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Buying in Costa Rica 

The Buying Process

Establish a set of search criteria prior to your arrival. We will work through all local listings (online) in the desired search areas including that of all other real estate agencies and brokers to ensure (No Stone is left un-turned). Once all listings have been viewed and sorted through online, I will begin to create a (Short List) of all your favorite listings. Once your arrival dates have been set, I will create a schedule for you to confirm, and begin making appointments with all other agents and homeowners to allow us access and to view the listings. A detailed schedule is very important as we will need to give renters sufficient notice, arrange keys, and utilize your time wisely and give you some time on the beach to enjoy all the reasons you love Costa Rica!!!! View and narrow down the listings.

Over the course of a few days, we will be able to work through and view all listings within your search criteria. Once we have narrowed the search, we will then begin re-visits and obtain any information crucial to making your decision and an offer. Meet with a local Real Estate attorney and other professionals such as Banks, Property Managers and Contractors who will be able to explain and answer any questions in person about the legal process of buying Real Estate in Costa Rica, fees, and duties. The process will not only educate you further, it will allow you to establish additional contacts with local professionals who will also be looking out for your best interests. NOTE: In any and all cases, I will remain as transparent as possible and will recommend that you interview several professionals in Real Estate law, Property Management, Banks, and Contractors. none of these professionals work directly for or with me, and I will only recommend the best in the area based on pervious experiences and testimonials of prior clients. I will however be able to provide you with a list of professionals, as well as take you and arrange appointments to meet and understand their services. Begin making offers. In Costa Rica, it is not uncommon to make more then one informal offer using a Letter of Intent (LOI)  which is a non-binding offer outlining the terms and conditions. An LOI will also allow us to determine the motivation of the seller, begin the negotiations and determine if you will be able to come to terms prior to entering into a formal legal agreement.

A formal Option to Buy and Sell Agreement will be created once the price and terms have been negotiated. This Option agreement will be a binding agreement by both parties and allows a due diligence term to being. A Due Diligence period will always be requested to allow any and all investigations into the title, corporation, home inspection, property survey or anything else deemed necessary to purchase title of a property free and clear of any liens, mortgages or encumbrances. Due diligence is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for acquisition.

Establish an Escrow account to handle the deposit and final balance payment. Some attorneys, have Escrow and trust accounts, however to be assured, I would recommend in most cases utilizing an internationally recognized Escrow title company such as Stewart title or Chicago Title, these are names you most likely recognize and will give you the reassurance you may be looking for when transferring large sums of money to a foreign country. An escrow account can be used in the sale of a house, for example. If there are conditions to the sale, such as the passing of an inspection, the buyer and seller may agree to use escrow. In this case, the buyer of the property will deposit the payment amount for the house in an escrow account held by a third party. This assures the seller “in the process of allowing the house to be inspected“ that the buyer is capable of making payment. Once all of the conditions to the sale are satisfied, the escrow transfers the payment to the seller, and title is transferred to the buyer. NOTE: All escrow service companies will require the following:
– Two forms of identification (all pages) must be valid and issued by a government entity (only one ID required from seller)
– Escrow Agreement duly executed by both parties.
– Know Your Customer (KYC) form duly executed by the Depositor.
– Copy of Utility bill showing buyers current physical address (less than three months old)
– Proof of income supporting transaction amount (Any of: Tax Returns, W2 Form, CPA Letter, IRA, A Final Closing and Purchase agreement will be established approximately 5-10 days prior to closing to ensure all is in order. The closing documents will include, a Closing statement and Escrow agreement, (which outlines the disbursement of funds, attorneys fees, taxes, commissions, mortgages, Escrow and title fees, and all other fees that must be paid out of the sellers proceeds prior to the seller receiving funds (a separate closing statement will be issued to the buyer and the seller with their respective closing fees), Final Purchase agreement, and a Share transfer (in the case a corporation is purchased which holds the title).

