The importance of having a trustworthy legal advisor by your side cannot be overstated. This is especially true with real estate investing in Nicaragua. I’m in Nicaragua with my real estate lawyer, and we’ll be discussing real estate transactions here in Nicaragua, the whole process, what to watch out for, and the mistakes to avoid when buying real estate or property in Nicaragua.

If you are looking for a reliable real estate lawyer in Nicaragua to guide you through the process of purchasing a home or property, look no further than Eduardo! He has extensive experience, in-depth knowledge of Nicaraguan real estate laws and regulations. 

We’ll cover: 

1. Why you need a good real estate lawyer in Nicaragua for property transactions

• Many title deeds are not clean. You can have classic situations with liens or mortgages on them, but also cases where the previous transaction was not done properly. For example, maybe the land on which the house sits was sold by a family 10 years ago, and one of the signatures is missing (that cousin who was far away). Effectively, you could suddenly have a family claim the house from you saying the previous sale was not done properly, and seek to grab it from you. As a foreigner, you are more vulnerable to such situations.
• Permits. Your lawyer can let you know if some special business permits or otherwise would be required for the real estate in question, and of possible tax incentives in some industries.
• Some coastal properties have extra taxes due to the Nicaraguan law code, whilst others don’t. You want to make sure under which tax code your real estate qualifies.
• Some properties have registered titles, while others are sitting on land leased from the government. You want to know what you are buying.
• There is a 1% annual property tax on real estate, based on the municipality’s valuation of your property. The valuation may be lower or higher than the purchase price.
• Your lawyer should ensure that there are no outstanding debts related to the property such a home owners association fees, electricity, water, garbage, internet, etc.
• Your lawyer can enable you to pay for the real estate using an escrow account in order to guarantee everyone’s safety. Essentially, you transfer the purchase price to his account, and only once all verifications have been done and everything is deemed to be fine will he transfer the money to the seller.
• IMPORTANT: Avoid using a lawyer proposed by your real estate agent. The reality is that there can be a conflict of interest in such cases. Though you are officially the lawyer’s client, who is more important? You and your single transaction, or the agent that brings dozens of clients? Using a lawyer that you chose independently won’t be more expensive and will offer you much more security.

2. What you need to know before buying real estate in Nicaragua

Here are 4 important points you should consider when buying real estate in Nicaragua.

1. There is a registration fee of 1% of up to a maximum of USD $1160.
2. In many cases it it better to create a Nicaraguan company to buy the real estate. It adds costs, but if you want to obtain an investor visa it is necessary. Also, if you want to sell the property or transfer it to a relative later on, you will not have to pay the registration and transfer taxes – you’ll only have to change the name of the shareholder in the corporation, which is much more affordable and quick.
3. The final contract must then be signed in person at the Notary Public. If you are not present, it can be done with a power of attorney. Buying real estate in Nicaragua can be done entirely remotely using the Apostille Treaty system.
4. BEWARE: The transfer tax is legally borne by the seller, but sellers and agents will often try to get the foreign buyer to pay for it. Be very aware of this in your negotiations. Here is the chart of the expected value of the transfer tax depending on the property value. 
   

   0 to $50,000.00	1%
   $50,001.00 to $100,000.00	2%
   $100,001.00 to $200,000.00	3%
   $200,001.00 to $300,000.00	4%
   $300,001.00 to $400,000.00	5%
   $400,001.00 to $500,000.00	6%
   $500,001.00 and more	7%

    

3. Fees: What a Real Estate Lawyer in Nicaragua will cost.

Lawyer fees for a real estate transaction in Nicaragua.

-Legal fees for closing = 1% of the property value with a minimum of $1,000

-Due Diligence on the property (optional but highly recommended) = $500

-Creation and registration of Nicaraguan Corporation to hold the property (optional) = $,1250

Other services in Nicaragua:

• My favourite realtor in San Juan del Sur, Nicaragua
• Create a company in Nicaragua
• How to obtain Residency in Nicaragua

Articles on Nicaragua:

• A Real Estate Investment in Managua or Gran Pacifica, Nicaragua?
• Investing in a Teak Wood Plantation, is it worth it?
• Full analysis of the San Juan del Sur real estate market

Video Transcript: “Tips on Nicaragua real estate transactions from a real estate lawyer“

LADISLAS MAURICE: Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. Today, I’m in Nicaragua with my lawyer, Eduardo, and we’ll be discussing real estate transactions here in Nicaragua, the whole process, and what to watch out for, which mistakes to avoid. Eduardo, how are you?

EDUARDO: I’m good. Thank you for having me for this conversation.

LADISLAS MAURICE: Pleasure. Eduardo, you and your team have done many, many real estate transactions over the years.

