The sale of future assets, particularly in real estate projects marketed “off-plan,” is an increasingly common practice in Nicaragua. Although there is no single law that comprehensively regulates real estate presales, the structure is legally valid and subject to specific regulations: the Civil Code expressly authorizes the sale of future assets (Art. 2566 C.), supplemented by land registry, consumer protection, and regulatory compliance provisions.
In these transactions, the buyer does not immediately acquire ownership of the property, but rather the right to demand its transfer once the property legally exists and the conditions established in the agreement have been met. This right may remain strictly contractual or, with the appropriate measures, may become enforceable against third parties.
How is the sale of a future asset structured?
Depending on the characteristics of the project, these transactions are typically formalized through:
- Purchase and sale agreements or promises to purchase and sell (Art. 2541 C.), which may be registered with the Public Registry.
- Purchase and sale agreements subject to a condition or term.
- Assignments of rights arising from a promise to purchase and sell or from the buyer’s contractual position, when permitted by the agreement and the project structure and with the developer’s consent.
The contractual structure should be tailored to the specific characteristics of each development and the interests of the parties involved.
An often-overlooked protection: registering the promise to purchase and sell
In Nicaragua, promises to purchase or sell may be recorded with the Public Registry of Real Estate Property through a preventive annotation, thereby restricting the legal disposition of the property through transfers during the agreed term (Law No. 698, General Law on Public Registries). To qualify for registration, the promise must be executed as a public deed and include, among other elements, the purchase price, the term or condition establishing when the definitive agreement is to be executed, and the parties’ express consent to its registration.
Key considerations before marketing a project
Before beginning the sale of future assets, it is advisable to verify, among other matters:
- Ownership of the land and the developer’s legal capacity to dispose of the project, together with the property’s registry history and the status of any liens or encumbrances affecting the parent property.
- Obtaining all applicable permits, licenses, and administrative authorizations, including land-use approvals and municipal permits, as well as environmental and construction permits.
- The project’s location in relation to coastal areas: the public-use strip and restricted-use zone are not subject to private ownership, and their use is subject to a municipal concession (Law No. 690 and its amendments). This determines what may effectively be offered to buyers.
- The feasibility of establishing the applicable legal regime, such as a condominium or horizontal property regime, where applicable, including approved plans and a duly registered constitutive deed. Without this step, separate registry folios cannot be opened for each individual unit.
- The existence of appropriate mechanisms to secure compliance with the obligations assumed toward buyers.
- Regulatory compliance in the marketing and sale process, including real estate brokerage licensing requirements and anti-money laundering, counter-terrorist financing, and counter-proliferation financing (AML/CFT/CPF) obligations before the Financial Analysis Unit (UAF), which apply to real estate brokers, attorneys, and notaries.
When does ownership transfer?
Entering into the agreement and paying the purchase price do not, by themselves, transfer ownership of the property. Ownership is perfected once the property legally exists, the corresponding public deed is executed, and the deed is registered with the Public Registry of Real Estate Property. Until then, the buyer holds a contractual right against the developer, unless the promise to purchase and sell has been registered.
At GarciaBodan, we advise developers and investors on the legal structuring of real estate projects, from the registry review of the underlying land to the design of presale agreements and related security mechanisms.
