seller any money until the Escritura (Property Deed) is signed
over to you, the buyer. This includes the deposit which needs to be placed
in an escrow account.
Rule number two
Be prepared to walk away from a purchase if you can’t get title insurance
on the property. Do not become so attached to the property that logic is
thrown out the window.
The seven steps to a successful real estate transaction in Nicaragua:
1. Be willing to walk away
2. Find a Lawyer that you understand (fluent in your native language)
3. Set up and use an Escrow Account
4. Obtain the Escritura (Deed) and Plano (Property Map) for the piece of
property from the departmental Registro (The registry that exists in each
of the 17 departmens, or states, in Nicaragua) and the departmental Catastro,
or land registry offics, which also exists in each department.
5. Get copies of the Historia Registral (Property History obtained at the
Registro), Solvencia Municipal (Property taxes paid obtained at the local
municipality office) and Libertad de Gravamen (Property Liens obtained at
the registro)
6. Have a topographer verify the property boundaries
7. Acquire Title Insurance through a certified First American or Stewart
Title Insurance Law Office
The seller should be responsible for obtaining items 4 and 5 and the documents
must be no older than 30 days.
The correct process
Once the seven steps have been completed and all the money is in the escrow
account then a certified check can be issued for the full amount and given
to the seller. At the same time the check is given to the seller the Escritura
should be signed over to the Buyer. This keeps the buyer in control of the
entire process. If you are unable to attend the signing in person, a trusted
agent with Poder (Power of Attorney) may be used to sign in your absence.
If you really pay attention to the two rules and follow the 7 steps purchasing
real estate investments in Nicaragua will become much easier, rewarding
and involve less risk to you. You won’t become a bitter buyer; you will
be a better buyer. Following this real estate purchasing process is better
for the buyer, seller and Nicaragua.
Check out HiFx