Escrow inspections & due Diligence
Purchasing a property in Costa Rica as a foreign buyer involves unique steps and local legal requirements. Below is a guide to streamline the process, tailored to the Costa Rican real estate market.
The Initial Agreement and Deposit.
Once you and the seller agree on terms, a purchase agreement (or “promise to buy/sell” contract) is drafted, typically by a notary public or attorney, outlining the conditions of the sale. This legally binding document requires a deposit, usually 10% of the purchase price, to be placed in escrow.
Key tips to ensure a smooth process:
- Document everything in writing. Verbal agreements should be transcribed into written contracts, including counter-offers or addendums, and signed by both parties. Your real estate agent and attorney/notary will assist in drafting and reviewing all paperwork, ensuring you receive copies for your records.
- Adhere to timelines. The purchase agreement includes deadlines for due diligence, inspections, and closing. Meeting these ensures smooth negotiations and prevents breaches of contract. Your agent will keep you informed and prepared for each step.
The Closing Agent (Notary Public/Attorney).
In Costa Rica, a licensed notary public, who is also an attorney, acts as the closing agent. They hold the deposit in a secure escrow account and conduct a title search through the National Registry (Registro Nacional) to confirm the property is free of liens, encumbrances, or legal issues by the closing date. The notary ensures all new encumbrances (if any) are properly recorded. Be aware that some properties, especially in coastal zones under maritime concession (ZMT), may have restrictions on building, usage, or ownership rights. Easements or environmental regulations may also limit how you can use the property. Your notary will clarify these details.
How to Hold Title.
Foreign buyers can own property in Costa Rica in their name, through a corporation (common for tax or liability purposes), or via a trust. Consult a Costa Rican attorney or tax advisor to determine the best option based on your legal, tax, and estate planning needs. For example, holding title through a corporation can simplify transfers but may involve additional maintenance costs. Coastal concession properties have specific ownership rules, often requiring a Costa Rican partner or lease structure.
Due Diligence and Inspections.
After the purchase agreement is signed, you’ll have a due diligence period (typically 10-30 days, as agreed) to inspect the property. Hire licensed professionals to assess the property’s condition, including:
- Structural and general inspections : Check for issues with the building, plumbing, electrical systems, or septic tanks.
- Land surveys : Verify boundaries, especially for rural or undeveloped land, to avoid disputes.
- Environmental assessments : Ensure compliance with Costa Rica’s strict environmental laws, particularly near protected areas or coastlines.
- Zoning and permits : Confirm the property’s zoning allows your intended use (e.g., residential, commercial, or tourism) and that existing structures have valid permits.
Your real estate agent can recommend reputable inspectors and surveyors familiar with Costa Rican properties.
Based on inspection results, you may:
- Proceed if all conditions are met, moving closer to closing, or
- Request renegotiation of terms (e.g., price or repairs) if issues are found.