Real Estate Taxes

Real estate taxes are 1% of value of the property and are paid to the Municipal Government. Property values are usually dramatically undervalued at the time of sale, to ensure lower tax rates.

Farmland of up to 30 manzanas (42.6 hectares) is exempted from real estate taxes.

Home Insurance

U.S. title insurance agency First American Title is the only U.S. firm that offers U.S. title insurance in Nicaragua. www.firstam.com, toll free (887) 641-6767

Special Considerations for Buying Rural Beach Properties

The agrarian reform efforts of the Sandinista government have confused the issue of land title in much of the rural Pacific of Nicaragua.

When buying property near the beach, it is imperative to find a reputable real-estate agency and lawyer to make sure the property you buy is cleanly titled.

There are two types of titles: possession (escritura positorio) and domain (escritura publica). People who are occupying a land may only have a title of possession, but not own the original deed to the land. This means there could be someone else who also claims to own the land.

When purchasing land, you want to make sure to purchase the title of domain, or escritura publica. A lawyer and real estate agent can help you sort out which title is which, to make sure you don’t buy a property from one seller only to find out a year later someone else also claims to own the same land.

Most properties on the coast also have tricky catastro numbers, which means the property’s boundaries are not properly registered. Investigate these issues before handing over money to the seller.

Special Considerations for Buying Property in Granada

Many old colonial homes in Granada need major renovation work before moving in. This includes new roofs, new electrical wiring and new interior walls. In some cases, just about everything must be gutted and rebuilt, as previous owners have not had the funds to keep up with maintenance, and some of the homes are built with 150-year-old adobe (60% of Granada’s Historical Center is built with adobe).

In the case of real fixer-ups, the rule of thumb is that you will have to invest upwards of 70% of the sticker price of the home into remodeling before you can move in. So a $65,000 home (of which there are few left) might need an additional $30,000 to $50,000 in major renovations and construction before it is ready to live in, or resold for a profit. This (plus the headache and time spend remodeling) should be considered when you are deciding on buying a fixer-up, versus a $160,000 remodeled colonial that is ready to move into.

Also, Granada has as strict building code to preserve its colonial scheme. The city is divided into two sections: Historical Center and area of Special Consideration – and each area has a different building code.

For example, in most homes near the city’s colonial center, the front of the home or building cannot be altered in any way. Roofs must be tiled, the front courtyard may not be altered architecturally, and restrictions may exist on building a second story. And at least 30% of the property must be left as open courtyard, which means don’t expect to move in and turn the whole area into different rooms. Usually, major renovations, including putting in a pool, must be restricted to the second courtyard area.

In all cases, all plans to construct and remodel must be approved by the city’s architect, who works out of the municipal building in front of the Central Park. You are wise to get a Nicaraguan contractor or lawyer to get your building permits approved. Showing your gringo face in the office is a good way to ensure you will get screwed every step of the way.

Fines for “illegal” construction are common, but the municipal government usually will not force you change your plans after they are done. Some contractors here view the fines as an added building expense, and do whatever they want, even if they don’t have the permits. If you do this, however, you risk facing work­stop orders. The building codes exist to preserve the colonial feel of the city, and the town architect warns foreign buyers that they probably won’t be able to buy a home in the colonial sector and turn it into a U.S.-styled house. Buying a home here means playing by the regulations. The town is trying to enforce these regulations more than ever.