Guidelines to Understanding The Transaction Process

Michael Krieg with his wife Mendy

“Take a deep breath, and my team will walk through it step by step,” says Michael about helping you find the property that best suits your lifestyle in Costa Rica.

JACO, Costa Rica (PRWEB)
August 06, 2021

Buying real estate in Costa Rica is pretty parallel to how you would do it in your home country, with a few differences. Michael Krieg with United Country Real Estate | International Luxury Properties shares some details and tips regarding real estate transactions so you can wisely invest in Costa Rica.

1.) Find a property you love in an area that suits your lifestyle. To do so, look on local websites rather than just doing a scattershot online search. There is no MLS in Costa Rica, so listings get shared, and some agencies are better at keeping their websites up to date. It is highly recommended to work with an agent in the area you’re interested in to help you find properties based on your interests.

2.) It is essential to understand that pricing is always a plus or minus since “comparables” aren’t as common in these markets. Michael is ready to work with you to prepare the right offer for you. As in most real estate transactions, assume there will be negotiations with the seller to arrive at an acceptable price for all parties involved.

3.) Agreement – When the agreement is reached, the offer will be formally turned into a Sales and Purchase Agreement. This is similar to the “Earnest Money Contract” used in North America that often agents prepare. In this case, Michael works with an in-house attorney to ensure all work is prepared correctly. The attorney fees are included in the Buyer’s Representative cost.

4.) Escrow – Michael and his team will assist you in opening this account. This is often the most challenging part of the process for buyers to understand. To comply with money laundering laws, the escrow company is under the obligation to gather a significant amount of information regarding your finances. They want to establish the source of funds is legal. This is an integral part of the process that has to be done to ensure a successful transaction.

5.) Corporation – It is recommended that a Costa Rican corporation is created and that such corporation is the owner of the property vs. you as the individual. This provides several advantages, especially when it comes to any liability. The process is simple and only takes up to ten days. The attorney Michael works with can assist with setting up all the paperwork. This is an approach that should always at least be discussed.

6.) Once both parties have signed the Sales Purchase Agreement, typically, a ten percent deposit needs to be processed to the Escrow Company. This will trigger the start of the Due Diligence period.

7.) Due Diligence – This involves multiple parties, including but not limited to a surveyor, home inspectors, agents, and municipality. Michael and his attorney will coordinate everything as needed. The recommendation is to do every single part. At the end of this process, you will receive a full report that allows you the opportunity to accept the results or reject any part of them. If there is a “fatal flaw,” you can withdraw from the deal and get your deposit back.

8.) Once the Due Diligence report is accepted, the deposit becomes non-refundable. At this point, the remaining balance is due to the escrow company. Closing will happen within a few days, and the property will be recorded to your name or corporation in the National Registry.

9.) Owning Property – You must understand your obligations as a property owner and how to fulfill them—know-how and when to pay utilities and taxes, especially if they are corporate taxes. If not living at the property full time, setting up a bank account in Costa Rica can make payments more manageable.

10.) Fees – the average fee for a real estate transaction is around 4.5%; this includes your due diligence in inspections, required taxes, and closing costs. Of course, all the above items are always negotiable as to who pays. Similar to the United States, a 50/50 split is standard practice.

Many of the details to complete a transaction in Costa Rica look very similar; one of the biggest challenges is time. Time moves slowly in Costa Rica. Contact Michael to learn more about the process and start your search for the property that will suit your lifestyle in Costa Rica.

About United Country

United Country Real Estate is the largest ranch real estate company nationwide and leading, fully integrated network of conventional and auction real estate professionals. The company has been an innovator in lifestyle, ranch, farmland, and country real estate marketing since 1925. United Country supports a combined network of nearly 500 offices and 6,000 real estate professionals across the nation, with a unique, comprehensive marketing program that includes the highest ranked and largest portfolios of specialty property marketing websites, the largest real estate marketing services company, an extensive buyer database of over one million opt-in buyers and exclusive global advertising of properties.

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