Real Estate Law in Nicaragua

In Nicaragua, ownership over real estate can be obtained through one of the following methods regulated in the Civil Code (CC): (i) transfer; (ii) inheritance; (iii) accession; and (iv) adverse possession.

Under the Nicaraguan legal framework, the creation, transfer, and modification of rights over real estate must be executed through a public deed before a notary public and must be registered with the real estate registry of the corresponding location.

Before the execution of the public deed, the notary public conducts due diligence, which includes obtaining the certificate of title issued by the real estate registry to prove ownership and the existence of taxes levied on the property or the existence of precautionary measures.

In Nicaragua, there are no restrictions on foreign citizens to acquire real estate, as they can engage in these transactions with a valid and current passport.

Confirmed title to real estate requires the execution of a public deed, the transfer of the property, and the registration with the relevant real estate registry.

The main documents that must be filed and registered with the local real estate registries are (i) public deeds that create, transfer, declare, modify, or extinguish property rights; and (ii) judicial rulings that order cessations (embargos) or any other type of preliminary injunction (medidas cautelares) on real property.

The information held in real estate registries are publicly accessible and available to any person with a legitimate interest in discovering the status of real estate and the corresponding power of attorney that proves it.

The CC provides that the seller is obliged to certain implied warranties, such as: (i) evict and provide compensation in favor of the buyer (evicción y saneamiento); and (ii) that the property has no hidden defects (garantía por vicios redhibitorios).

Mortgages over real estate may secure the principal amount, accrued interest, and other related expenses owed by the debtor to the creditor.

Pursuant to Section 2722 of the CC, mortgages over real estate must be created through a notarial deed.

In order to be effective vis-à-vis third parties, mortgages must be registered with the public real estate registry of the jurisdiction where the property is located.

Lease agreements are regulated by Title XIV of the CC; the lease agreement is defined by Section 2810 CC, as a contract by which two parties are mutually obligated, one to grant the use or enjoyment of a good, or to carry out work or provide a service; and the other to pay a certain and determined price for this use, enjoyment, work, or service. The lessor or landlord is the one who gives the good on lease, and the lessee or tenant is the one who receives it.

The obligations of the lessor are:

• To deliver to the lessee the leased property with all its belongings and in a condition to serve for the agreed use, and if there was no express agreement for that for which by its very nature it was intended;
• To keep the leased property in the same condition during the lease, making all necessary repairs for this purpose;
• To not hinder or obstruct in any way the use of the leased property unless for urgent and indispensable repairs;
• To guarantee the use and peaceful enjoyment of the property for the entire duration of the contract; and
• To respond for the damages suffered by the lessee due to defects or hidden flaws in the property, prior to the lease.
  

The lease agreement may terminate:

• Because the term set in the contract has been fulfilled, or the purpose for which the property was leased has been satisfied;
• By express agreement;
• By nullity; or
• By resolution.

Municipalities, and specifically their construction departments (Ventanilla Única de la Construcción-VUC, Dirección de Urbanismo), are responsible for managing construction permits within their limits. The rules for construction permits are set, in general, in the Municipal Tax Plan, but each municipality is entitled to specify detailed requirements within its urban area through a specific body.

Pursuant to the General Ordinance of Urbanism and Construction, the construction, repair, alteration, extension, and demolition of buildings, will require a permit from the relevant municipality.

Urbanization projects, construction of hotels and hotel complexes, or any project or activity likely to cause an environmental impact, can only be executed or modified after an evaluation of its environmental impact through the presentation of an Environmental Impact Assessment (EIA).

Inheritance/estate tax: In the transfer of assets subject to registration before a public office, the following definitive income tax withholding rates will be applied on capital income and capital gains and losses: an occasional withholding tax ranging from 1% to 7%.

Real property tax: The municipalities levy a 1% tax on the value of real estate.

Stamp duty: Stamp duty is levied on certain types of documents issued in Nicaragua or abroad that produce effects in Nicaragua. The amount varies depending on the transaction

Chapter authors and key jurisdiction contacts: Ricardo Güell | Deloitte Legal | Nicaragua; Claudia Moreno | Deloitte Legal | Nicaragua

Download: Handbook for Real Estate Transactions