It does not have to be difficult, stressful or even risky to invest in Nicaragua real estate. 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 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.
No deed, no money
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.
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”.
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It is important to have a lawyer that can advise you on Nicaraguan law. They will make sure you are protected on the deed and in your purchase contract, which will both be in Spanish. Make sure your expectations don’t get lost in translation.
Use a third party escrow service
Typically escrow is handled by an attorney in Nicaragua. It’s your money, so make sure it is your attorney or a trusted international escrow agent, such as First American, that makes sure the terms of the contract are met before any funds are released.
Have a topographer review the property boundaries
Before you move forward with a transaction, you should find out if the property documents are accurate. The best way to know what you’re buying is to find a professional that can confirm the documentation. This is not something that should be taken for granted in a foreign country as it is in the States.
Acquire title insurance
Title does not have to be a risk for you in Nicaragua if you obtain title insurance from one of the large carriers offering policies in the country, such as First American or Stewart Title. You should 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. This is the greatest risk and one that is easily avoided.
Follow up with the seller
The seller is responsible for providing you with 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. In addition, they must provide 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). These documents must be no older than 30 days.
Make the trade
Once the other 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 these steps, purchasing real estate 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.