Perhaps you have visited the country and you feel like you would like to be an investor or possibly purchase a retirement home. Foreign Investment Law 344 recognizes foreign investors’ rights to own property and to establish business as they wish. Foreigners are allowed 100% ownership with equal rights under the law. Property ownership in Nicaragua is fee simple/freehold, with title issued and registered in your name.
Second homes are being snapped up by foreigners, mainly from the United States and Canada. However, real estate practice and the supporting institutions are still underdeveloped. Most purchases are cash transactions with the buyer and seller directly negotiating.
Before buying a property, we highly recommend the investor should ask the owner about the history of the property registry, which allows them to check for possible conflicts of legitimacy, as well as the document “Freedom of Encumbrance” to determine that the property has no debt whatsoever.
Additionally, depending on the history of title to the property and if necessary, the owner must submit the “Certification of No Objection” given by the Attorney General’s Office, which certifies that there are no irregularities with the property. This document is a requirement to register the property under the buyer’s name, mainly for those properties that were affected by the agrarian reform. It is also important to identify whether the property is under a special regime such as coastal or border line or if it belongs to indigenous communities, in which cases special treatment of land tenure, through the figure of the lease, may be required.
Once you have agreed upon a purchase price with the seller, the notary will prepare a promesa de venta (promise to sell). This is a three-party agreement, signed by the buyer, seller, and notary. Upon its execution, the notary will prepare a testimonio. This is an exact copy of the promesa and is placed in the public records to advise other prospective real estate buyers that the property is under contract.
Once all conditions of the promesa have been met, the notary will prepare an escritura (deed) to be executed by the buyer, seller, and notary. Once again, a testimonio is prepared. This is taken to the property registry and an appraisal of the property is done. An appraisal certificate is issued and submitted to the IRS, along with the testimonio. Once the transfer taxes have been paid the testimonio is recorded in the public registry office at the local municipal. Real Estate professionals are not individually licensed in Nicaragua so it is not necessary to purchase property using Real Estate services.
If you are considering building your own home, Building permits are required by the municipality and by the Ministry of Environment and Natural Resources (MARENA, for its acronym Spanish) before any construction work begins. The city grants the building permit certifying that the plans comply with the requirements established by that authority. On the other hand, the environmental permit, which must be requested to MARENA, is a pre-requisite that can involve the certification of an environmental engineer and health during the planning and design process.
It is recommended to seek legal counsel in the process of buying and developing any property. Be wary of attorneys that are not experienced in Real Estate transactions in the area you wish to purchase. Nicaraguan property titles can be in disputes sometimes–an experienced attorney can trace title of the property that interests you to ensure it is not contested.