Your Guide to Purchasing Property in Nicaragua

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Angela Riley
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1 Your Guide to Purchasing Property in Nicaragua Let the experts at Aurora Leon Coastal & Colonial Realty guide you through the purchase process.

2 Aurora Leon Mission: Our mission is to promote Northern Nicaragua as a tourism and investment destination and to guiding our clients through a purchase with clear and accurate information as well as exceptional service.

Our History: Aurora Leon Realty was formed in 2006 and we are a part of the Aurora Real Estate Group, which has 4 offices. The three offices are located in Managua, San Juan del Sur, Leon and Granada.

3 Our History: Aurora Leon Realty was formed in 2006 and we are a part of the Aurora Real Estate Group, which has 4 offices. The three offices are located in Managua, San Juan del Sur, Leon and Granada. The first Aurora office was started by Aurora Gurdian Ubago, who, after many years in Miami as a realtor, came back to Nicaragua to open Aurora Realty in Managua. Aurora Realty was opened in 2000 and has been one of the leading agencies in Managua ever since. Our San Juan del Sur office was formed by Julio Lacayo, the son of Aurora Gurdian Ubago, Aram Terry and Zach Lunin in 2004 and we are the largest agency in San Juan del Sur. Our Granada office was opened in 2012 and is owned by Julio Lacayo, Aram Terry and Zach Lunin. Our Leon office was formed by Zach Lunin, Julio Lacayo, Aram Terry and Jordan Clark in 2006 and we are the largest and leading real estate company in Leon and Chinandega and we have the largest database of properties in Northern Nicaragua. All offices work together in promoting the national residential market and the international investment and tourism market. Our Company name and our respected history gives us an advantage with all of our Nicaraguan and international clients. The Aurora group is known as an honest, ethical and professional real estate firm and we take that very seriously.

About 75% of our sales are beach properties.

4 Our Market: The Aurora Leon office sells houses and land in the city of Leon and on all of the beaches north of Managua. About 75% of our sales are beach properties. Our buyers are mainly from the USA and Canada with a small percentage from Europe and Nicaraguan Nationals. Areas we Cover:

5 Leon: Leon is considered one of the major cultural centers of Nicaragua. The flavor and history of Nicaragua is heavily routed and visible in this historical colonial city that also houses the largest population of college students in the country. Leon is the second largest city in the country next to Managua, and the city has seen tremendous growth over the past few years. New restaurants, grocery stores, hotels and other new attractions are all nestled into the beautiful historical colonial homes that give Leon its unique identity. Expats and locals alike have been reviving the historical centers of the city, and are brining new life and energy into a town that has opened its arms to tourist and expats looking for a wonderful place to call home. El Tránsito / Playa Hermosa: The most southern of beach areas that Aurora Leon covers, El Tránsito and Playa Hermosa are up and coming beach towns that are quickly gaining attention. El Tránsito and Playa Hermosa are located equidistant from both Managua and Leon, giving the area the choice of two amazing cities less than an hour away. The area is becoming a major focus of the Nicaraguan Government that has been investing a lot of money on new infrastructure and commercial enterprises that will soon spark new development. The main access road was recently paved, making access to the area quick and easy. The beach area is still quaint and largely underdeveloped, but there are ample ocean views, great beachfront lots and new homes available. This area will is perfect for someone looking to get in on the ground floor.

6 Salinas Grandes: One of the best ground floor opportunities is the Salinas Grandes beach area. With new development just starting to happen, this area will soon become a hot bed of activity. Only 45 minutes to the center of Leon, this quite beach area still offers the conveniences of a major city within a short drive. Salinas Grandes offers a large selection of beachfront land, that is an clean slate to build a dream beach home, or be the first to create a tourist hot spot. Las Penitas / Poneloya: The Las Penitas and Poneloya beach area is one of the first beach towns that developed in Nicaragua. Only 30 Minutes from Leon, this area has been a long time vacation and daytrip hotspot for the residents of Leon. Due to the increased tourism industry that has blossomed in Leon, the area is quickly redeveloping into a tourist hotspot, while still keeping the charm of this old beach town. With beautiful beachfront homes, restaurants, bars and hotels, this area is perfect for someone that is looking for the convenience of a major city only 30 minutes away, as well as great food and bars within walking distance. Aserradores: Aserradores is a large area to the north of the city of Chinandega. Only 25 min to major grocery stores and shopping, Aserradores is another great beach area that is quickly gaining attention of retirees from all over the world. The area is a hub of local fishing and agricultural activity, giving the area a quaint village atmosphere. The area has a diverse topography which

