How Property Sales Work in Costa Rica
The closing process in Costa Rica is different from the US, Canada, or Europe — but not complicated once you understand it. The biggest differences: there's no MLS (Multiple Listing Service), the notary plays a central role (more like a civil law notary than a US one), and the process is generally smoother and faster than you'd expect.
Here's every step, in order, with realistic timelines.
Letter of Intent (LOI)
The process starts with a written offer — a Letter of Intent or "Carta de Intención." This is a non-binding document (unless you specify otherwise) that outlines:
- Offered price and payment terms
- Deposit amount (typically 5–10% of purchase price)
- Due diligence period (typically 15–30 days)
- Contingencies (financing, inspection, clear title)
- Proposed closing date
The LOI opens negotiation. Expect some back-and-forth — Costa Rican sellers often counteroffer, especially in a strong market. Once both parties agree on terms, you'll move to the formal purchase agreement.
Tip: Have your attorney draft or review the LOI before submitting. Some agents use informal templates that lack important protections.
Due Diligence
This is the most important phase and where your attorney earns their fee. Due diligence should cover:
- Title Search: Verify ownership, check for liens, mortgages, easements, and annotations in the National Registry
- Survey Verification: Confirm the plano catastrado (registered survey) matches the physical property and Registry records
- Water Letter: Obtain a carta de disponibilidad from AyA or the local ASADA confirming water service availability
- Building Permits: Verify all construction was properly permitted and complies with municipal zoning
- Maritime Zone Status: Confirm whether the property is fully titled or within the concession zone
- Tax Status: Verify all property taxes and municipal fees are current
- Environmental Compliance: Check for any SETENA (environmental agency) restrictions
- HOA/Condo: If applicable, review condo bylaws, HOA financials, and outstanding assessments
Timeline: 2–4 weeks. Some items (like the water letter) can take time depending on the local utility.
Cost: Included in your attorney's fees. Some buyers also commission an independent property inspection ($300–600).
Purchase Agreement (Contrato de Compraventa)
Once due diligence comes back clean — title is clear, survey matches, water letter is current, permits check out — your attorney drafts the formal purchase agreement (contrato de compraventa). This is the legally binding contract that commits both parties to the transaction. Everything before this point has been preliminary. Once you sign this and deposit funds into escrow, you're locked in (subject to the contingencies written into the agreement).
This isn't a standard form. Unlike US real estate where everyone uses the same NAR template, Costa Rican purchase agreements are custom-drafted by attorneys. Every deal is slightly different. This is good (the contract can be tailored to your specific situation) and bad (you need to read every word because there's no "standard" to fall back on).
📄 What's in the Contract
- Full legal description — Property folio number, plano catastrado number, exact boundaries, total square meters, and any encumbrances or easements
- Purchase price and payment structure — Total price, deposit amount, escrow schedule, and whether it's USD or colones (always specify currency explicitly)
- Deposit and escrow terms — Where funds are held, release conditions, what happens if either party defaults
- Representations and warranties from seller — Seller confirms they own the property, all taxes are current, no hidden liens, all construction was permitted, no pending litigation, etc.
- Closing date and conditions precedent — Target closing date and what must happen before closing (Registry transfer, seller vacating, escrow funding, etc.)
- Default and remedy provisions — What happens if buyer backs out, seller can't deliver clear title, or closing doesn't happen on time
- Inventory list (if furnished) — Itemized list of all furniture, appliances, and equipment that conveys with the property. Get specific: "Samsung 55" TV in living room," not "TV." I've seen sellers take the good appliances and leave broken replacements because the contract just said "refrigerator."
⚠️ Watch For (Red Flags & Negotiation Points)
- Penalty clauses for buyer withdrawal — Some sellers want to keep your entire deposit if you back out for any reason. This is negotiable. Reasonable structure: deposit is refundable if due diligence reveals undisclosed issues, non-refundable if you simply change your mind. Anything harsher than that should be negotiated.
- Seller's obligation to deliver clear title — The contract must explicitly state the seller will deliver title "free and clear of all liens, encumbrances, and defects except those disclosed in writing." If this language is missing or vague, your attorney should add it.
- What happens to the deposit if the deal falls through — Be specific about scenarios: seller can't deliver clear title (you get deposit back), seller backs out (you get deposit back plus damages), buyer backs out after satisfactory due diligence (seller keeps deposit), title issues discovered during due diligence (deposit returned, deal cancelled).
