by Ivo Henfling
You want to purchase Costa Rica property and you have your money still in your own country. Your GoDutch Realty agent has found you the right property and your offer has been accepted by the seller. Congratulations, you are on the way of acquiring a beautiful property in Costa Rica but might be a long way.
A Costa Rica real estate closing can be very smooth, if you allow a professional handle it. But the real estate closing can be full of obstacles too. Stay away from those obstacles and use Costa Rica escrow.
Your real estate agent sent the accepted offer to your attorney to have the option to purchase – sale agreement to be drafted. At signature of this agreement, you will have to make an earnest deposit of 10% (this is customary but negotiable) of the purchase price.
Your attorney doesn’t have an Costa Rica escrow account. You have no bank account in Costa Rica yet and the bank won’t open one until you have residency. So where should you send the earnest money to? Costarican sellers usually want that earnest money to go to them but you should insist it goes into escrow with your attorney.
A couple of weeks ago, the buyers’ agent brought a client who had an attorney representing him who had no Costa Rica escrow account. She held the earnest money check, a cashiers’ check in her name (!!) until the closing. When we got to closing, nobody had figured out how to cash a $21,000 earnest money check in the attorneys name and pay commissions to two real estate agents, pay the attorney her fees and the transfer taxes and transfer the leftover to the seller who was leaving the country the next day.
Banks in Costa Rica do not carry that kind of cash. What an unnecessary hassle at a moment that should be a happy one for everyone: the real estate closing. Guess who spent the whole Friday afternoon in the bank with the seller to get paid.
The US government has been pressing the Costarican governments to call anything over $10,000 money laundering if there is no proof of origin of the funds. It doesn’t have anything to do with drugs but it has to do with control on US citizens and them paying their taxes. The new DIMEX residency card is also part of that whole Big Brother thing.
Don’t wait until you run into trouble. Why even look at Costa Rica real estate for sale if you don’t have the solution to being able to pay for your property? Pick your Costa Rica real estate attorney BEFORE you start looking at Costa Rica property for sale. Don’t EVER pick a closing attorney who doesn’t have an escrow account registered with SUGEF.
The solution is very simple. All funds, the earnest money as well as the lump sum should go through a Costa Rica escrow account that is registered with SUGEF.
Even though Costa Rica does NOT have escrow laws like the USA has, there will be a paper trail that is supervised by the Costarican government (SUGEF).
If you do as described in that transaction above and give the closing attorney a cashier’s check in her or his name you ask for trouble. What will happen if she passes away before the real estate closing?
Using escrow in a Costa Rica real estate transaction makes it not only easier for the buyer but also the seller will have no trouble with the proceeds. Contact a GoDutch Realty agent for more information.