Buying Real Estate In Costa Rica? Your Ultimate Guide To The Purchasing Process

You’ve found your dream property in Costa Rica—but now what? When it comes to buying real estate in Costa Rica, the purchasing process can seem like a daunting task, especially if this is your first international real estate investment.

Before we carry on—congratulations on taking the first steps of your Costa Rica real estate journey!

We’re here to reassure you that if you’re working with a licensed and professional real estate broker, the purchasing process in Costa Rica is safe and straightforward. That said, you’re making a significant investment, and we recommend understanding the Costa Rica buying process and general timeline involved in purchasing property.

While what follows can vary slightly depending on the Developer or Seller, here are the steps you can expect to follow when buying real estate in Costa Rica:

Your Ultimate Guide To The Purchasing Process In Costa Rica

1. Letter of Intent

Once you’ve selected the perfect home for sale in Costa Rica for your unique needs, the first step is to draft an LOI (Letter of Intent.) The LOI includes Buyer and Seller information, the proposed purchase price and terms of the offer, and the sale conditions. Now that your offer is in writing, we can move on to the negotiation process.

2. Negotiation (If Needed)

Of course, negotiation is not always necessary when purchasing a property in Costa Rica. But if it is, the process will include negotiating the following:

-Total Purchase Price
-Terms of Sale (Due Diligence Period, Payment Structure, Closing Dates)
-Specific Conditions or Changes About the Property Agreed Upon For The Purchase

3. Seller Acceptance Of Offer

The Seller agrees upon the offer negotiated. With an agreement in place, we can now legally formalize the sale with your attorney.

4. Buyer Signs Sales and Purchase Agreement (SPA)

Your attorney (we can recommend local, trusted, and bilingual attorneys if you don’t have one) will draft the Sales and Purchase Agreement, or SPA.

5. Buyer Will Open A Costa Rican Escrow Account

All reputable Costa Rica real estate agents will recommend setting up an Escrow Account to complete your real estate transaction. Escrows in Costa Rica act like personal bankers, so you can have them pay your bills and make other payments needed in everyday life.

The Escrow will need to collect documents from you to satisfy the central banks of Costa Rica and SUGREF (the international banking commission.) Costa Rica is proudly the only Central American country not on the Black List in SUGREF.

This compliance requires more documents from the Buyer’s side to make high dollar transactions. Buyers must provide three months of bank statements, the origin of funds, tax returns (in some cases), and copies of their identification. The Escrow Agent will take care of the entire process; you just need to provide the agent with the information to handle the compliance.

The process is quick and painless, but some feel it is invasive because they are not accustomed to this in North America. Don’t worry—this is standard protocol and probably the most unenjoyable part of the transaction process.

6. Buyer Sends 10% Deposit

The Buyer is responsible for sending a refundable 10% deposit (or as agreed upon in the SPA) to your Escrow account. Now your dream Costa Rica property will legally be off the market, and your real estate transaction is deemed “under contract.”

7. Buyer Opens A Costa Rican Corporation

It is standard for foreigners to open a local corporation to hold their property, and we always recommend this step to our clients. We do not recommend purchasing shares of the previous owner’s Corporation. This can have unforeseen problems such as previous employees or caretaker’s grievances. Trust us—you do not want to take on the Seller’s issues.

To open a corporation, you will pay under $1,000. The process takes about 24 hours.

Having a corporation will provide separation from you to mitigate liability. It also will allow you to open bank accounts quickly, acquire insurance, seek out available financing options and other necessary business activities in Costa Rica (that are otherwise not available to non-residents.)

8. Due Diligence Period Begins

The Due Diligence process for purchasing real estate in Costa Rica is typically 30 days. If the property is raw land, sometimes it may require more time to complete the proper studies. (This depends on the size and variables of the land in Costa Rica.) More difficult property may have 45 or 60 days to complete the Due Diligence process.