7 allows for large ocean view properties as well as several beachfront areas. The area boast over 5 world class surf spots all within 15 minute drive, great stretches of sandy beaches and tons of activities for all ages. This is a perfect pick for someone looking to be a part of a warm and welcoming Nicaraguan community, with unique ocean view properties with ample space to build a dream home or hobby farm. Property Rights in Nicaragua: In places like Costa Rica and Mexico, an owner does not have fee simple or titled land along the ocean - Property owners have the right to lease the land, or have to put the property in a trust set up by a national bank. This is not the case in Nicaragua. One of the most important differences between property in Nicaragua and other Latin American destinations is foreign (non-native) ownership rights. In Nicaragua, there are absolutely no restrictions on foreigners owning property in the country. Any person can own land outright and fee simple in Nicaragua! Any foreigner or foreign corporation may also own property in Nicaragua. The simplest way to hold property is in your own name however; it is also common to hold it in the name of a Nicaraguan corporation. This entails added costs in monthly tax filing and annual reporting. You can also hold property under a U.S. Corporation, although the legal process is more involved. Escrow Services: Most sellers typically require a 10% deposit in order to hold a property while we perform due diligence (title search and other clauses defined in the Purchase Agreement).

8 Aurora Leon Realty tries not to offer escrow service between buyer and seller. There are very strict laws regarding money laundering in Nicaragua and it represents a risk to us to receive large sums of money for a purchase. In some instances, we can receive the 10% deposit in our company account and the remaining funds for closing will be wired directly to the seller. We also have a working relationship with First American Escrow and the law firm of Garcia and Bodan, both of which will escrow deposit and closing money during the due diligence period for a fee. Steps to Purchasing Property In Nicaragua: 1. Look at properties for sale An Agent from Aurora will be happy to show you as many properties as you like. We cover the entire Northern Coast of Nicaragua. A typical day of looking at beach properties can be from 9 am until 5 pm with up to a 4-hour round trip from one location to another. In these conditions a day of looking at property can represent a significant cost in gas and depreciation to vehicles. For this reason we charge a fee for a Real Estate tour. This fee will be reimbursed if a property is purchased. Fees are as follows and will be paid up front: Tour within Leon = Free Tour to the beaches of Poneloya and Penitas = $35 Any other beaches and up to 2 full days of touring = $90 per day

9 2. Make an offer Aurora Leon Realty introduces you to several properties based on your budget and interests. Once we find the property that best suits you, an Offer to Purchase Agreement will be completed and sent to the seller. Once the terms are agreed upon a 10% deposit will be deposited into the account of the escrow company or into the Aurora Leon bank account. If deemed necessary, we can tie up the property for the due diligence period with a Promise of Sale. 3. Decide which attorney will handle your closing We have list of recommended attorneys that vary in fees, areas of focus and English speaking ability. Your selected attorney will provide you with a quote for his or her services, including a breakdown of the services to be rendered. 4. Create a power of attorney This is an important step of the acquisition process, because without a power of attorney, or your presence for the closing or signing of the promise of sale in Nicaragua, it won t be possible to complete the acquisition of your property. The Power of Attorney can either be given to an Aurora Agent, or to someone else you select who lives in Nicaragua or can easily be present for the promise of sale and the closing. You will need your passport in order to create a power of attorney. This typically costs approximately US $80.00.

