Are real estate brokers and companies under any governmental supervision?

by Quatro Legal Real Estate Team | Nov. 24, 2023 | Article, Real Estate

In Costa Rica, there are no regulations governing real estate brokers and no license is required. This means that anyone can act as, or call him or herself, a real estate agent or broker. This situation normally creates confusion among real estate investors and opens the door for problems. Therefore, in recent years, the office of the Superintendent General of Financial Institutions (SUGEF), in compliance with provisions of international organizations, has created regulations and tools to supervise and prevent money laundering, financing of terrorism and the proliferation of weapons of mass destruction which has affected real estate practitioners. The reality of this regulation is that it is directed to protect the financial system from illegal activities and not create a set of rules and standards by which real estate agents and brokerages must abide in order to guarantee the protection of the consumers – buyers and sellers of real estate and the market itself.

Main efforts by the Costa Rican government to start creating a regulation of the real estate market have been spearheaded by the pressure of the international Financial Action Task Force (FATF), an inter-governmental body that sets and promotes standards to prevent money laundering. The FATF focuses on matters related to illegal activities such as terrorist financing, purchase, and trafficking of weapons of mass destruction, and human trafficking. It is a global watchdog that monitors the implementation of measures to help combat money laundering. The FATF is also in charge of sanctioning and adding countries, entities, organizations, and people to so-called BLACKLISTS, where no one wants to or can afford to be. Such lists amount to a global ban due to non-compliance with international regulations.

As part of this process that has been in the making for years, SUGEF regulates and supervises all financial institutions and non-financial activities and professions – real estate agents and brokerages – and in November of 2019, SUGEF approved “Agreement 13-19” which was later published in the Official Bulletin La Gaceta No. 220 on November 19, 2019. This regulation categorized on three levels the persons and companies that perform the activities provided for in Articles 15 and 15 bis of Law 7786 and included real estate agents, brokers, promotors of real estate projects and developers. The categories were assigned based on risk exposure and establish future obligations based on the level as a means of combating money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction. Upon enactment, registration became mandatory for the real estate sector, applying to all natural and legal persons habitually and professionally engaged in the purchase and sale of real estate, including, but not limited to, brokers, intermediaries, promoters, and developers of real estate projects.

If you are thinking about working with a real estate agent or brokerage, ask to see their SUGEF registration resolution, it should be publicly displayed in their offices. Also, their contract templates must include a warning as published by SUGEF and keep their registrations in compliance. Remember that registration became mandatory as of January 2020; therefore, it should not be acceptable for an agent not to have this in place.

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