Escrow inspections & appraisals

Inspections and Due Diligence

In Costa Rica, buyers—especially foreign investors or retirees—typically conduct thorough due diligence within the timeframe outlined in the purchase agreement (usually 10-30 days). This process involves hiring licensed professionals to inspect the property’s condition and verify legal aspects. Inspections may include:

• Structural and general inspections : Checking the building, plumbing, electrical systems, and septic tanks, which are common in rural or coastal areas.
• Land surveys : Confirming property boundaries, especially for undeveloped land or properties in regions like Guanacaste or the Southern Zone, to avoid disputes.
• Environmental assessments : Ensuring compliance with Costa Rica’s strict environmental regulations, particularly for properties near protected areas, coastlines, or in maritime zones (ZMT).
• Zoning and permit checks : Verifying that the property’s zoning supports the buyer’s intended use (e.g., residential, tourism, or commercial) and that existing structures have valid permits.

Since local bank financing is rare for foreign buyers, appraisals are less common unless the buyer is securing a loan from a private lender or a home-country institution. In such cases, a licensed Costa Rican appraiser may evaluate the property’s value based on location, recent comparable sales, and features like ocean views or rental potential. For commercial properties, buyers may request environmental audits or soil tests to assess development feasibility, especially in eco-sensitive areas.

The Closing Agent (Notary Public/Attorney)

In Costa Rica, a licensed notary public, who is also an attorney, serves as the closing agent. Their role is to:

• Conduct a title search through the National Registry (Registro Nacional) to ensure the title is free of encumbrances (e.g., liens, mortgages, or restrictions) by the closing date.
• Verify that any new encumbrances, such as easements or concession terms for coastal properties, are properly recorded.

The notary ensures the property’s legal history is clear, addressing unique factors like maritime zone concessions or environmental restrictions that may limit usage or development. They also manage the escrow account holding the buyer’s deposit (typically 10% of the purchase price) until closing.

Contingencies

A contingency is a condition that must be met for the purchase agreement to become binding. Common contingencies in Costa Rica include:

• A satisfactory inspection report from qualified professionals (e.g., structural, environmental, or boundary surveys).
• Clear title verification, ensuring no legal issues or unregistered claims.
• For coastal properties, confirmation of valid concession rights (if applicable) or compliance with maritime zone regulations.
• If financing is involved (rare for foreign buyers), approval from the lender.

During due diligence, the buyer reviews all relevant documents, such as the title report (informe registral), cadastral plan (plano catastrado), and seller disclosures, and conducts inspections to confirm the property’s condition. Depending on the results, one of two outcomes occurs:

• All contingencies are satisfied, and the sale moves closer to closing.
• The buyer requests renegotiation of terms (e.g., price or repairs) based on inspection findings or title issues.

Our experienced listing agents excel at navigating these negotiations, responding objectively to buyer requests while protecting your interests. With extensive experience in Costa Rican property sales, we ensure fair and strategic handling of any renegotiation to achieve the best outcome for you.

Buyer Financial Readiness

Since most foreign buyers in Costa Rica purchase with cash, we recommend accepting offers from buyers who provide proof of funds, such as a bank statement or escrow deposit confirmation, to ensure their ability to close. If a buyer is using financing (e.g., through a private lender or home-country loan), a pre-approval letter or written loan commitment is ideal. If an appraisal is required, a licensed Costa Rican appraiser will assess the property to verify the sale price aligns with market value, considering factors like location, comparable sales, and unique features. Our team will guide you through this process, ensuring all parties are aligned for a smooth closing.