By Ivo Henfling
You are selling your Costa Rica property and your buyer needs financing from a local bank. If your real estate agent is the only agent involved, it will make it for both buyer and seller much easier to deal with as the bank’s loan officers need a constant reminder to keep working on the document of this particular buyer. I have done many real estate closings involving bank mortgages and in many, the sellers freak out unnecessarily. This is why I am writing this blog, so you don’t have to freak out.
Most Costarican banks will tell your buyer to get an option to purchase – sale agreement for 3 months because they might need that amount of time to process the documents. I have seen some take that amount of time and others do their due diligence and close in 3 weeks. Ask your real estate agent to keep you up to date during the process, this helps to calm the nerves and the agent will need your help.
At signature of the option to purchase – sale agreement, the buyer should deposit 10% earnest money (negotiable) with his/her attorney in escrow. The agreement should describe when this money returns to the buyer, in most cases only if the seller cannot deliver free and clear title or if the home inspection shows something bad enough for the buyer not to close. If the buyer does not close and the earnest money goes to you, the seller, you should pay the real estate agent(s) 25% of this earnest money, but no more than what the real estate commission would have been. This is sometimes a discussion point, but the fact is that by then, the real estate agent has done his/her job in full.
Make sure your Costa Rica property is free and clear of any liens and encumbrances when you put it on the market. All GoDutch Realty agents are obliged by rule to get a copy of the survey and do a title search, though I have seen some secretly not doing so. You will need that information when the buyer’s attorney writes up the option to purchase – sales agreement anyway.
Give your agent the name of ownership and property info so the agent can pull a title check and get all the information on the property like the size, in whose name it is and if there are any easements, mortgages or other liens and encumbrances, so all the information is available. The bank’s loan officer will request a copy of this document.
Give your real estate agent a copy of the survey of the property. If you don’t have one, get it from your attorney or ask your agent to get one for you against payment. The bank’s loan officer will request a legible copy of this document and though most closing attorneys forget about this document, the buyer should receive his/her own copy.
You will be asked, as soon as the buyer is presenting the documents to request the mortgage, to deliver your property taxes paid up to date and certified by the municipality. The certification you can request at the municipality after paying the taxes up to date you can just buy some stamps (they will tell you which and where).
I have not seen it happen yet, but soon they will request your receipt of payment of the new Corporation Tax if the property is owned by an S.A. (Corporation) and the Luxury Home Tax if your property applies for this tax.
If the property is owned by your S.A. (Corporation), the bank also wants a copy of the Shareholder’s (Accionistas) book’s pages with text, the Assembly’s (Asamblea) book’s pages with text, a copy of the shares, a copy of the corporate ID and a copy of the constitution of the company.
So when you list the property with our agent, make sure you have all these documents (no need to give the agent a copy until closing) so you don’t have to start looking like crazy when you have a buyer ready to close.
The bank will need a copy of your cédula de residencia (local residency card) or a copy of your passport. Beware, the Tico passports, though they expire, keep the same passport number after renewal. Most foreign passports change numbers when renewed.
So when you purchase a Costa Rica property, make a photocopy of your passport and keep it with the property documents. If you don’t have one, a public notary can give you a sworn declaration that you are the same person as the one who bought the property.
The last thing you need to do is be ready for the appraiser. Most bank appraisers in Costa Rica do just that: appraise. But some banks have the appraiser also do a home inspection. In another blog, I will tell you all about that.
The good news is now, that when you get this far, that you just managed to sell your Costa Rica property and you made it painlessly through the process and you are ready for your next adventure.
Your GoDutch Realty agents are all at your service for this, contact us NOW. We hope we can help, thank you for working with us. Cheers and congratulations.