- Who pays which closing costs — There's no standard in Costa Rica. By custom, buyer and seller split the 1.5% transfer tax 50/50, but everything else is negotiable. I've seen sellers pay the full transfer tax in a buyer's market. I've seen buyers pay everything in a hot market. Specify in the contract who pays transfer tax, notary fees, Registry fees, stamps, escrow fees, and title insurance.
- Timeline for seller to vacate — If the property is occupied (by the seller or a tenant), specify when they must be completely moved out. "Within 30 days of closing" is not specific enough. Use a hard date: "Property shall be vacant and delivered to buyer no later than [specific date]." Also specify penalties if they don't vacate on time ($100–300 per day is common).
- Currency denomination — Costa Rica uses colones (₡) for daily transactions but USD for most real estate. Your contract must specify which currency the price is denominated in and, if USD, what exchange rate applies for any colones-denominated fees. Never assume — I've seen contracts accidentally written in colones when both parties thought they'd agreed on USD. That's an instant 500:1 pricing error.
Bilingual contracts (English/Spanish): Most purchase agreements for foreign buyers are written in both English and Spanish, with both versions included in the same document side-by-side or on facing pages. This is helpful, but here's what you must understand: the Spanish version is the legally binding one. If there's any discrepancy between the English and Spanish text, Costa Rican courts will enforce the Spanish version. This means your attorney must review both versions carefully to ensure they match. I've personally seen cases where the English said "seller pays all closing costs" and the Spanish said "costs split equally" — the seller paid nothing and the buyer had no recourse.
Common additions for Tamarindo properties: If you're buying in a development or gated community, the purchase agreement should address: HOA bylaws and whether you agree to them, any pending special assessments, seller's obligation to provide current HOA financials, and any restrictions on rental use (some communities restrict short-term vacation rentals — you need to know this before closing if rental income is part of your plan).
For beachfront or near-beach properties, include language about maritime zone verification and seller's representation that all concession fees (if applicable) are current and the concession is transferable. For properties with septic systems (common outside Tamarindo town center), include seller's representation that the septic is functional and properly sized for the house. Septic replacement costs $3,000–6,000 — you don't want to discover it's failed right after closing.
Timing: Your attorney should provide a draft purchase agreement for your review at least 3–5 days before the signing date. Read it. Ask questions. Request changes. This is your last chance to negotiate terms before you're contractually bound. Once signed and deposited into escrow, your leverage drops to near-zero.
Escrow — Protecting Your Purchase Funds
Escrow is your financial safety net. Instead of wiring hundreds of thousands of dollars directly to a seller you just met, your funds sit in a neutral, regulated escrow account until every single closing condition is satisfied. No escrow = no protection. This is non-negotiable for any serious buyer.
How escrow works in Costa Rica:
- Initial deposit (5–10% of purchase price) goes into escrow when you sign the purchase agreement. This shows the seller you're serious without giving them control of your money. The deposit is refundable if due diligence reveals problems or if the seller can't deliver clear title.
- Remaining balance is wired to escrow 3–7 days before the scheduled closing date. The escrow company verifies funds are cleared and converts to USD if needed (Costa Rican banks work in both colones and dollars, but most real estate transactions are denominated in USD).
- Funds are released to the seller only after the notary confirms: (a) both parties signed the escritura (transfer deed), (b) all closing costs and taxes were paid, and (c) the deed was submitted to the Registro Nacional for inscription. This usually happens within 24–48 hours after the signing appointment.
- Post-closing verification: Some buyers (wisely) instruct escrow to hold back a small amount ($5,000–10,000) until the National Registry confirms the inscription is complete and title has officially transferred. This protects against last-minute registry rejections due to paperwork errors.
Choosing an escrow company: Use a licensed, established escrow provider. The two largest international firms operating in Costa Rica are Stewart Title Latin America and First American Title Costa Rica. Both have San José offices (mostly in Escazú), English-speaking staff, and decades of experience with foreign buyer transactions. They also offer title insurance, which you should get anyway on purchases over $200K.
There are also reputable local escrow firms like Escrow & Closing Services CR and law firms that provide escrow services in-house. Your attorney will recommend someone, but verify they're properly licensed — Costa Rica regulates escrow companies under the Superintendencia General de Entidades Financieras (SUGEF). An unlicensed "escrow service" is just someone's bank account. Don't risk it.
Cost: Escrow fees typically run 0.25–0.5% of the purchase price, with minimums around $500–750. On a $400,000 property, expect $1,000–2,000. Some companies charge a flat fee instead of a percentage — compare pricing. Either way, this is cheap insurance for six-figure transactions.