Hopefully, you already checked out: 15 Questions You Absolutely Must Ask Before Buying Real Estate In Costa Rica. This in-depth resource covers questions you’ll want to ask before submitting your LOI, as well as important steps to follow during the due Diligence process. That said, here are the most critical things you’ll want to look:

Water: Water in Costa Rica is administered by the government and has many restrictions on use. ASADA is the locally administered water system in Costa Rica and is governed by AYA, the national level water department. Verify that your specific property is tied into the ASADA system. If the property has a Deep Well or Artesian Well, it must have a concession of use. You’ll also want to understand the quantity and quality of the water. A water concession can take 1-3 years to obtain, so knowing your water status is essential.

Title versus Concession Property: We always recommend buying a titled property in Costa Rica. A foreigner owns titled property with the same rights as a Costa Rica Citizen. Concession Property is usually a 20 year lease—but can be as low as five years. These areas are subject to land use plans and have limited use based on this. Furthermore, a foreigner cannot own Concession Property; to purchase such land, a local Costa Rican must own 51% of your Corporation.

Registry: A registry study should be performed in all Due Diligence reports. This will notify the attorney if there are any issues on the property, and they can proceed accordingly.

Easements: An Easement, also called “servidumbre” in Costa Rica, is essential to look for in development or property. Most common easements can be for the right of passage, environmental purposes, or water systems. These usually are 6 to 8-meters wide and can cross anywhere on the property. It is essential to check if the property has any easements and, if so, what they are.

Embargos: You can see these in the registry study. There may be liens or other things compromising the property, which need serious consideration.

Condo By-laws: If you are purchasing from a developer or a community, it will be important to review the Codes Covenants and Restrictions (CCRs). In most cases, these are very standard and are in place to ensure the value of your property continues to grow, and the tranquility of the community is maintained.

Utilities: Your attorney will need to check the utilities and make sure they are paid and working. If this is raw land, you will need to see what utilities to which you have access. We recommend buying within a community to make sure you have the utilities you need for everyday life. Internet is widely available in Costa Rica. It is vital to have hardline direct access to the internet and not have wirelessly transmitted internet systems. You will have trouble with any system not directly connected to the home. Optimally you will find a community with access to fiber optics, which will allow you to have unlimited bandwidth and speed.

Taxes: Always check to make sure the taxes are paid to date on the property. The taxes will be prorated at closing, and you will generally have to pay the prorated amount as taxes are due annually.

Insurance: Always check to make sure the insurance, if applicable, is paid to date on the property. The Seller will prorate the insurance at closing, and you will typically have to pay the prorated based on the term of payments.

Property Survey: We recommend doing a property survey, which is generally paid for by the Buyer. This depends on the current survey; if it was performed and registered within five years, it may be ok. Suppose this is a property in a rural area. In that case, we recommend a new survey to check boundaries and make sure there is no overlap with other properties in the national registry.

Soil Study: Depending on what you are building and the property’s topography, a soil study is always a good idea. The Buyer typically does this. Perforations are made to test filtration (information needed for the septic system). Cores are taken to the lab to check the soil density, viscosity, and compression strength to determine construction suitability.

If there are current structures on the property, they will not settle, or worse, fall in mountainous properties.

9. Attorney Produces the Closing Statement

When you are satisfied with the Due Diligence, now it is time to produce the Closing Statement for your Costa Rica real estate purchase. This is an outline of payment between the Buyer and the Seller. The Buyer typically has five days to close after accepting the Due Diligence.

10. Closing Date Is Set And Remaining Funds Sent To Escrow

With your Closing Date set, it is now time to send the remaining funds for your Costa Rica real estate purchase to your Escrow Account.

11. Closing Day!

Now the Buyer signs the Deed and releases the funds from the Escrow Account. Typically the Buyer and Seller split closing costs 50/50. For more on what closing costs to expect when purchasing real estate in Costa Rica, be sure to check out our comprehensive Costa Rica Real Estate Buyer’s Guide.

Congratulations! You now own your dream property in Costa Rica!

Follow the above steps, and you’ll have no problem purchasing real estate in Costa Rica—provided you go with a trusted real estate agent and attorney. Costa Rica is truly a paradise, and we’re incredibly excited for you to explore the wonders of this gorgeous country with us!

Do you have further questions about the purchasing process in Costa Rica? We’re here to help! Get in touch with us today to learn how to start your Costa Rica real estate journey. It would be our pleasure to help you on this exciting adventure!

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