Ownership Issues

Ownership Issues in Nicaragua

Property ownership in Nicaragua is fee simple/freehold, with title issued and registered in your name. If you are familiar with real estate affairs in Nicaragua (and speak fluent Spanish) you could buy directly from the local farmer or property owner. However, it is strongly recommended that you enlist the help of a reputable local attorney. Property titles all over the country are in dispute. An experienced attorney can trace title of the property that interests you to ensure it is not contested.

When inquiring about a property for sale, the first question to ask is whether the seller truly owns the property. If you’re interested in a property for which the title is not clear, we advise you to move on. Disputes can involve many parties and drag on for years. Unpaid, back taxes may apply to properties being sold now...so you’re better off investing in a property for which the title is free and clear, the taxes are paid, and the ownership can be yours without contest. Also, it has happened that people have sold, or tried to sell, land that they didn’t actually own. Therefore, it is imperative to have an experienced attorney on your side--one that is familiar with Nicaraguan real estate law. The risks can’t be dismissed, but buying here is generally straightforward (and profitable) once you go through the proper channels.

Pay extra attention to land that is part of the Autonomous Regions of RAAN and RAAS (Regiones Autonomistas--Atlantico Norte and Atlantico Sur). The Autonomy Law requires the government to consult indigenous people regarding their area resources. Make sure to hire an attorney that understands the autonomous regions to help with title clearance.

Until 1999, you couldn't buy title insurance in Nicaragua. Now you can, through First American Title Insurance. It will make your investment here (particularly in the Corn Islands, where the real estate market is in its infancy) that much more secure. You buy the policy in the U.S., Canada, or the U.K., and its coverages are interpreted under the laws of the country where you purchase the policy.

When you’re buying in Nicaragua, we recommend that you make your offer subject to the ability to secure a title insurance policy. Some developers already have title insurance, which is generally a good indication that you won’t have any difficulty. You should always ask to see a developer’s master policy. But, remember, to protect your own property, you will need your own policy.

Title insurance ensures that your new property will indeed belong to you, and that you are protected against future claims on the property related to past matters. It generally costs 0.5% of the purchase price, or a minimum fee ($1,000). You can purchase title insurance after a property is in your name, but we recommend you contact a title insurance company before you buy your home or land. We recommend First American Title Insurance.

First American Title Insurance offers its international policy of title insurance through its international underwriting office in Sunrise, Fla. There are several advantages in obtaining title insurance on land in Latin America and the Caribbean through the international policy. For example, the policy is in English, in U.S. dollars, and with claims made directly to First American in the U.S. The international policy is very similar to those issued by First American in the U.S. It covers the vesting of title and against hidden defects. First American also insures access to the property and that the real property taxes are paid up to date. Obtaining an extended coverage policy is optional.

There are two costs for an international policy. The first is the attorney fee for the title opinion. The second cost is the title insurance premium. The standard cost for a policy is $5 per thousand with a minimum premium of $1,000. Thus, you can get up to $200,000 worth of coverage for the minimum premium of $1,000.

In addition, First American offers escrow services, in which it acts as a neutral disbursing agent between buyers and sellers on a particular real property transaction and disburses following instructions from both parties. Funds deposited are held in a non-interest-bearing bank account, FDIC insured, and are typically disbursed via wire transfer.

For more information, contact Turalu “Tuey” Brady Murdock, vice-president/counsel:

First American Title Insurance Co.
Latin America/Caribbean Operations
International Division
13450 W. Sunrise Blvd., Suite 300
Sunrise, FL 33323
Tel: (954) 839-2900, ext. 188
Toll-free: (877) 641-6767
Fax: (954) 838-9228
E-mail: tmurdock@firstam.com
Website: www.firstam.com