EDUARDO: Yes.

What is the process to purchase real estate in Nicaragua as a foreigner?

LADISLAS MAURICE: What is just the general process for foreigners when they buy real estate here in Nicaragua?

EDUARDO: All right. The most important part of any real estate transaction for us is, obviously, the due diligence. We want to make sure that you are being sold what you’ve seen. And what we look for is, obviously, first, the title. We always recommend getting a survey and possibly doing your own survey verification as well. And then our due diligence process involves us going to the public records, making sure that we reveal all the transfers of title, we go back to the origin so that we know that there’s no break in the chain of title, we understand what’s the current situation of the property, whether it has any outstanding litigation, any mortgages, any rights with third parties. That’s the part of the public records.

We also go to the municipality, we confirm property taxes, and any other outstanding obligation. If it’s a house, it has additional obligations to the municipality, such as garbage collection. And the last part of our due diligence has to do with the survey office. We want to make sure that there’s no encroachments. And for that, we hire typographers to verify that everything’s correct in the survey office, but also to make sure that the property, if there’s a house built inside, within the boundaries of the property, that there’s no overlapping or encroachments onto someone else’s property, or that the title of the property matches the physical area of the house or the property that you want to buy. Those are the basic points that we do.

How long does a real estate transaction take in Nicaragua?

LADISLAS MAURICE: And how long is the process? Let’s say, I like a house. I’m like, “I want to buy this.” We agree on a price with the seller. I go to you, Eduardo, I’m like, “Run with it, tell me what to do.” How long until I get the actual title deed?

EDUARDO: Usually, our due diligence process takes us two to three weeks, depending on complexity and, obviously, depending on the volume of transactions. Now, we recommend that you have an initial contract that outlines the terms and conditions under which you will buy. This is basically a term sheet which is signed by both parties. There’s some cases where a deposit is required to kind of guarantee the transaction. For that reason, we’ve created and we’ve had for a while our own escrow company that is an impartial entity that holds the deposit and acts based on the contract terms and conditions.

LADISLAS MAURICE: That’s good. Yeah, escrow always just makes transactions so much safer.

EDUARDO: Yeah.

How often do they face issues in transactions?

LADISLAS MAURICE: Let’s say, out of 100 due diligence processes, how many end up showing a problem?

EDUARDO: I would say a very low percentage. And one of the reasons is that, because of what you said, the volume of what we do, and the people that we work with, there’s typically agents or sellers that we know. We’ve been in this business for over 20 years. And I would say that our firm is the one that handles the biggest volume of transactions so that we can easily identify which properties may have an issue or not right from the start or confirm that we’ve done due diligence before in these specific areas. And other than updating our previous investigation, we don’t expect or we don’t anticipate any issues. We do the due diligence, but we know in advance whether there is a problem or not or what to look for.

I would say, in our experience, and I want to say we’ve done over a thousand transactions, even more, less than 2% of the transactions that have come through us we’ve seen issues.

LADISLAS MAURICE: Interesting.

EDUARDO: Yeah.

Should I hire a lawyer for a real estate transaction in Nicaragua?

LADISLAS MAURICE: Cool. Look, the reality is if you’re trying to buy from someone who is being dishonest with you, as soon as they see that you’re taking a serious law firm onboard to help you with the due diligence, just even that by itself, the seller just tends to dissipate into thin air. Look, when you’re back home, and you watch the news, or reports, etc., you often hear of people going overseas, and they buy real estate overseas, and they get scammed, they lose their money. This doesn’t really happen anywhere if you use a good law firm and a good notary public to represent your interests. In most cases, people who get played, they’re going with their girlfriend’s cousin who’s selling them a plot of land, they’re not going through the proper process, etc. It’s just always weird situations, where had they chosen a good lawyer, none of this would have ever happened.

My number one advice to people is, when you buy real estate overseas, just make sure to hire a good lawyer and don’t go for the cheaper lawyers. Look, I’m sure there are cheaper lawyers than you, Eduardo.

EDUARDO: Yes.

LADISLAS MAURICE: I’m sure they’re going to be comments here of people saying, “Oh, I know someone who is cheaper, blah, blah.” There’s always a cheaper lawyer out there. Personally, I’ve been doing real estate deals all over the world, in Latin America, North America, Europe, Africa, Middle East, wherever. And each time I always go for some of the top local law firms because this just drastically reduces my risk, because I’m fully aware of the fact that when I operate in an environment that I am not familiar with, there are just so many known unknowns and unknown unknowns for me, and that’s how I reduce my risk.

Cool. Eduardo, thank you very much. If you’re interested in finding out more about Eduardo’s services, there is a link below. Eduardo, thank you very much.

EDUARDO: It was great to see you.