Wire transfer realities (read this carefully): Wiring large sums internationally isn't like Venmo. Here's what actually happens and how to avoid delays:
US banks: International wires over $50,000 trigger compliance reviews, especially to Central American destinations. Your bank's fraud department may call you to verify the transaction is legitimate. They may ask for documentation (purchase agreement, attorney contact info, escrow company verification). Some banks (particularly smaller regional banks) are uncomfortable with Costa Rica wire transfers altogether and may delay or decline them. Call your bank 1–2 weeks before you need to wire funds. Speak to a banker, not the call center. Explain you're purchasing real estate in Costa Rica. Ask if they need any advance documentation. Get a wire transfer instruction sheet from your escrow company and have it ready.
Canadian banks: Similar scrutiny. RBC, TD, and Scotiabank are generally smooth with Costa Rica wires, but you'll need to notify them in advance. Expect 2–4 business days for funds to clear.
European banks: SWIFT transfers to Costa Rica can take 3–5 business days and sometimes route through multiple correspondent banks, each taking a small fee. Budget for $50–150 in wire fees. Some European banks require in-person verification for large international wires — don't assume you can do it online.
Timing is everything: Don't wire funds the day before closing. Wire at least 3–5 business days in advance. I've seen closings delayed because a wire was stuck in compliance review, or routed through a correspondent bank in New York that decided to hold it for 48 hours "for verification." These delays cost you — literally — because sellers can (and do) charge per-diem penalties for late closings if your purchase agreement includes them.
Wire fraud warning: This is real and happens in Costa Rica. Scammers hack email accounts and send fake wire instructions with altered bank account numbers. Always verify wire instructions by calling your attorney or escrow company directly using a phone number you looked up independently (not one from the email). Send a small test wire first ($100) to confirm the account is correct before sending the full amount. Yes, this sounds paranoid. Yes, people lose $300,000 this way. Verify everything.
Notary & Closing (Escritura)
The notary public (notario público) is the central figure in a Costa Rican real estate closing. This is nothing like a US notary who just witnesses signatures at UPS stores. A Costa Rican notary is a licensed attorney who has passed a rigorous national exam and been granted special authority by the government to authenticate legal documents, particularly property transfers. Think of them as a quasi-judicial officer whose signature makes documents legally binding and admissible in the National Registry.
What the notary actually does:
- Drafts the escritura de traspaso (transfer deed) — This is the legal instrument that transfers ownership. It includes the complete legal description of the property, purchase price, buyer and seller information, title folio number, fiscal value, and representations from both parties. The escritura is a formal, stylized document written in precise legal Spanish. It's usually 8–15 pages for a straightforward sale, longer if there are complications.
- Verifies identities — The notary must physically meet the buyer and seller (or their authorized representatives), verify their passports or cédulas (Costa Rican ID), and confirm they are who they claim to be and have authority to sign. This happens at the closing appointment.
- Witnesses and authenticates the signing — The notary reads key sections of the escritura aloud (or summarizes them in English if you don't speak Spanish), confirms both parties understand and agree, and witnesses the signatures. Their notarial seal and signature authenticate the document.
- Calculates and collects all taxes, stamps, and fees — The notary determines the exact amounts owed for transfer tax (1.5%), fiscal stamps (timbres fiscales), municipal stamps, National Registry fees, bar association stamps, and national archive fees. They collect payment (usually via check or wire from the escrow account) and remit to the appropriate government agencies.
- Files the escritura with the National Registry (Registro Nacional) — The notary submits the signed, stamped deed to the Registry for inscription (inscripción). This is what actually transfers title. Until the Registry records the deed, ownership hasn't technically changed.
Who chooses the notary? By custom, the buyer and seller mutually agree on a notary, though in practice the seller's attorney often serves as notary or nominates someone. This is fine as long as your attorney reviews the escritura draft before the signing appointment. Many buyers prefer to use their own attorney as the notary for maximum control — this is common and perfectly acceptable. Just negotiate it during the purchase agreement phase.
Can you close remotely? Yes, and most foreign buyers do. If you can't be in Costa Rica for closing (or simply don't want to fly down for a 45-minute signing appointment), you grant your attorney a limited power of attorney (poder especial) authorizing them to sign the escritura on your behalf. This POA must be notarized (if signed in the US, use a notary public and get it apostilled; if signed in Costa Rica, any local notary can do it). The POA is specific to the transaction — it only grants authority to sign this particular property transfer, not broad control over your affairs.
