By Ivo Henfling

Before you sell your property in Costa Rica, you should plan for what can soon be an important issue for you. I mean, when you receive your check at closing, what will you do with it and how will you get the money to where you are moving to? I know, it sounds kind of weird but with today’s money laundering laws and before you get accused of being a drug dealer, you need to make sure you take the right steps.

First of all, by Costarican law, you don’t have to pay any capital gains in Costa Rica. You probably DO have to pay capital gains in your home country, so that is something to take into account. You don’t want to send a lot of money back home and have the tax department asking you where all that money came from.

Money Laundering

When you wire it to your account in the US, most banks won’t even ask what the source of the money is. I guess the US government is just happy to receive more money into their economy and don’t oblige their banks to ask what the source of the money is.
Well, banks in Costa Rica DO ask you what the source of the money is that you are depositing into your Costarican bank account because we have money laundering laws, obliged to by the US government, go figure that one. And if they don’t, they get fined by the SUGEF. SUGEF is the government institution in charge of the control of the financial sector of Costa Rica.

Step by step

So when you are ready to sell you property in Costa Rica, you should take into account several issues. Let me show you in 13 steps how it should work:

1. When you receive an acceptable offer on your property, have the buyer’s attorney write up a purchase – sale agreement between you and the buyer.

2. Make sure the agreed sales price is mentioned in full and any cost that will be deducted from the final amount, like real estate commission and closing cost is in the document.

3. Make sure the buyer deposits earnest money of 10% of the sales price into your attorney’s escrow account, with a title company or any other option that both parties agree on until closing.

4. Make sure the buyer's agent make a mistake of including things in the inventory list that should NOT be included.

5. At closing, you should receive a cashier’s check in your name, either pulled on a Costarican bank if you want to deposit into your Costarican bank account or pulled on a US bank if you want to take the check with you to be deposited into your US account. Don’t forget the earnest money in escrow. You can deduct the real estate commission, closing cost and eventual other costs from this deposit and receive the difference also in a cashier’s check in your name.

6. NEVER receive cash money when you sell your property. You will NOT be able to get it into any bank account and for sure you will be arrested for money laundering.

7. At closing, you should receive a document, authenticated by the closing Notary Public, that either the transfers the shares or the corporation that owns your property in Costa Rica, or transfers the title into the buyer’s name or his/her company, ALWAYS mentioning the full sales price.

8. It is customary in Costa Rica to save on closing cost by registering a much lower sales price than the real value, which will get you into real trouble when you deposit the check into your Costarican bank account for a different amount than the sales price. Unless you document the deducted costs.

9. Request your authenticated copy of ALL closing documents from the closing Notary Public and ask his secretary to make an extra copy that you can give your bank when you deposit your check(s). The whole issue is about creating a paper trail.

10. Ask your real estate agent to accompany you to your bank immediately after closing, so the money will be in your account safe and sound.

11. Deposit the check into your account at the bank’s agency where you opened the account. If you don’t keep a copy on file because the bank might email or call you to ask for proof of the source.

12. If you leave the country and want to be able to have your bank in Costa Rica to wire the proceeds of the Costa Rica property you have sold, either give them the wire instructions right away or make sure you sign a bank statement so they will accept your instructions by email on a later date.

13. If you didn't read this blog and you become an angry seller, don't say it was my fault please.

By Ivo Henfling, your Escazu, Santa Ana and Alajuela real estate agent who always tries to keep you informed about important issues, no matter if you are buying or selling Costa Rica real estate.