The appointed Escrow Company will be responsible for issuing payments to all respective parties and ensure payments are completed. Register final title or corporation transfer in the National Registry. Your attorney will be responsible for the final registration in the National registry to show you as the new titleholder and or manager of the holding corporation. I will always advise that in any case, you follow up with your attorney as well as request your real estate agent to follow up with your attorney until the registration is completed 100% (this process can take between 2-4 week to reflect in the national registry, however all documents are legally signed and you are officially the owner and title holder). Enjoy your new Purchase in Paradise!!!

Property Taxes

MORE GOOD NEWS! Here’s one of the real perks of buying property in Costa Rica. Real Estate taxes here are very low: only ¼% of the total value. Taxes on a $100,000.00 home are about $250.00 per year

Closing Costs

The government collects a 2.5% transfer tax on all Real Estate transfers. The total taxes levied on a purchase are about 3.8% of the declared value. Nevertheless, a lot of homes are held as a corporation, so simply buying the corporation includes the Real Estate as an asset and no transfer tax is required, just a small attorney (Notary) fee of 1-1.25% of the declared value. The cost for setting up a new corporation, called a Sociedad Anonima, is about $400.00. Title insurance is also available here through Chicago Title and Stewart Title Latin America, your attorney or realtor can advise on this option.

Escrow Services

In most cases an Escrow service is recommended as a third party holding for deposits and final balance transfer to the seller at closing. An escrow service such as Chicago Title and or Stewart Tiltle will act as a nutral third party and only do as stated in the mutually signed sales contract. Highly recommended, and the service is typically paid for by the Buyer at a minimal cost.


Financing real estate in Costa Rica is not always an easy task, but possible.
Bank financing is similar to that found in other countries. The down side to bank financing are the interest rates. Current interest rates on real estate loans are very high, 8% to 15% per year. An option used here is to obtain an interest only loan for 3 to 5 years. The interest is paid and a final payment is made for the principal amount. Many United States and Canadian Banks have branch banks here. The possibility exists to arrange for a secured loan in the US or Canada and use the funds to make a cash deal here in Costa Rica.
One viable option, and one of the better ones, is to arrange for the seller to carry the mortgage on the property. Many sellers will, some will not. Your attorney or realtor can offer advise during the pre-search, qualifying process. One thing, do not look for 25 or 30 year loan terms. The normal is 5 to 10 years. GOOD NEWS the interest rates can be much lower


Many foreign individuals starting a business in Costa Rica or merely purchasing real estate for investment purposes decide to use a corporate entity as the owner of such. This decision is a very wise one, and it is what we highly recommend to our clients as the first choice to be followed.
Ownership through a corporation allows one to have flexibility and more predictability in areas ranging from estate planning (if share ownership is properly structured the investor can avoid his heirs a painful and lengthy long-distance probate procedure), tax management (as an example, rules on corporate expenses are more flexible than the ones on personal ones), and representation (shareholders meetings can facilitate granting special powers of attorney or other types of authorizations for many actions thus not requiring local presence in the country).
The first question often asked by our clients is whether to use (or form) a Costa Rican corporate entity or use one already existing and controlled by such individuals abroad. Our advice is, in most cases, the use of a local entity. Although foreign corporate entities can own land and engage in business activities in the country, registration procedures (both at the Public Register and with government entities) as well as negotiation of contracts with private parties can get complicated, delayed and/or find obstacles when they are involved.
In any event, if a foreign entity will be used, note should be taken that we normally recommend registering the foreign entity in the Costa Rican Commercial Register as a branch or at least to register specific powers of attorney for such also in the Costa Rican Commercial Register. Both cases require a special and formal procedure that may take several weeks.
As mentioned before, in the great majority of cases, the use of a local corporate entity is preferred. Although Costa Rican commercial law contemplates many types of corporate forms, only two of them offer the investor the comfort of having structures similar to the limited liability companies to which he or she may be used to in their countries of origin.
Such corporate forms are the Sociedad de Responsabilidad Limitada and the Sociedad Anonima. In both cases, shareholders are only responsible for their participation on the companys social capital and their own personal assets are fully protected and out of reach from any potential creditor the company may have