Remote closings are standard. I've closed three Costa Rican properties and was only physically present for one. The others were done by POA while I was working in California. Your attorney sends you a PDF of the signed escritura within 24 hours, and you track the Registry inscription online. It works smoothly.
The closing appointment itself: If you do attend in person, here's what happens. You meet at the notary's office (usually in San José or Escazú, though some notaries will meet in Tamarindo for an extra fee). The appointment takes 30–60 minutes. The notary reviews the escritura, confirms the property details, verifies identities, reads key sections aloud, and has both parties sign. You'll sign 4–6 times (initialing each page, signing the final signature page, signing the tax payment authorization). The notary collects certified checks for all fees and taxes. You shake hands with the seller. The notary files the paperwork. Done.
What to bring: Your passport (the one you'll hold title under or that matches your POA), proof of your tax ID number if you're holding title personally (you'll need a Costa Rican NITE or DIMEX number), certified checks for closing costs if the notary requested them in advance (though most now pull directly from escrow), and your attorney. The seller brings their cédula or passport and proof of their corporation if selling through an S.A.
Reading the escritura (critical): Do not sign the escritura without your attorney reviewing the Spanish version first. The notary drafts it based on the purchase agreement, but mistakes happen — wrong fiscal value, incorrect lot number, missing easements, wrong corporation name. Your attorney should receive a draft escritura 5–7 days before closing to review for errors. I once caught a notary who accidentally listed the wrong plano catastrado number (off by one digit), which would have required months of Registry corrections to fix if we'd signed it. Read everything. Verify everything.
Cost: Notary fees are included in the "stamps & registration" line item on your closing cost estimate — usually $500–1,500 depending on transaction complexity. The notary is paid from the escrow account at closing. If you're using your own attorney as notary, their fee is typically included in the overall legal fee rather than charged separately.
National Registry Transfer (Registro Nacional)
After the notary files the deed, the Registro Nacional processes the transfer. This is the final step — once recorded, you are the legal owner.
Timeline: Registry processing typically takes 1–2 weeks. Your attorney can track the status online through the Registro Nacional's digital system.
What you receive:
- Registered deed (escritura inscrita) — your proof of ownership
- Updated title folio showing your name (or your corporation's name)
- Updated plano catastrado (if any boundary changes were made)
Once the transfer is recorded, you can obtain a certified copy of your title from the National Registry at any time. This is your most important document — store it safely and keep digital copies.
Closing Costs — The Full Breakdown
Budget 3.5–4.5% of the purchase price for total closing costs. Here's where every dollar goes.
🏛️ Transfer Tax (Impuesto de Traspaso)
1.5% of the registered value or sale price (whichever is higher). Split 50/50 between buyer and seller by custom, though this is negotiable. Collected by the notary and remitted to the government.
⚖️ Legal Fees
1–1.5% of purchase price (minimum $1,500–2,500). Covers your attorney's work: due diligence, contract drafting, closing coordination, and post-closing follow-up. This is money well spent.
📑 Stamps & Registration
~0.5% combined. Includes fiscal stamps (timbres fiscales), municipal stamps, national archive stamps, bar association stamps, and National Registry filing fees. Your notary handles all of this.
📋 Notary Fees
Variable — often included in legal fees. If using a separate notary, expect $500–1,500 depending on complexity. The notary is responsible for the escritura, tax calculations, and registry filing.
🔒 Escrow Fees
0.25–0.5% of purchase price. Paid to the escrow company for holding and disbursing funds. Some escrow companies charge a flat fee ($500–1,500) instead of a percentage.
🛡️ Title Insurance (Optional)
0.5–0.75% of purchase price. One-time premium. Recommended for purchases over $200K and strongly recommended for maritime zone properties. Not required by law.
What you don't pay: There's no buyer's agent commission in Costa Rica — the seller pays the real estate agent's commission (typically 5–6% of the sale price). This is a significant advantage for buyers compared to markets where the buyer covers agent fees.
Example: Closing a $400,000 Condo
Purchase Price: $400,000
Transfer Tax (1.5%): $6,000 (split: $3,000 buyer / $3,000 seller)
Legal Fees (1.25%): $5,000
Stamps & Registration (0.5%): $2,000
Escrow (0.35%): $1,400
Title Insurance (0.5%): $2,000
Total Buyer Closing Costs: ~$13,400 (~3.35%)
Without title insurance: ~$11,400 (~2.85%)
Pro Tips for a Smooth Closing
Start your wire transfer early
International wires to Costa Rica can take 3–5 business days and may trigger compliance reviews. Tell your bank in advance that you're purchasing real estate in Costa Rica. Have the escrow account details ready before you need them.
