Yes You Can Get Cheated Buying Real Estate In Nicaragua

A rule of thumb in marketing goods or services is that you focus on the positive while avoiding any negative aspects. If there are negatives they’re included in a disclaimer written in tiny text at the bottom of the page. In the case of TV or radio, disclaimer are spoken so quickly no one grasps what’s being said. This rule of thumb is especially relevant in the real estate industry. However, I have no choice but to shine a light on the negative aspects of purchasing Nicaraguan real estate to educate those who may be considering making the move to this tropical paradise..

The plain and simple truth is… there’s a good chance someone will try to cheat, overcharged, or under serve you during the real estate purchasing process. Due to the nature of Nicaragua real estate laws, there’s no such thing as a real estate brokerage as a North American or European would understand the term to mean. “Real Estate Agents” are not regulated and are licensed the same as a merchant in the Mercado selling batteries, produce, or hand crafts.

The most glaring difference between Nicaraguan real estate transactions and what most foreigners expect is that the price being asked by a “Realtor” is over and above what the seller seeks to receive. This means that selling commissions and probably more are added to the amount the seller wants. Together these amounts total the “asking price”. I personally know of properties being advertised for double what the seller is actually willing to sell the property for.

There is also no such thing as a “real estate listing” as it’s known in North America or Europe. Owners seeking to sell their property will allow a real estate agent to sell it provided the sellers get what they want. The seller will also employ the services of friends, family members, co-workers and outright hucksters to sell their property. It’s perfectly legal to do so, and the owner is only bound by a “listing agreement” if he or she has entered into a contract expressly stating that the selling agent has sole rights to sell their property. Such agreements do exist I assume, but they’d be official documents, written on official stationary by a lawyer, and registered with the court. That said, I do not personally know of any Nicaraguan national agreeing to enter into an exclusive listing agreement. Since 90+% of real estate on the market in Nicaragua is owned by Nicaraguans, or Nicaraguan corporations, it’s best to assume no exclusivity has been granted, no matter what you are told.

It’s accepted by North Americans and Europeans that a property survey and title registered at a federal land registry or municipal taxation agency will be accurate. In Nicaragua such an assumption may prove ill advised. I have been involved in real estate transactions that had significant discrepancies between the stated boundaries in the title and the official survey. Such discrepancies are correctable, but to rectify them is a time consuming, and sometimes costly undertaking. So it is best to identify issues before being bound to a purchase agreement. I advise making the resolution of encroachments, meets and bounds discrepancies, or inaccuracies in the title documentation, including misspellings and typo errors, the responsibility of the seller.

There is no Multiple Listing Service (MLS) in Nicaragua, nor any other similar service. Thus there’s no reliably way to calculate what comparable properties have sold for, nor how long they were on the market. Ironically there are appraisal firms that assess the value of a property. I’ve retained a number of them to secure bank financing and none have ever satisfied me that the values applied have relevance to any other factor than what the sale price is. So even if someone provides an appraisal, the true value is what someone is willing to pay from the property and the seller is willing to accept.

I talk to dozens of people each month who have tales of horror to tell. They’re generally people seeking my help to recover their money or get title to a property they’d already paid for. Often I have to be the bearer of bad news, but I shouldn’t have to be. Caveat Emptor, Latin for ‘buyer beware’, is as applicable in Nicaragua as it is anywhere.

For sure Nicaragua has real estate title issues. However, most of those stem from the time when the US backed Somoza dictatorial dynasty and their cronies were sent packing have been settled. What remains problematic are older holdings that have been handed down through generations. It is necessary to have everyone with any claim on title sign off on a transfer, otherwise the purchaser may find their ownership contested. Claims can included multiple family members, some of which may no longer be living. In such cases heirs who many not even know they share ownership in a property would have a claim, or a family estate may. Also claims on title may include tax authorities, utility companies, and occasionally creditors. The document required to identify claims on title is the “certificato de Gaveman”. For my clients I always have the title searched and recommend anyone interested in a property do the same.

In conclusion, it has to be stressed that the tales of horror told by people investing in Nicaragua real estate generally share one underlying fact the tellers of such tales fails to share. That is that the purchaser did not perform their due diligence or have someone do so on their behalf. There are still bargains to be found for investors in Nicaragua real estate, but not every property is a bargain no matter how cheaply it is priced. Be cautious, ask questions, and by all means hire a knowledgeable consultant and/or lawyer.