Costa Rica Real Estate Deposits & Escrows

I have read with interest the many internet articles concerning “crooked” Costa Rica real estate transactions and much is said about comparisons in the U.S. To compare is negative energy because you are in an apples and oranges situation.

The first step in protecting yourself here in a real estate or any transaction is to realize you are in a different country governed by a different legal system and you fall under the umbrella of the way things are done here – not in the U.S.

For instance, real estate deposits and escrows here are very different. Escrow accounts are pretty much non-existent unless you are dealing with one of the big title companies or have a legal private arrangement with your realtor or lawyer.

Deposits will be the focus since you definitely need to be aware of the deposit structure in Costa Rica with individual sellers. The majority of the time the deposit is going to be held by the seller.

Instead of “held”, I should have used the word “given” to the seller. I do not think many sellers in Costa Rica hold deposits very long. Therefore, you should place as little money as possible in the hands of the seller.

5% is a start with a maximum of 10%. I will share with you my standard phrase over the years when buying real estate from individuals. When asked how much money I would like to deposit, I would state: “The least amount of money possible.”

Then when the seller named a figure I always said it was too much and again “What is the least amount possible”. It is amazing how sellers will come down to initiate a sell. If you back out as a buyer, the seller who already has your deposit will most likely keep it.

I would venture to say in Costa Rica under normal circumstances the seller has already spent the deposit money. You can put protection clauses in your contract but the bottom line is deposits once lost, are very hard to recover here in Costa Rica.

The one clause I advise clients to put in the contract is that if the seller does not honor the contract or other circumstances occur, the buyer will be given back double the original deposit.

I do not think this clause scares anyone but it might help you in another situation. It is not uncommon for the seller to sell the property to someone else if they offer a higher price.

This has happened in the past and can create a situation. A seller in this circumstance may be willing to give you your deposit back and to appease you or in effect – get rid of you.







You may recover double the deposit if you have the double deposit return clause in your contract. Of course, you are probably thinking that if you lose your deposit or the owners do not sell you will simply take them to court to recover.

Taking them to court can be done if you are patient, patient and most importantly – extremely patient!

If you eventually win, you may recover your monies if you are patient, patient and if you live that long!

I think you may be beginning to understand this insight into the court system here in Costa Rica. Concerning the money, I advise clients never to use cash because you have no paper trail and cash does funny things to people in Costa Rica.

There seems to be this need to figure out how one can get their hands on your cash and use it.

Certified checks from the states and regular checks can take a lengthy time to clear. Better to open an account bank here, wire money and get a certified check from the bank in Costa Rica. Be careful with deposits and who controls your money.

Every day there are many real estate transactions that occur in Costa Rica without problems. As stated before I respect all professions and business institutions. I do, however, play the devil’s advocate in protecting my clients in real estate transactions. I am available for consultations and my fees are reasonable and fair.

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As an independent personal advisor/consultant, Rudy’s main objective is to protect you, save you money and eliminate frustration. Rudy’s knowledge of negotiation, contract clauses that protect you, construction and improvements will be an invaluable service.

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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.