How a Closing Works in Costa Rica

[Mitchell Cohen]

Last week I returned from Costa Rica with a successful closing. I would like to explain to everyone how a closing actually works in Costa Rica. Before I get started you will be surprised that it is not that different from a closing in the U.S. I think there is a stigma for during business abroad today. Yes you must be aware of the laws in each country you do business with. A good attorney can explain how the local laws apply to real estate. The advantage in Costa Rica is that most land is titled property. Which means once you buy it the property is is your name forever. You can sell it,will it or borrow against. I found a large Pacific Ocean view farm that measured 235 acres for my client. In this case there was nine brothers and sisters that owed this property. We wrote an option with the price that was agreed by both parties. A closing date was also in this agreement. Usually 5-10% would be required to be held in a escrow account. I would recommend Stewart Title. My client said that he would pay full price at closing so a deposit was not necessary. In Costa Rica closing costs are paid by the buyer. The breakdown is the following the attorney gets 1.5% of the purchase price to do the closing which includes transferring the property to the new S.A corp that was created and registering the property in the National Registry. The buyer must pay 2.5% of the purchase price as a transfer tax to the local municipality. If you use Stewart Title to hold the funds in escrow they get 1% Of course before the closing the buyers attorney did a title search on the property. She also made sure there were no liens or law suits with the property. We also measured the farm to make sure that the size was accurate. Once all this was complete we waited for the closing date. My Client wired the funds down to Stewart Tile in Costa Rica. We all met in a Bank the day of the close. The buyers attorney was present,the sellers attorney was present and a representive from Stewart Title. The buyer was not even present. They gave power of attorney to the attorney. The nine brothers and sisters all signed the buyers attorney protocol. The Stewart Tile rep issued the checks. My commission check was wired to my brokers account in Ft Lauderdale that cleared the next day. I bet you thought it would be more involved. Doing business outside the country may not be for everyone but it is something that I think should be explored.