Legal basis for investing and owning

There are no restrictions on foreigners owning property and running business in Nicaragua. Law 344 establishes equal treatment of foreign and domestic investment; eliminates restrictions on the way in which foreign capital can enter the country; and recognizes a foreign investor's right to own and use property without limitation.

Residents may hold foreign exchange accounts but non-residents only if they have approved immigration status.  Foreign companies owning Nicaragua real estate need to be registered locally and local regulations apply.

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Types of property ownership

The majority of property for sale in Nicaragua has a fee simple (freehold) title. There is leasehold property for sale, although this makes up a small proportion of total sales of Nicaragua real estate in the country.  Some Nicaragua real esate is held as titulo suppletorio (providing rights of possession). In many cases it is possible to rectify possession title to freehold (fee simple) ownership but the process is cumbersome and long-winded.

A new Coastal Law was approved in June 2009 by the National Assembly.  It provides a solid framework for managing the development of Nicaragua’s coastline and puts in place strong measures for protecting private property ownership.  The public zone has been defined as 50m from the median high tide mark.

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Purchasing and registering property

All Nicaragua real estate purchases must be witnessed by a local attorney and notary public. (In Nicaragua, attorneys are also notary publics)  The legal due diligence involves reviewing the escritura publica (public deed); libertad de gravaman (document showing absence of liens and encumbrances); solvencia municipal (document showing the state of taxes on the property) as well as any additional terms and conditions of the contract of sale.  For certain transactions a technical due diligence runs in parallel and considers (for example) boundaries and topography, water availability, energy availability, analysis of permissions and permits, highest and best use studies, Nicaragua real estate market studies. 

Once the due diligence periods have been completed and the property is cleared for sale, the closing is scheduled.  At the closing a new public deed is drawn and signed by both seller and buyer (or person with power of attorney for either party) in front of a notary public.  At the same time funds for the purchase of the property are transferred from the buyer to the seller.

Following the closing, a Catastral Certificate and valuation is obtained at the Catastral office and a property inspection is carried out to assess value.  Transfer taxes are paid and the document obtained from the Catastral office is inserted in the pubic deed.  Property registration takes place at the public registry.

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Closing costs and property taxes

The costs assocated with Nicaragua real estate purchases include transfer tax, registration tax and fee, municipal tax, legal fees, realtor commissions and annual property taxes.

• Transfer tax - 1% of assessed value of the property.  The assessed value is normally less than the market value.  (This tax does not apply if the property is owned by a Nicaraguan corporation and the sales involves a purchase of shares.)


• Registration (or recording) tax and fee - tax of 0.5% of assessed value of the property.  An administrative fee commonly applies.


• Municipal tax - 1% of assessed value of the property.  The assessed value is normally less than the market value.  This municipal tax only applies in certain municipalities such as San Juan del Sur.


• Legal fees (title search, closing and registration) - Between 1-1.5% of purchase price.  (Escrow fees range from US $250-$750.)


• Realtors commission - Between 5-10% of purchase price


• Property taxes - The annual property tax is calculated as 1% of the assessed value of the property. Eligible projects under Nicaragua's tourism incentive law are exempt for up to 10 years.

The Doing business project by The World Bank Group calculated the official costs for registering a property in Nicaragua in 2008 as 3.5% of purchase price, based on a business to business purchase.  The time taken to register a property was found to be 124 days.  Reveal Real Estate has found that Nicaragua real estate investors have experienced additional delays in 2008 when registering properties close to water bodies.

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Title insurance

International Title Insurance is available for Nicaragua real estate.  The policy offered by the main firms afford essentially the same protection as a standard policy in the United States.   There are three main US companies offering title insurance in Nicaragua: First American Title Insurance Company (NYSE-FAF), Stuart (NYSE-STC) and LandAmerica (NYSE-LFG).

First American has been operating in the country for the greatest length of time, has in-depth experience of the Nicaraguan property market, strong local relationships and a network of local attorneys. Many of the major developers have master policies available for inspection.

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