2 New Rules For Buying, Registering Property
Purchasing property in Nicaragua is simple and safe, if the buyer follows all the correct steps.
The first step, as we have mentioned in previous columns, is to always carry out a title search to know the current legal status and history of the property.
Once a buyer has decided to buy a piece property, the next step is to get a notary to authorize a public purchase deed, in which the seller agrees to sell the property to the buyer and the buyer agrees to purchase the property from the seller.
The purchase deed has to be registered at the Public Registry under the new owner’s name (buyer’s name); this is the stage that we call the “registration process.”
It is in this stage where buyers have to watch out for two new rules in order to avoid any potential problems for the registration of the property.
The first thing that a buyer has to know is that if he or she is purchasing property through a corporation, the corporation must first have a valid tax certificate to obtain the cadastral appraisal for the property, according to new regulations issued by the Tax Office. This means that, unlike before, when a buyer had only to register the corporation at the Public Registry in order to successfully register the purchased property under the corporation’s name, now the buyer must first register the corporation at the Public Registry and the Tax Office to receive a tax identification number (Tax ID).
The Tax ID is now required by the Tax Office for every corporation that purchases a piece of property.
If your corporation doesn’t have a Tax ID, then the buyer is guaranteed to have problems when requesting the cadastral appraisal certificate needed for the payment of the transfer tax and registration of the purchase deed at the Public Registry.
The second thing buyers must know when purchasing property (especially in the area of Rivas) is that some municipalities are requesting the payment of the municipality income tax, which is 1% of the purchase value of the property. Without the receipt indicating that the buyer has already paid this tax, the Public Registry will not admit the purchase deed for registration.
This tax is not being required by all municipalities in the country, but that doesn’t mean that it is an illegal tax – under the Law of Municipalities, each municipality can determine whether or not to charge this tax.
So these are the two new rules that the authorities are implementing for the purchase of property. If the buyer complies with them and follows the process, he or she should not have any trouble purchasing legally titled property and registering it properly.
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