How To Buy A Home In Costa Rica Properly (Part 1) -2021
Updated: Feb 22, 2021
Buying a home can be scary. Buying a home in another country can be even more scary. But doing your research and due diligence up front will save you so much time, money & heartache. Please note I am not a lawyer and this is only a personal overview of how my purchase went. If you have specific questions we suggest you contact a real estate lawyer.
A little about my history: I'm an award winning (retired) professional Home Stager and (active) licensed realtor in Ottawa, Ontario Canada. My husband and I have been renovating & investing into Real Estate for the last 18 years. We also own income properties in Tambor Costa Rica and are considered Airbnb Super Hosts. As you can see Real Estate is my wheel house & I hope to share my knowledge with you to make your life easier.
So let's get into it. By now I would hope you've found an area you want to own a home in and are ready to make an offer. If. not feel free to view our blog on "Picking A Place".
First of all I suggest all buyers work with an EXPERIENCED professional Realtor. They are FREE for you to use and using a friend in Real Estate doesn't mean they are good. Truly find out their level of experience. 1) They they even OWN their own home in Costa Rica? Some just rent and to me why would I buy with someone who hasn't been through the process themselves. 2) How many deals do they do per year?? 1-2 month means they don't know much than the basics. Look for an agent that does lots of deals per month this means they are experienced NOT the number of years they have been in the business. If you don't know who to find reach out to me and I'm happy to refer you to a qualified party if I'm not able to service the area myself.
Now that you've decided to work with an agent and you've told them what you're looking for and taken a few home tours to view the homes first hand the next step is the offer. Before you write your offer the Realtor will tell you if they feel the home is over priced or not.
In Costa Rica you'll draft an OFFER TO PURCHASE this is where you'll write out on a simple sheet what you offer essentially this is not a legal contract but remember as soon as you submit the deposit it is NOT REFUNDABLE. It is important to note that this is NOT to be confused with an AGREEMENT OF PURCHASE & SALE which is what most of us are used to using in North America when buying a home. Then the lawyers in Costa Rica will draft the AGREEMENT OF PURCHASE & SALE after the OFFER TO PURCHASE is agreed upon by both parties.
Overview For Offer To Purchase Details.
-Buyer's IDs are required (drivers licence/passport)
-Deposit Amount -Usually 10-20k USD. Keep in mind in Costa Rica deposits are NON REFUNDABLE unless it's the sellers fault you can not close. Such as title issues etc.
-Closing Date -Usually 30-60 days.
-Inspection -Optional to hire a professional to review the condition of the home.
-Seller will pay: Capital Gains if any, Realtor Fees & VAT, Payment of maintenance fees/condo fees, utilities UNTIL the closing date.
-Buyer will pay: Balance upon closing & about 3.98% Closing Costs charged in COLONES as well as choosing their own lawyer to handle the deal. *Sometimes you can split closing costs 50/50 but if you do the SELLER will pick the lawyer and in order to protect yourself I suggest against that method to save 2% when it could cost you way more in the long run.
This is a quick view of what an OFFER TO PURCHASE looks like with a reputable listing company. I've scratched out sensitive information for privacy reasons but as you can see this is the start of what an offer would look like. Page 2 is the most important page as its details terms in a greater manner so you'll definitely want a Realtor to work for you. Remember they are free for you!
The biggest surprise to me purchasing a home in Costa Rica was the time frames to deal with an OFFER TO PURCHASE. Normally in Canada when I draft an offer I put an irrevocable time on it meaning the sellers MUST respond to my offer within 3hrs or my buyers can refuse to proceed on the offer. In Costa Rica there is no such requirement as it's only an OFFER TO PURCHASE not an AGREEMENT TO PURCHASE. So they literally can take all the time they want to respond. Eric & I submitted our offer on a Monday and the sellers responded to us the following Monday. Mañana, Mañana is definitely a thing here!!! After they responded to us we countered back the next day and then they did respond quicker with another 24hrs later.
Once an Offer To Purchase Is Accepted, You'll want to...
-Start interviewing lawyers! We used Rafael Angel Pérez Zumbado of Pérez/Mejia Asesores Jurídicos. He knows this area very well and has helped many people buy in our area which instilled confidence in us.
-Set up Corporation (lawyer) to hold your investment into. There are pro's and con's to this such as an annual fee. I follow A.M. Costa Rica for this type of knowledge as he is an expert in his field and has an excellent article about the pro's of having a property in a corporation for death succession planning with a tax advantage. Feel free to also ask your lawyer but be sure they understand ESTATE PLANNING because I you will your asset to someone it is cheaper for them if it's held in a corporation.
-Set up a Business bank account as you'll be able to deposit more money per month this way. A personal bank account with BNCR (Banco National Costa Rica) will only allow $1000 a month deposited.
-Prepare For Closing: You'll have to have the funds ready to wire transfer to the lawyer for disbursements. Then the lawyer will hand the keys over to you upon completion. If you are out of the country when purchasing you can ensure your licensed realtor or property manager (not a friend) obtain the keys and hold them for your arrival.
-Schedule your move or get set up on Airbnb / hosting platform if you plan on renting.
I hope this has helped & if you have any questions I'm happy to help just reach out to me in our contact us section of our webpage.
Kristy & Eric
Dog Paws & Sandy Hair Be sure to check out our Villa Rentals.
Thinking of Buying / Selling in Canada or Costa Rica? Feel free to reach out and I'll be able to connect you with a trusted professional in your market.