Get a power of attorney
If there's any chance you won't be in Costa Rica for closing, set up a limited power of attorney (poder especial) early. This allows your attorney to sign on your behalf. It needs to be notarized and, if signed abroad, apostilled.
Don't skip the inspection
Costa Rica doesn't have the same inspection culture as the US. But especially for resale properties, an independent inspection ($300–600) can reveal structural issues, plumbing problems, or unpermitted additions that could cost you thousands later.
Negotiate closing cost splits
The 50/50 split on transfer tax is custom, not law. In a buyer's market, you may be able to negotiate the seller paying a larger share. Everything is negotiable — including who pays for escrow and notary fees.
Common Closing Mistakes Foreign Buyers Make
After watching dozens of closings in the Tamarindo market, these are the mistakes we see most often — and the ones that cost the most money to fix after the fact.
1. Using the seller's attorney. This is the single most common mistake and potentially the most expensive. The seller's attorney has a fiduciary duty to the seller, not you. "We'll use one attorney to keep it simple" sounds efficient but creates a fundamental conflict of interest. We made this mistake on our first purchase and it cost us six weeks of delays when the attorney prioritized the seller's timeline over our due diligence. Hire your own independent counsel. Always.
2. Wiring funds at the last minute. International wires to Costa Rica routinely take 3–5 business days and can trigger compliance reviews that add another 2–3 days. We've seen closings delayed — and per-diem penalties triggered — because buyers wired funds the day before closing. Wire at least 5 business days early. Call your bank first to alert them about the international transfer.
3. Not reading the Spanish version of the contract. In dual-language purchase agreements, the Spanish text is the legally binding version. We've personally caught discrepancies between English and Spanish versions — one said "seller pays closing costs" in English and "costs split equally" in Spanish. Have your attorney verify both versions match word for word on every material term.
4. Skipping the property inspection. Costa Rica doesn't have the same inspection culture as the US or Canada. Many buyers waive inspections because "the property looks great." An independent inspection ($300–600) can reveal structural issues, unpermitted additions, failing septic systems, water damage behind walls, or electrical problems that would cost $5,000–20,000 to repair. On a $400K purchase, that's cheap insurance.
5. Not verifying the furniture inventory. If you're buying a furnished property (common in Tamarindo), every single item should be listed in the purchase agreement. "Furnished as shown" is not specific enough. We know of a case where the seller removed the good appliances, the outdoor furniture, and even the curtain rods — all technically legal because the contract said "furnished" without an itemized list.
Post-Closing: Your First 30 Days as an Owner
Congratulations — you own property in Costa Rica. Now what? Here's the checklist for your first month as a Tamarindo property owner, in priority order.
Week 1:
- Set up utilities in your name — Transfer electricity (ICE or Coopeguanacaste), water (AyA or local ASADA), internet (Tigo, Cabletica, or ICE), and cable/streaming. Your attorney or property manager can handle this, but do it immediately to avoid service gaps.
- Change all locks — The seller, their cleaners, their property manager, their contractor, and probably their neighbor all have copies of the old keys. $200 for new locks is cheap peace of mind. Better yet, install a smart lock system ($250–350) if you plan to rent.
- Photograph everything — Document the property's condition thoroughly with photos and video. This protects you if disputes arise about pre-existing damage, and it gives you a baseline for insurance claims.
Week 2–3:
- Set up property insurance — Contact INS (Instituto Nacional de Seguros) for structural insurance. Add supplemental rental coverage if you plan to vacation-rent. Budget $800–2,000/year total.
- Hire a property manager (if renting) — Interview 2–3 management companies. Ask for references, sample properties, and occupancy data. Sign a 6-month initial term with a 30-day cancellation clause.
- Get a NITE (tax ID) — Required for declaring rental income and paying property taxes. Your accountant or attorney handles the application through the Ministry of Finance.
Week 4:
- Professional photography (if renting) — This is the single highest-ROI investment in vacation rental. Professional photos cost $200–400 and can increase booking rates by 30–50% versus phone photos. Do this before listing on any OTA.
- Introduce yourself to the HOA — Meet the administrator, get the bylaws, understand the rules (rental restrictions, pet policies, noise guidelines). Better to learn the rules now than get a violation notice later.
What Comes After Closing?
If you're planning to rent your property, our rental income guide covers occupancy rates, management options, and realistic yield projections. Still have questions about the legal side? Check our buyer FAQ.