Real Estate Purchase Advice from Nicaraguan Lawyer

The following information was written by Paul Tiffer, a Nicaraguan lawyer that many NL members have used. I did some minor editing on the document (we agree that my English is better than his and his knowledge of Nicaraguan laws is better than mine) but this is essentially his words. Personally, I agree 100% with what he has to say.

At the present time there are many people interested in Nicaragua, they are coming both for holidays and to live, as a retired person or to a run business and make a living in Nicaragua. In any case the new "Nicaraguan residents and friends" need to buy a property. It can be: a beach house, a city house, a lot, a farm, etc. In my practice I have worked with many people--some American, Canadian or British--involved in long and scary stories with their seller, real estate agency and, the worst and most common, with their Lawyer, usually referred by another friend.

Before you make any purchase or sign any contract, it is important to know the Nicaraguan legal system, the properties problems, and the Notary System too. I have seen the most incredible contracts, specially prepared by a foreigner Real Estate Agent, who looks very confident, taking into consideration their are foreigners too.

If you are going to buy a property it is imperative you know that all the properties contracts (Sale and Purchase or Promise of Sell), must be done by a Notarized Contract. In Nicaragua, Attorneys at Law are Lawyers and Notaries, for that reason a specialized Attorney at Law is imperative, especially a bilingual one if you don't speak Spanish or are you not are able to read a Legal Contract of Sale and Purchase. I say this because I have seen many contracts in English, on ordinary paper rather than that required for Nicaraguan legal documents and, in some cases, with references to the laws of another country, ex: "will be governed by Panamanian legislation". That's an illegal contract; if you go to court to try to start a lawsuit against the seller it is not going to be considered a legal contract and you will be in big trouble.

In another case, I saw a contract between a foreigner real estate agent and an European investor who were buying a nice lot in San Juan del Sur, in the Private "Contract of Sale". There were clauses asking to start to do the negotiation charging a percentage of the price, signed just for the "buyers and the real state agent", without offering any legal document, and asking for another amount of money in a short time, to continue the negotiation. In that specific case, the Europeans paid the five percent, and returned from their nice vacations to Europe, and trusted the wonderful purchase will be happening. The property has a Mortgage and a Lawsuit from the neighbor who is fighting for more area to their property. My European friend needed four months to get the down payment, and there were lucky.

It is always absolutely necessary to check the History Certificate, Link Certificate, Municipal Solvent, and if it is possible to do a new blueprint to confirm exactly what you are buying. A good handshake isn't enough.

Last but not least, do not send money to anybody without proof of the reason. Even though you may feel your Attorney at Law is a trustworthy person and they ask for money to pay for a purchase or taxes on your behalf. For example: In Leon some clients from Europe sent five thousand US dollars to their Lawyer to pay some taxes in their name, without any paper--in Nicaragua email are not proof in Court--so he takes the money to resolve a "family problem". Finally, and after some nightmares, and almost a heart attack, they push him to sign an IOU on my advice. Today they have recovered the money but this same Lawyer takes one thousand dollars to do the registration of some property bought for an American and later said it was a part of his fees, and did not pay the taxes. An escrow account is what should be used in this case.

My advice is do not be in a hurry and do not allow pressure from the Seller or Real Estate Agent to sway your decisions. Look for professional legal assistance from the beginning in Nicaragua. Before falling in in love of a property it is imperative to be sure of the legality.

Paul Tiffer

ptiffer@cablenet.com.ni

Web link