Essential Legal Documents for Real Estate Transactions in Costa Rica

Today, as part of our ongoing Quatro Legal Real Estate series, we are talking about the most common documents involved in buying or selling real estate in Costa Rica. If you’re investing in Costa Rica, you will likely come across these documents during a real estate transaction.

Essential Legal Documents to Purchase Real Estate in Costa Rica

You might not use all these documents, but it is important that you get to know them.

Letter of Intent (LOI)

The LOI is a term sheet outlining an agreement proposal. It is usually not binding and it serves to clarify the key points of a transaction. The LOI is generally the first document produced by real estate agents to initiate the communication pertaining to a future transaction between a buyer and a seller.

Option to Purchase and Sale Agreement (SPA)

We normally call it PSA or SPA. It is a contract where a seller and buyer agree to sell and buy one or more properties. The SPA sets the foundation for a secure and smooth transaction and describes in full all the terms and conditions that must be met to complete the sale. It does not need to be long or complicated, but it does need to be complete and clean.

The Escrow Agreement

This is a contract defining the terms and conditions under which a buyer deposits cash with an independent third party known as an escrow agent, who in turn, and subject to specific terms and conditions, delivers it to the seller and other parties involved.

We always advise clients to close using an escrow service, because as you know, it’s easy to give money away, but not so easy to get it back.

Due Diligence Summary or Report

This is a process where the buyer, through a real estate firm or attorney, for a specific period of time, systematically researches and verifies the legitimacy and accuracy of the title, as well as the contingencies that could cloud it. Therefore, the due diligence report is a document containing the information uncovered, as well as a summary of the key points needed to make an informed decision.

The due diligence is a smart investment, not an expense, as many of the documents collected during due diligence are in Spanish, or its content will not mean much to foreign buyers without an explanation.

Purchase and Sale Deed

This is the final legal closing document prepared and authorized by a public notary, where the seller transfers to the buyer one or more properties or assets. It should be a reflection of the terms of the SPA and the agreements generated after it’s signed. The purchase and sale deed must be incorporated in a notary’s book and registered in the Public Registry of Costa Rica for it to be binding and enforceable against third parties.

Remember buying and selling properties in Costa Rica is a formal process with many moving parts. Therefore, you need to be fully counseled and represented by a savvy and experienced real estate attorney or firm.

Ask your attorney about his or her experience in the market, number of years as practitioner, and volume and types of transactions to ensure you are working with the right person or team.

Looking for legal counsel in Costa Rica you can trust? 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.