Buying Property in Nicaragua - 14 Things to Know
Updated September 3, 2022
Check out the video! (Subject to change as soon as I have time given the new info below)
Updated September 23, 2022
*New note for 2022: This article is focused solely on the standard requirements and procedures for purchasing property in Nicaragua, with an emphasis on foreign buyers.,
There are reference to corporations and residency contained herein.
The rules for corporations and how they relate to residency are changing and I will be updating those articles accordingly.
By Joel Stott-Jess,
We often get asked what the process is like for buying real estate in Nicaragua as a foreign citizen. So I put together this guide that will hopefully answer most of your questions!
1) Buying as a Foreigner
Are you interested in investing in property in Nicaragua but concerned about restrictions? You're in luck. With a couple small exceptions, there are no restrictions on foreigners investing in Nicaragua.
The purchase and registration process is the same for expats and locals. With a good lawyer and agent, it's simple and easy. There is no need to have a local partner, and you can have the escritura (Deed) free and clear in your name. All we need is your passport, some basic personal information, and we can set everything up for you.
2) Financing
In 2022 the sales market is booming, at least in the context of our small market.
I you need financing, it would be best to look for it in your home country. With lower rates in most countries, if you able to borrow there and buy cash here, you can take advantage of interest arbitrage.
Interest rates are brutal at 10% or more. Unless you light cigars with $100 bills, it’s not a good idea for most people. We recommend freeing up capital from investments or property at home, in order to buy cash here.
In its place we are seeing some seller or “vendor take back” financing. You can read a full breakdown on it here. Common down payments are 50% with terms of two to three years at 5-8% interest. There are some longer-term deals happening, up to five years, but those are less common. These terms are negotiable, and it varies case by case. Contact me if you want more info.
3) Where can I buy property Nicaragua?
The short answer is almost everywhere.
The only real restricted area is near international borders. Within five kilometres of the border with Costa Rica or Honduras, foreigners are excluded from purchasing land. The stated reason is national and border security.
Within five to fifteen kilometres of the borders, foreigners can invest. But they then must apply for, and receive, a waiver permit in order to register the property. We've seen those permits take as long as one to two years to get. Given all the great properties you can get elsewhere, I wouldn recommend buying anywhere outside the fifteen kilometres zone. Unless your dream property is within the zone or it is held in a corporation already.
3.1. Oceanfront / properties within 200m of the ocean, or developments with oceanfront access:
You can own oceanfront property as a foreigner. Titled properties, especially in my area of San Juan Del Sur are grandfathered in and are able to use the property without restrictions and have full title.
The "Ley De La Costa" or Law of the Coast states that all land, not covered by the grandfather clauase within 50 meters of the high tide line is property of the country. Some of properties are know as concessions and have lease terms of 20 to 99 years.
I won’t delve into these much as I generally do not recommend their purchzse.
They can be leased and improved upon but generally not owned via full title (fee simple). These properties are not found in my listings as they are generally not favoured by my clientele, nor would I generally recommend them. They tend to be found in more northern parts of the country, outside of my general range of activity.
I deal exclusively with full-titled beachfront properties.
There is a new rule being applied to the Ley Del La Costa (Coastal Law).
Previously, this requirement was normally applied only to beachfront properties. However, the new interpretation of the law includes any property within 200 m of the water, including clear cliff front properties, and developments or properties within 200 m of the mean high tide line.
This requires a document called a Letter of no Objetions / Certificate of No Objections (CONO). The spirit of the law is to entail that dubious figures, such as those engaged in criminal activity, do not purchase large tracts of land on the beach. Then use it for illicit activities. It's essentially an extra layer of Know Your Client (KYC) information required by the government. If you are not performing criminal activities, or actively under criminal investigation, it’s not a consideration.
However, the application of this law is now changing. For properties within 200 m of the ocean, or many properties in developments with beachfront access, we are now required to get this CONO. The cost is not significant, it's approximately $1000, borne by the sellers.
As a result, the timeline for closings on affected properties has changed. Due to the increased numbers of properties requiring it, and the lack of increased staff in the department granting these permissions, many properties are now taking 6 to 8 months to close.
This does not affect the ability to perform the transaction, nor put at risk any deposits in escrow. However, it means that for a significant number of these properties with proximity to the ocean, closings are taking significantly longer. Hence my update for this article.
For more information on that, please feel free to reach out to me. and I can give you a more detailed view of the current situation as this evolves, and affected communities.
The following article, Buying Beachfront Property In Nicaragua, will be subject to change as the situation is ongoing.
4) Finding Your Property
In Nicaragua, there is no Multiple Listing Service, or MLS. Therefore, your best option is an experienced local agent who can help you in your search. Since you are still reading my article, I would love it if you chose to work with me. I have assistants, and proprietary tools, that allow me, in my humble opinion, to have at least equal to the best market analysis in the area.
