About Closing and the Process of Settlement
Part 3 of 3 – condensed version
Be sure to get the full guide: Buying / Owning – Rules of the Road
Part 3 of 3 – Ok, so you found the property you want and have negotiated a price with the help of your agent. During this process you will need to engage with a good lawyer. One that speaks your language. So 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 visa-versa. The lawyer is tasked with the title search that will show any encumbrances, liens, mortgages, land usage certificate, etc. Also verify that the taxes are paid up to date. It’s also important to verify if the land falls within areas that are affected by environmental restrictions and 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 with their own lawyer on the side 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.
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 however this can be somewhat negotiable. The cost can vary between a San Jose lawyer and a small town lawyer. It’s always good to get a quote before you get started. Additional costs may apply that involves 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
Getting an escrow company involved is now the preferred method to arrange closing due to all the new regulations concerning funds entering the country from foreign sources. Gone are the days when a foreign buyer would send the funds 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 and to plan a closing around these scenarios you will likely find yourself in a banking rat maze and be forced to start over. There are competent escrow services here 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, to pay off mortgages or agent commissions etc. The buyer will need to 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 they can open the escrow account. Fortunately the cost is reasonable so there is no reason to plan otherwise.
Part 2 of 3 Facts about Buying and Owning Beach Property
Author Jeff Lantz – I enjoy what I do. Connecting people to the land. Something I’m truly passionate about. Helping people that come for all the same reasons I did 30 years ago comes natural. It’s not just about buying a property. It’s about investing in a whole new lifestyle. So feel free to contact me. I’m happy to help.