About Closing and the Process of Settlement - Osa Peninsula Real Estate Facts

Be sure to get the full guide: Buying / Owning – Rules of the Road

About Closing and the Process of Settlement — You’ve found the property you want and negotiated a price with the help of your agent. During this process, you’ll need to engage a good lawyer — one who speaks your language. Get a solid recommendation before choosing one. All relevant documentation will be in Spanish, so make sure your lawyer can provide translations for the pertinent parts so you can understand and approve.

In Costa Rica, all lawyers are notaries and vice versa. The lawyer is tasked with the title search that will show any encumbrances, liens, mortgages, and the land usage certificate. Also verify that the taxes are paid up to date. It’s important to check whether the land falls within areas affected by environmental restrictions and to request a land-use certificate issued by the local Municipality. Other due diligence in the field is where a competent agent comes in. The seller will usually consult their own lawyer and pay any corresponding fees. The buyer’s lawyer will execute the deed transfer at closing. If an escrow company is involved, closing can be done remotely once the deed is signed.

Closing Costs

Unless agreed otherwise, it is customary for the buyer and seller to equally share the closing costs. Fees paid for attorney/notary services are based on a published scale, though this can be somewhat negotiable. The cost can vary between a San José lawyer and a small-town lawyer. It’s always good to get a quote before you get started. Additional costs may apply for work performed outside a standard transaction.

The following fees apply only to titled property and subsequent recording of the title at the National Registry based on the declared value:

• Attorney’s fees: 1.25%
• Recording fee: 1.5% for transfer tax
• Documentary Stamps: 0.86% for institutional taxes

Escrow Services

Using an escrow company is now the preferred method to arrange closing due to the new regulations concerning funds entering the country from foreign sources. Gone are the days when a foreign buyer would send funds directly to their lawyer or agent. Sometimes a buyer would open a local bank account and wire the funds to themselves in advance of closing — however, these are no longer viable options. Planning a closing around these scenarios can create banking delays and force you to start over.

There are competent escrow services in Costa Rica that will help you and your lawyer set up your escrow account in advance of closing. Escrow will receive the funds and distribute payments to the seller, pay off mortgages, and handle agent commissions. The buyer must provide certified documentation to establish the origin of funds — such as letters and statements from their bank — along with other details requested by the escrow service before opening the account. Fortunately, the cost is reasonable, so there’s no reason to plan otherwise.

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Author: Jeff Lantz

I enjoy what I do — connecting people to the land is something I’m truly passionate about. Helping people who come for the same reasons I did 30 years ago comes naturally. It’s not just about buying property — it’s about investing in a whole new lifestyle. Feel free to contact me. I’m happy to help.

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