Your real estate agent is the most important decision you can make when buying property in Nicaragua. Feel free to check out my testimonials. I can provide the contacts of past clients who you can chat to about their experiences with me.
5) Valuation and Making an Offer
Most property prices here in Nica are at least somewhat negotiable. Your agent will investigate the property to determine its condition, comparable recent sales, how long that it’s has been on the market, and how motivated the seller is. With that information, they will help you craft an opening offer.
Found your perfect property for sale in Nicaragua?
Awesome, time to make an offer. In order to put in an offer, we require $1000 in earnest money. We accept cash PayPal, some electronic transfers, and crypto in some circumstances. This refundable deposit ensures that you are truly interested in purchasing a property.
If the seller accepts your offer, this $1000 earnest deposit becomes part of your 10% deposit. The 10% deposit usually takes place within 10 days of the signing of the agremment.
If we can’t come to an agreement with the seller the money is returned to you. Simple as that.
6) Hiring a Lawyer
You've found your dream property in Nica, made an offer, and had it accepted. Now it's time to get a lawyer.
I have extensive legal contacts here, and can set you up with an English speaking attorney. If you’re a real estate client of mine that’s one of our services. And even if you’re not we can still help you out via our consulting services.
Should you are going to be returning to your home country during the purchase process, we recommend getting a power of attorney. It’s a limited document granting the ability to purchase this property in your name only at your instruction. This way, your team here can perform all of the tasks necessary without you having to fly back down.
Your lawyer will also open an escrow account just for you. This serves to protect your investment in the event of any issues discovered during due diligence. It works just like escrow in the United States or Canada.
7) Deposit and Transferring Money
Great! So we've gotten the agreement, lawyer, and escrow all set up. The next step is usually that 10% deposit, plus a portion of the legal fees, paid into escrow within ten days.
Your $1000 in earnest money described earlier forms part of this deposit. These funds serve to take your property off the market and hold it while due diligence is on going. And they are non-refundable should the due diligence come back clean. More on due diligence below.
How do you transfer money down to Nicaragua? There are two options.
Most clients choose to make use of the attorneys escrow account. It’s set up in your name once we have completed the privates sales agreement. Once their KYC and escrow forms are complete you can wire to escrow.
8) Due Diligence
Time for the lawyers to get to work. During the due diligence process, the lawyers will dig deep into research about the property. They research the escritura (deed), liens against the property, tax records, utility bills, employment records if applicable, home owners association fees and other related items
Should any issues arise during the process, such as property taxes owing, the seller would pay the balance prior to closing. Or those funds we be deducted from funds dispersed to the seller. Should the issues be significant enough to compromise the sale, the buyer has the option of declining the purchase and receiving the 10% deposit back or allowing the seller to rectify the situation to the buyers satisfaction.
Normally, the issues discovered are minor. For example, a recent transaction had a $300 garbage bill owing for a few years. they forgot about. We paid it prior to closing, and it was sorted easily.
9) Closing
Escrow usually lasts about 45 to 60 days. During that time, the lawyer performs the due diligence and makes sure the property is ready to be transferred. Usually the lawyer has determined the the property is clean after about 30 days. The remainder of the funds, including closing costs, should then be transferred.
That gives 15 days for the remainder of funds to arrive in Nicaragua. In that way, we can transfer the property to you on closing day.
Take into mind the aforementioned information regarding properties close to the beach for how this would affect your transaction. Closing be longer in those cases and I want to be upfront about those new timelines.
We have signed for the purchase of your property, and distributed funds.
Congratulations! You now own a property here in Nicaragua!
What comes next?
10) From Funds Already Deposited The Attorneys Pay Closing Costs
The closing costs vary based on the valuation of the property. The fees include:
Municipal Tax: 1% of the deed price (depending on municipality)
Property Registration Fee: 1% of the deed price or 1% of the appraisal performed by the municipality, whichever is greater.
Legal Fees: minimum 1 and up to 1.5% of the purchase price plus between $100 -$250 government agency related costs
Transfer Tax: Based on the deed price and the tax assessment, whichever is higher. The government will perform a survey and assess a value after closing. The transfer tax is then applied based on the greater of the two numbers. The tax rate is:
1% for properties under $50,000
2% for properties between $50,000 and $100,000
3% between $100,000 and $200,000
4% between $200,000 and $300,000
5% between $300,000 and $400,000
6% between $400,000 and $500,000
7% over $500,000
An important note is that the assessment is performed after the closing. So the attorneys will estimate the closing costs based on government information, but there my be variations
Real Estate Commission: By custom these are paid by the seller and already included in the sales price of listed properties. Hence the buyer is responsible for the above expenses, the seller responsible for the commissions. In most cases they are fairly equal, creating a modicum of equality in expenditures borne by both parties.
Notes and Exceptions tot the above:
Unless the property is held in a corporation - If the property is held in a corp you can buy the shares and avoid the transfer tax, municipal tax, and property registration fee. Just pay legal fees and closing costs below. See the article on corporations here. *Note this is changing. Contact me for more on this as it is ongoing.
