Tag: real estate
I generally take care of the following steps for my clients, whether they’re buyers or sellers. However, I thought I’d share the steps that must be gone through so my clients can appreciate a few of the many formalities I attend to on their behalf. Also I want to be sure anyone wanting to go it alone is properly informed as to the steps required and which party to a transaction is expected to handle which aspects.
These steps are based on the assumption the property is already registered and that there will be no change of use involved. In the case of a property being purchased that is to be subdivided from a larger parcel of land, and a new title created, or the current use of the land is to be changed, additional steps are required.
1. Obtain a Libertad de gravamen (non-encumbrance certificate) from the Registro Público de la Propiedad Inmueble y Mercantil (Land Registry)
The non-encumbrance certificate, or libertad de gravamen, is an official document that shows all the encumbrances that are currently on the property. It also lists all of the owners of the property since its first annotation. The certificate must be obtained by the seller before starting the transaction formally.
A certificado a manera de titulo (Title) is required to apply for the non-encumbrance certificate. A replacement title can be obtained from the registry if the original title has been lost. The cost is NIO 100.
A certificado de historia registral (certificate of historical registration), is a document related to the non-encumbrance certificate. It is a list of all previous transactions related to the property. This document will list transfers and re-registration of the title. This document can obtained at a cost of NIO 100. An additional fee of NIO 50 is required for every additional past transaction listed.
2. Obtain a Solvencia Municipal (tax clearance certificate) from the Municipality. A tax clearance certificate must be obtained by the seller from the municipality. Provided the seller is up to date with tax payments it should take only one day to receive the tax clearance certificate. The fee is NIO 20 to receive the document immediately, or if it is possible to wait until the next business day it is free of charge.
3. Next, a notary must prepare and sign the public deed. A notary public prepares and notarizes the public deed of purchase and sell between seller and buyer. The preparation of the deed is an exclusive act of the notary. The notary will review all past transactions from the record book at the Land Registry using the documents obtained above, and verify the ownership of the property.
Notaries generally estimate their fees for this service based on a percent, which varies between 1.5 and 2% of the property value according to agreement between the parties and notary. Allow 2 days for this phase of the process.
4. Obtain the Cadastre certificate at INETER (National cadastre). INETER is the national cadastre and is in charge of surveying the land and keeping a database on the plots and boundaries. This certificate is necessary to obtain the cadastre valuation at the DGI. This step requires 2 weeks and the fee is NIO 300.
5. Obtain Cadastre valuation at the DGI. Parties to a real estate transaction must obtain the Cadastre Certificate and request a valuation from an inspector. In practice, the Cadastre requires a special power be granted to notaries or any other person when the interested parties cannot themselves manage this procedure. The closest similarity to North American or European proceedures would be the issuing of a limited power of attorney. If the parties can go to the Cadastre themselves, they do not need to grant anyone a special power to act on their behalf. The Cadastre will require the original property title (that of the Seller).
This step in the process requires about 21 days and costs NIO 50 and is paid using Tax Stamps. In cases in which a special power must be granted, the costs rises of course. It will cost about C$ 2,000 in fees for the person who will go to the Cadastre, and C$ 1,000 for the notary who will previously authorize and issue the special power.
6. After the cadastral certificate is obtained, an inspector from the Catastro fiscal – Direccion General de Ingresos will visits property to assess value. Generally it is required to pick up the inspector and drive he or she to the property. It will take the inspector about one week to write the report on the value. The cost is 20 Cordobas and it usually takes from 2 to 3 days for the inspector to have time to inspect the property.
7. Payment of Income/Transfer Tax at the Administracion de Rentas – Direccion General de Ingresos, or Tax Administration Office. This is an agency of the Treasury Ministry. The percent to be paid is established depending on the Cadastre Value. The Cadastre value usually not the same as the market price. For the payment of the transfer taxes, the fiscal authority takes as a base of calculation the highest value between the sale price in the public deed of purchase and Cadastral value. Fees of NIO 4 + 2 stamps of NIO 10 need to be paid to make the payment.
The transfer tax rate of 1% was established by an injunction (“amparo”) declaring the increase of the 2003 Ley de Queda Fiscal unconstitutional. An amendment to the Nicaraguan fiscal law entered into force on January 1st, 2010 (Law 712 published in the official Gazette No. 241 of December 21st 2009), changing the tax according to the following sliding scale, from 1% of the value of the property to the following percentages: 1% for properties with a value between US$1.00 and US$50,000.00, 2% for values between US$50,000.01 and US$100,000.00 and 3% for values above US$100,000.01. According to Article 87 of the new Tax, the property the transfer tax is calculated and paid as follows: 1% for properties with a value between USD1.00 and USD 50,000.00, 2% for values between USD 50,000.01 and USD 100,000.00 and 3% for values between USD 100,000.01 and USD 200,000.00 and 4% for values above USD 200,001. Fees of NIO 4 + 2 stamps of NIO 10 need to be paid to make the payment.
8. Apply for registration of the public deed at the Registro Público de la Propiedad Inmueble y Mercantil. In English Land Registry or Real Estate Registry. Parties file the public deed at the Land Registry for its proper registration. The amount is calculated based on 1% of the cadastral value, with a maximum fee of NIO 30,000. This payment is made directly at the branch of a commercial bank that is located inside the Land Registry Office. The notary applying for registration will charge C$500 as fees. At submission, the request for transfer is recorded, signaling priority rights over the property. The registration of property transfers is very slow and can take longer than 90 days. When finalized, the Land registry will write in the original deed, the book and page where the transfer was recorded. This document is then returned to the notary with all the other certificates provided. The Land registry operates with paper documents. However, the sale deeds are scanned and almost all past records are digitized in Managua. In the rest of the departments in the country, records are not always accessible digitally. Newer transactions (less than 1 year) are not always digitized. Any person can access past deeds with computers at the Land registry at no cost. It is possible to track the status of the deed registration online through the website: www.registropublico.gob.ni/servicios/consultatramite.aspx.
15 days is an expedited procedure. 1% of cadastral value is the registration fee and NIO 500 notary’s fees + 20% of the registration fee for the expedited Procedure.
9. Apply for name change at the Municipal cadastre. The new owner needs to update the records at the municipal cadastre in order to be able to pay the real estate taxes. It should taken only 1 day and there is no cost.
As always, if you have any questions about purchasing, renting or selling real estate in Nicaragua, contact us.