The 3 Stages of the Real Estate Purchase Process in Costa Rica

Quatro Legal believes in the value of specialization and client experience when buying real estate and/or investing in Costa Rica. We have created a standardized process. It does not matter the size or purpose of your investment. We will apply the same methodology and process as to always guarantee its security.

As part of our ongoing Quatro Legal Real Estate series, let’s explore how the purchase process in Costa Rica works:

How Purchasing Real Estate in Costa Rica Works

We focus on having successful transactions, but also maximizing a great client experience during the process. Follow the three stage purchase process, which starts when an offer is accepted and a property or properties are under contract.

Stage One: Pre-closing

1. Set up an Escrow Account

Choosing the ideal escrow agent for a real estate transaction is a key part of the purchase process. The main role of the escrow agent is that money is not exchanged between parties until contractual conditions are met. All escrow agents charge a fee for their services, which are fixed or established proportionally to the value of the transaction.

An escrow agreement shall be executed. Know your client forms, KYC, identification documents, and source of funds proof may be required

2. Due Diligence

Performing a thorough due diligence is the most important part of a purchase decision. Due diligence is a process prior to making the final decision of whether to close on a property.

Due diligence is a process where buyer through their lawyers systematically researches and verifies the legitimacy and accuracy of the title as well as the contingencies that could cloud it such as taxes, debts, liens, encumbrances, lawsuits, zoning and building restrictions, utility availability, et cetera.

We specialize in preparing due diligence studies and we’ll draft a due diligence report.

3. Set up a Corporation

If you’re planning to invest in Costa Rica, it may be a wise decision to set up a corporation. The two most common corporations in Costa Rica are: Sociedad Anónima, abbreviated as S A, and Sociedad de Responsabilidad Limitada, or S R L.

• Some of the benefits to do business through a corporation in Costa Rica are:
• Separate patrimony from shareholders
• Operate your company remotely
• Facilitate estate planning
• Preliminary closing statement

Our firm considers as a best practice and courtesy to provide its clients at the start of a transaction, a detailed preliminary closing statement containing all costs associated with the transaction. We will include a variety of items that are essential to close the transaction and a set of optional services with recommendations based on our experience of what foreigners and investors need to be fully set up for their Costa Rican life.

Stage Two: Closing

Execute Purchase Deed and Register It Before the Public Registry

In Costa Rica, closing a transaction normally implies signing a purchase and sale deed. This is a legal document prepared and authorized by a notary public, whereby the seller agrees to sell, irrevocably, to the buyer one or more assets under specific terms and conditions. The purchase and sale deed is the main document to close the deal, and it should reflect all final terms agreed during all stages of the transaction.

The registration process usually takes about 10 business days. At this stage, all final numbers are settled and disbursement instructions are signed by the parties to pay the seller, lawyers, notaries, realtors, lenders, and any other third party that rendered services in connection with the transaction.

Stage Three: Post closing

1. Retain your maintenance package to cover your yearly legal obligations

2. Set up a will to protect your investment

3. Set up a bank account

4. Get utilities transferred

5. Get an insurance policy for your property

6. If a luxury home, get your luxury tax appraisal to determine tax compliance

7. If you are renting, get registered as a taxpayer with Costa Rican Tax Agency and get your short term rental license.

8. Retain accounting services to service rental activity.

9. Buy a car.

10. Apply for residency.

Looking for legal counsel you can trust to make your purchasing property in Costa Rica easier and more rewarding? Get in touch today.

Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change. For the most accurate and up-to-date information, please contact our office directly. Some images may be AI generated.