If the property has physical, non-fixed assets - Many properties here come furnished, and sometimes with goods such as appliances, electronics, pool systems and sometimes vehicles. These non-fixed assets are not subject to the real estate transfer tax. We can discuss options for minimizing the transfer tax with a dual deeds reflecting the non-fixed assets. Contact me for more.
11) Settlement of Expenses
Escrow Service: A little over 0.5% of the purchase price. If closing is carried out by the same law firm, you get a usually get a discount of the 50% on the escrow fee.
Translation Fees: Varies on the document needs of the buyer
Power of Attorney: $50 to $100 depending on the law firm
Survey and Cadastral Certificates: Between $150 to $250 depending on the surveyor and size of lot
Wire Fees: They are applied when wiring money to Nicaragua, varying from $25 to $100, depending on the bank and the amount of the transfer
12) Registering the Property
The final steps to complete the purchase process can only be completed once the contracts have been signed and the property has been paid for. Your lawyer and realtor will complete those steps over the coming months. Usually it takes 90 days, post closing, for your property to be duly registered with all of the government agencies in Nicaragua.
I like to make clear hat you are the legal owner of the property on closing day. You own it outright.
The registration process undertaken by the attorney, as part of their fees, is just the sequential registration of the sale with he various government institutions.
13) List of Important Documents
Escritura: The deed. Here in Nicaragua the escritura is equivalent to the title or deed in other countries. It demonstrates who holds legal ownership of the property.
Plano: The plot map. It is a physical map that shows the boundaries of the land.
Solvencia Municipal: Municipal solvency. This document shows that the property taxes are up to date.
Libertad de Gravamen: Certificate of no liens. This document shows that the property has no liens, outstanding loans or other encumbrances
Historia Registral: This document shows the public history of the land for the previous thirty years.
Promesa De Venta: Promise of sale. If there is seller-financing this document secures the property and defines the terms of payment and schedule.
Certificate of No Objections: Relevant to properties with proximity to the ocean as mentioned above
14) Other Terms to Know
Catastral: Office where the plano is kept (measurements, physical description) and the official ma with your name(s) is registered
Registro Publico de Propiedad: Public real estate registry. Office where equal copy of the Escritura is kept
DGI (equivalent tot he IRS or Canada’s CRA): Institution responsible of assessing the sales tax on the property
Impuesto de Bienes y Inmuebles: Annual real estate tax. Typically around 0.8% of value of the property. If this is paid before March of each year there is a 10% discount
HOA: Homeowners Association Fee. If you are buying in a private development there will usually be a monthly fee to cover road maintenance, and possibly security and utility services. Check with your agent to compare fees and services to and determine which development is right for you.
You can learn more about the communities and fees in the articles about the popular communities in around San Juan Del Sur here:
Bonus Information:
Many people moving to Nicaragua are able to dramatically reduce their tax burdens in their home countries. Circumstances depend on their nationality, source of income, and a number of other factors. These can be dramatic savings, given the territorial tax system of Nicaragua.
There is an article on my, admittedly, neglected side blog on it: Why More People Should Consider Moving Abroad For Financial and Personal Freedom
We offer services that help structure international corporate formation, bank accounts, and holistic structures for many people. Especially that those that work remotely. You can see more on that here: https://www.lifeinnica.com/blog/Panamanian-corporations
We offer services that help structure international corporate formation, bank accounts, and holistic structures for many people. Especially that those that work remotely. You can see more on that here: Panama Corporations for Business Banking, Tax and Crypto
It is not for everyone, and often requires bespoke planning, depending on your situation. However, check out the article and reach out to me if it seems like moving abroad can provide a significant tax savings. For many people working remotely, we can reduce their overall tax burden to 5% using a combination of structures. My consulting services can be of assistance in this regard.
Feeling Overwhelmed?
Don't worry, this is what we’re here for. My job is to help you navigate the process and ensure you are comfortable every step of the way.
My team is here to support you, and our efforts go beyond just finding you the perfect property. With decades of combined experience in the local market we will put our expertise to work for you today.
Want to know more?
Get in touch with me today, I love to help people invest in Nicaragua, and make the move down here. You can contact me any of the ways listed below. I try to respond to most messages within 48 hours.
Thanks for reading, hope this was helpful!
Contact me for more information!
Joel Stott-Jess
Cell / WhatsApp: (+505) 8176 8624
US Number: +1 786 753 8743
Skype: joelstottjess
Joel Stott-Jess is a New York Times featured agent / broker in San Juan Del Sur.
Originally from Alberta, Canada he has been doing business in Nicaragua since 2014.
An investment consultant, serial entrepreneur, surfer, and outdoor enthusiast he is an expert on the real estate and business markets in Nicaragua. He also operates The Central Investor, a real estate and investment blog focused on the entire Central American region.
Thanks to his lovely Nicaraguan wife, a medical doctor, he is also well informed on health care services in the country.