Your guide to investing safely in property in Nicaragua

by cbnicaragua on February 28, 2010

As you navigate the Nicaragua real estate market you’ll notice that on the surface the market works in the same way as it does back home. The terminology is the alike; you’ll find brokers, title insurance analysts, attorneys, surveyors, property registration – but dig a little deeper and you’ll notice some important differences.

First, don’t expect to be able to walk into a broker’s office, specify your requirements and receive a list of all properties on the market that fit. The reason this is not possible is because there is no Multiple Listing Service (MLS) or central database of properties for sale. So if you want to make sure you see everything there is on the market, be prepared to tour with every broker in your target area.

You’ll be hard pressed to find reliable market comps. Official property statistics are not published and there is no way of knowing how many properties are on the market, how long they have been on the market, how many sold in a particular period, or what they sold for. You’ll have to rely on asking prices and websites that aggregate international real estate data in order to try and get an understanding of value. Not ideal, but a good start.

In Nicaragua you are required to be in the country at the time of closing. (More precisely you have to be in front of a Nicaraguan attorney, so your attorney could travel to where you are). So in practice, most buyers either plan to be in the country or leave a power of attorney with a trusted individual in Nicaragua to sign on their behalf.

Make title insurance a requirement. Although the law in Nicaragua does not require title insurance, it’s a good extra step to take. The process of obtaining title insurance will require your attorney to examine the title history in detail so you can be more confident that any issues or encumbrances are brought to your notice. In addition, unless you are fluent in Spanish, make sure your attorney speaks English. The contracts you will be signing are in Spanish so you’ll want to get these translated before signing.

Some developers will recommend that you use their lawyer for the closing process. This is often cheaper than contracting your own lawyer but may mean that you don’t receive the independent guidance that you need. Also it is not prudent to leave your deposit directly with the seller. This is customary in Nicaragua, but we don’t recommend it. Far better to leave your deposit with a third party such as your real estate agent or lawyer.

Don’t assume you can finance your real estate purchase in Nicaragua. You’ll find the financing offerings from local banks to be less competitive to those in the US, and the process very bureaucratic. Most buyers still pay in cash or negotiate seller financing. The number of developers and owners who will seller finance is growing rapidly, so don’t hesitate to ask.

Right now buyers are in the driving seat when it comes to purchasing real estate in Nicaragua. Negotiate hard, do your legwork, take your time to understand how the market works, and you may find yourself in front of an opportunity of a lifetime.

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