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  • Writer's pictureJean Franco Fernández Clark

How to Purchase a Real Estate Property in Nicaragua - Guide for Foreigners

If you want to purchase a land, house, mansion, office building, islet, island, or farm, the buy and sale procedure is the same, regardless of the company type.

Can foreigners buy real estate property in Nicaragua? Yes, foreigners can buy real estate property in Nicaragua, and register it under their own name, under a nicaraguan company, or under a foreign company or trust.

Unlike what happens with motor vehicles, where foreigners cannot register them under their names unless they have a residency permit

Only limitation is foreigners cannot buy land/property located certain kilometers from the border/costs.

Due diligence procedure.

A buyer has to first 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 is the current registered owner of the property.

There are cases where the "owner" has not requested to be registered as the owner in the Public Registry, and they do it either because of ignorance, tax purposes, etc. This does not mean the Seller is not the owner, but in Nicaraguan Law, put simple, before a court of law the owner is the person in the Public Registry.

It is not recommended to purchase the property if the Seller/Owner is not registered in the public registry, otherwise you run the risk of your property not being registrable under your name.

In case you want to proceed with the purchase even if the owner is not on the public registry, that is not a problem, we would just haver to draft a very strong agreement and terms to protect your investment.

Procedure 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 the past, and in some places, in Nicaragua you did not need a certified land plan to dismember a property, but the property was registered. If you buy a property what was dismembered without a plan, you will have to make a plan for this property. This is not a problem, but just a heads up. 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 own any Estate taxes. This is also issued the same day (at the moment you request it) in case everything is correct. 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, as after you register the property in the Public Registry of Real Estate Property, you will not automatically appear as the owner in the town hall (but again, appearing as the owner in the town hall does not make the owner). Therefore, appearing as the owner in the town hall will only affect who the Real Estate Tax Bills are invoiced to. You should request this town hall solvency from the Seller before buying the property, otherwise you would be forced to pay the taxes, or force Seller to pay these taxes. It can be agreed between Seller and You who can pay these taxes in case there is a tax debt because sometimes Seller does not have the money to pay these taxes or for whatever other reason, but whatever the case is to agree that You as a buyer should pay the taxes, it is good to know how much is owned beforehand so you don’t get any surprises. The town hall issues the Solvency Certificate for free. If there is an Estate tax debt, you can get a “balance” for less than 50 córdobas. All payments in this step are made in the town hall.

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. The DGI will request that you have all the documents from step 1, 2, and 3, (deed, cadastral certificate, and municipal solvency) to give you the final valuation and your tax bill. ​ 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 where the property is located.

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. Fee: 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.

Disclaimer: Nothing herein shall be considered legal or tax advice.

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