10 5. Send the deposit monies and attorney s fees These monies are to be sent via wire transfer, either to the selected escrow account or the account of Aurora Leon. We manage payments to your selected attorney on your behalf. 50% of attorney fees along with 100% of expenses are paid when services commence. The balance is paid when we receive your registered property deed. This payment structure is designed to expedite the property registration process. 6. Perform due diligence specified in the promise of sale or purchase contract The time period for this due diligence is typically 30 days and depends on the time of year and recognized holidays. The title search and legal opinion must be completed by your chosen lawyer during this time period and all necessary tests conducted on the property (e.g., soil tests, water availability, etc.). 7. Send the balance of monies to escrow account or seller Once due diligence has been completed, you will wire the balance of the monies either to an escrow account or directly to the seller. 8. Sign the escritura or compra/venta. Once all monies for the property being purchased are deposited in escrow, a closing will be set for the seller, you or your representative with a Power of Attorney, and the attorney managing the closing. At this meeting, both you or your representative and the seller will sign the Escritura de Compra/Venta document in front of the attorney and a Testimonio will be

11 drafted. If the monies are being sent directly to the buyer, we will sign the Compra/Venta and send the closing wire simultaneously. We always obtain a copy of the Testimonio for your records while your property deed is being registered. This testimony is legal proof of ownership. If you are not present, we will obtain a copy and send it to you either via fax or Registration of the property in your name Your attorney submits the Testimonio document to the Registro office, along with the Carta de No Objección. In order to completely register your property the testimony and property plot map must pass through three government offices (Catastro, Renta and Registro). This process can take up to 1-3 months due to government bureaucracy, but you legally own your property once you sign the Escritura de Compra/Venta which is supported by the testimony that your attorney provides you at Closing. The steps in the registry process are as follows: 1. Your plat map is registered in the mapping and land studies office (Catastro). 2. Then your property is scheduled for physical site evaluation by the DGI (Dirección General de Ingresos, Managua) for appraisal purposes. 3. Taxes based on DGI appraisal are paid at the tax office at the municipal level (Renta). 4. Once acquisition taxes are paid the property is passed on and signed off by the Public Registry Office (Registro), which makes your deed public record. Once registered, the property will be in your name or the name of your company (Nicaraguan or foreign). 10. Enjoy Once we receive your registered deed the process if over and you are property owner in Nicaragua!

12 CLOSING COSTS: Each purchase will have closing costs. They can vary for different cases but below is a general estimate. Lawyer s fees for Public Deed and Legal Opinion: Varies based on Attorney. From $800 to $1500 Transfer Tax: Varies based on purchase price: For purchase price of $0 -$50,000 = 1% $50,000 - $100,000 = 2% $100,000 - $150,000 = 3% $150,000 and up = 4% Registration tax (1% of appraised value with a cap of $1500) Power of Attorney $75 Legal and Due Diligence Expenses (Buffer) $450

13 NICARAGUA PROPERTY TAXES Once you own your property you will be responsible for annual property taxes (the I.B.I or Impuestos de Bienes Inmuebles). This is paid to the local municipality. The amount is 1% of the assessed value given to your property by the DGI (Dirección General de Ingresos). The assessed value of the property is set each year and will be amended following any improvements made. Taxes are paid in arrears each year by March 31. If paid before March 31 certain discounts may apply. Assessed values tend to be less than market value. We offer an annual service to pay your taxes for you. AURORA PROPERTY MANAGEMENT SERVICES After your purchase Aurora Leon can help to manage your property. We can hire and manage a caretaker, pay your utilities, help with construction and repair projects and also help to promote your house as a vacation rental. The details of those services are included in the Vacation Rental and Property management package.

COSTA RICA REAL ESTATE FREQUENTLY ASKED QUESTIONS (FAQs)

COSTA RICA REAL ESTATE FREQUENTLY ASKED QUESTIONS (FAQs) Disclaimer: The following questions are a collection of real questions formulated to GLC over the years which we believe represent some of the most