Country Buying Guides - Nicaragua

The conveyancing process

• Independent Lawyer
It is essential to use an independent solicitor with a legal knowledge of both the English and Nicaraguan legal systems, who are able to translate the documents and explain the terms to your full understanding.

• Due Diligence
It is important to carry out due diligence on the property you are purchasing in order to ensure there are no encumbrances on the property and that Title Deeds and such are in order. Your independent solicitor will do this on your behalf and as you will see below this process is especially important within Nicaragua.

• Who Can Purchase
Foreigners have the right to own property and to establish business as they wish in Nicaragua. Foreigners are allowed 100%* ownership with equal rights under the law. Most purchases are cash transactions with the buyer and seller directly negotiating

• The Title
The lack of clear title on some properties, both urban and rural, can be a major issue for investors. Buyers should exercise great care when purchasing. Title may be unclear as many properties were confiscated illegally in the 1980s. Properties that have agrarian reform titles, or supplemental titles issued by court order, should be avoided. It is imperative that appoint an independent expert solicitor who will perform the searches for you.

• The Promise Of Sale
The property purchase process starts with the offer being verbally accepted by the buyer. If a promise of sale is made, there is a non-refundable deposit of normally between 5%*-15%* paid to the seller, and the remaining time scales are arranged. The whole process of registering a property can take around 65 days.

• The Free of Lien document
Your lawyer will request the Free of Lien document from the Public Registry Office. It should show any impediment to the sale (such as previous promises of sale, mortgages, pending legal cases, etc.), and the name of the real owner.

• The new Title Deed
Once your lawyer has checked this paper, a new Title Deed will be drawn up showing you as the new owner. Both parties must then sign this document, and should be witnessed. It is common for a Power of Attorney to be used in order to save you the expense of flying out to sign a document. The seller should provide his Tax ID Number, Land Registry Certificate, Land Registry Survey, Power of Attorney, 1%* Withholding tax and Verification that all taxes have been paid to date. At the same time the money for the purchase of the property should be transferred from the buyer to the seller.

• Registration
Once these steps have been completed your lawyer will register the property in your name. Following this, the lawyer will take the necessary steps to have the property registered in the buyer’s name. The Cadastral Office will value the property. You will then have to pay 4%* of this assessed value to the Revenue Office as payment of Transfer Tax. There is also a registration fee of 0.5%* of the assessed value payable to the Public Registry. Payment of this Registration Fee ensures that the property is registered in your name. It is once you have been registered as owner that you legally own the property.

• Taxes & Costs
After payment of the transfer tax and registration fee mentioned above, the other main cost you will have to bear is that of the legal fees.

• Inheritance
Most foreign legal systems’ inheritance law is different to our system, hence it is extremely important to use your independent lawyer to help you make a will so that in the unfortunate event of your passing, your wishes and not the word of the law is followed.

In Assocation With The International Property Law Centre LLP