Attorney in Costa Rica

How can I sell or buy a car in Costa Rica? Notarized car transfers.

Car rentals in Costa Rica, are expensive, so it´s a good idea to buy your own vehicle.  So you want to buy or sell a car?  Buying or selling a vehicle differs from doing so in Canada or the United States.  You should know, that just as real estate properties, cars are also registered, to their owners in the Public Registry of Costa Rica.  A car transaction will likewise need the services of a Notary Public.  So when buying or selling a car, it´s necessary to have a notary public, and do a summarized due diligence study on the vehicle.  

You should know that vehicle deeds don´t circulate like a check.  You can’t sell or buy a car by endorsing the car´s deed”, like in many other countries. Car deeds in Costa Rica, are for proving ownership only, but not for selling the vehicle itself.  To transfer your car to another person, you must hire the services of a notary public, and a public scripture must be drafted and signed, to transfer the vehicle´s ownership to you, or a corporation of your choosing.  

Selling or buying a vehicle in Costa Rica. Types of Transfers:

We are talking about vehicle transfers.  There are two ways in Costa Rica to transfer your vehicle: through a car sale or a vehicle donation.  In both cases, both parties must hire a notary public.  The attorney will draft the transfer scripture, which both the seller and buyer must agree to and sign.  

 

Transfer a car in Costa Rica

Buying or selling a car in Costa Rica. Due diligence:

Buying a car in Costa Rica, carries the same work as purchasing real estate.  It´s important to have your attorney perform a summary due diligence study on the car you wish to purchase.  It begins in the Public Registry by looking to see if the vehicle is free of encumbrances, such as liens or judicial embargoes.  It´s essential to ascertain the vin and chassis number of the car, and who is the current owner of the vehicle, according to the Registry.   

Every car in Costa Rica must pay a yearly tax, called “Marchamo”, in order to circulate. So it´s important to check that it has been paid.  Non compliance will make the Public Registry reject the car transfer deed. To buy a car in Costa Rica, checking that the annual mechanic evaluation has been passed is essential.  This annual mechanic evaluation, or “Revisión Técnica”, is carried out in various DEKRA Stations, across the country.  If the marchamo is not paid in time, or you miss out on the technical revisions by Dekra, you may be fined by transit offices in Costa Rica.

 

I want to sell a car. How can I determine the car's fiscal value, for tax purposes?

If you wish to sell your car, and you are unsure about its fiscal value, all you have to do is log into the Public Registry or have your attorney do it for you. Once you access the corresponding site with the plate number, you can ascertain the vehicle’s information.  The Registry will certify all important information, such as who owns the vehicle, its fiscal value, and important characteristics.  It also tells us if the car has encumbrances or judicial annotations.  This is extremely important information, whether you wish to buy or sell a vehicle in Costa Rica.

buy a car in Costa Rica

Buying or selling a car in Costa Rica: The notarized paperwork.

You found the car that you wish to buy, and due diligence was performed on the vehicle.  A sale price was negotiated, and you are ready to go with the seller, to the public notary´s office.  You arrive at the notary public´s law firm,  and the public scripture is read aloud.  Both you, as the buyer and the seller must sign the scripture, which is the notarized sales contract.  This is done in a public scripture, in a notarized fashion.  Once you employ the notary and sign the paperwork, the notary public will register the copy of the public scripture in the Public Registry.  He will need to pay the taxes and associated costs.  The Registry will then proceed with the registration process.  The car will be successfully transferred to the new owner if no defects exist in the notarized paperwork.

Closing costs associated with buying a car in Costa Rica:

Besides legal fees, vehicle transfers pay 3.5% in taxes and registration expenses. This tax rate will always be based on either the vehicle sales price or the fiscal value of the car, whichever is the highest.  These moneys must be paid to the public notary, at the moment of the car sale closing, so that he may pay the corresponding amounts, when he files the paperwork at the Public Registry.  

I wish to buy a car in Costa Rica. What can you recommend?

If you wish to buy a car and you need help finding where to look, there are interesting options online.  You can search for a car from a seller on Auto Finanzas.  Once you find the vehicle you wish to buy, have it inspected by a mechanic, and hire an attorney/notary public to help you with the transfer.  You should also consider setting up a corporation in Costa Rica to act as a holding company for the asset.  This has several advantages, especially for expensive vehicles.  If not,   have it in your name.  Your attorney must also perform a small due diligence check to ascertain that the car has no legal responsibilities or liens.  

 

Should I sell my car or donate it? What is the difference?

A sale is an onerous contract.  A sale is legally perfected when the seller and buyer agree to sell and buy a car.  An essential element in a sale is the agreement on a price.   A donation, on the other hand, has no price.  The person who receives the donation is not paying for the transfer.  In both cases, however, you still have to pay the notary´s legal fees and the transfer taxes and registry costs.  If you sell your car for more than US$10,000 (ten thousand dollars), the banks will require you to show the origin of the funds.  You should request a copy of the public scripture, to the notary public that did the transfer to show to the banks.

Are there other ways to own and transfer vehicles in Costa Rica?

A popular way to own a vehicle is to put it in the name of a corporation.  When you wish to sell a car, you only have to transfer the corporation’s shares to the buyer.  You will avoid paying high legal fees, car transfer taxes, and registry costs.  Another option is to simply lease a vehicle.  The monthly payments are even tax deductible if you use the car for your work.   You can also rent a vehicle and have the rental payments as tax-deductible.   

Any more legal advice when purchasing a car in Costa Rica?

Avoid scams by remembering that a vehicle purchase in Costa Rica requires a notary public. You can consult with me for vehicle due diligence. We will revise the circulation rights and property title. Remember to see if the circulation rights (marchamo) are paid for the corresponding year and that the technical revisions are up to date with Dekra.     

Contact us to help you buy or sell a car in Costa Rica in any province: San José, Heredia, Cartago, Alajuela, Limón, Puntarenas and Guanacaste.   

Dr. Christopher Pirie Gil.

Attorney in San José, Costa Rica.

Contact us to buy or sell a car in Costa Rica.