Who Pays the Attorney in a Costa Rica Real Estate Transaction? Watch out for the sharks!

I have mentioned in previous collaborations with WeLoveCostaRica, that a buyer should never use the seller’s attorney, just for the sake of saving some bucks. And I stand by my words.

If you are coming to Costa Rica scouting for a good deal on real estate, either as a mere investment or for a retirement home, you should look out for yourself, think with a cool head, do not rush, and do not allow aggressive sales pitches to force you into a wrong decision.

Among the most dangerous species in wild fauna of the current Costa Rican real estate market I have to place some of my colleagues – attorneys.

Let me share with you an experience that just happened to me and to one of the nicest clients I’ve ever had, hereinafter referred to as “The Client”.

A few years ago the client was offered a pre-construction condominium unit. He liked the deal, so he went with the seller – also a foreigner – to the seller’s attorney to sign a purchase option.

What the client didn’t realize at that moment, because he did not have an attorney helping him out, was that the seller’s attorney (hereinafter “the shark”) included a section stating that closing will take place at his offices, and that he will execute the selling deed.

Almost a year before the closing date, it seemed irrelevant at that time, although it was not.

When the deal began to take shape, and the client had to make installments, and find supervision for the construction, he also realize the need to find a nice attorney to represent him (me of course).

I began trying to contact the shark, to no avail, for almost a month prior to the closing date. He did not answer several phone calls or e-mails.

Three days before closing, when the client was about to take the plane to come to Costa Rica, he phoned the seller and told him about the behavior of the shark.

A few minutes after that conversation, a month of telephone messages were finally answered.

I then began working the details of the deal with the shark, and it was clear he would do the part of the closing related to his client; I would do what was relevant to my client (a share purchase agreement of the corporation who would hold the land title).

Well, at closing date. We arrived to the shark’s offices, and when the check books were on the table, the shark showed up his bill, for 100% of the legal fees, requesting my client to pay half of it.

When I politely remembered him his client would pay his half to him, and my client will pay his half to me, he pulled out the purchase option signed a year ago, and impolitely pointed out the innocent clause about the closing having to be prepared by him.

No logical reasoning was possible with the shark at that moment, the fees were his! End of discussion.

He event spat out that: “You did not need an attorney for this closing, I am the attorney doing the job…”

That is, he – the attorney for the seller – was complaining about the buyer having been rude enough to have hired his own legal advisor which he had every right to do.

This embarrassing situation lead to my client yielding to the shark’s demands, to avoid risking the deal and all the money he has already poured into the business, and graciously promising to pay my fees.

At the end he paid 50% of his part of the fees to the shark, and the – previously arranged – fees to me. That is, 100% of the fees for the transaction, that otherwise should have been paid equally between parties.

Said clearly, the unethical behavior of the shark provoked that legal fees – for that single transaction – increased 50%.

And to add insult to aggravation, the real estate transfer deed the shark prepared was full of mistakes, which I pointed out, and ask to be corrected, otherwise registration of the property into my client’s corporation would have been rejected by the Public Registry…

Buyers, then, have to be aware of situations like this, and assert their rights to have their own legal counsel on board, since day one, and clearly stating each party will pay its attorney.

What is happening quite often in these days, with attorneys who work for developers, is that they are lured by the size of the project and the dozens, or hundreds of possible new clients they will have if they accept to work for the developer, but on one condition: All fees are charged to the buyer and none to the developer.

Such situation at the end is in reality an increase of at least 0.5% on the final sale price for the property, which if you are aware of and accept, is fine, the problem is not knowing about it and having to write one last check out of an often already depleted check book.

So, get things straight from the start so that you don’t have any unpleasant surprises that could lead you to pay some few more thousand – unaccounted – dollars, the very day of the closing.

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.