The #1 mistake Americans make when buying property in Costa Rica

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The #1 mistake Americans make when buying property in Costa Rica

by Augusto Arce in Costa Rica

Costa Rica is one of the best real estate investment destinations in Latin America. As it is well known, the country is a solid democracy and also a respected State of Law where you can rest assured that your assets are properly registered in a reputable centralized digital registry system.

Having said that, its legal & business environments are considerably different from that of North America and other countries whose legal systems are not originated in ancient Spanish Law like Costa Rica is. As a foreign investor you should seek legal advice from a qualified real estate attorney who understands such differences.

So, what is the #1 mistake Americans and other nationalities make when buying property in Costa Rica? It is very simple yet extremely crucial. You see, when a Costa Rican citizen is buying a property, he or she will do it with the advice and protection of his personal lawyer who he or she has known for years, NEVER with an attorney referred by the real estate broker! Why? For us it´s logical, we want an independent attorney in our corner to make sure that our investment is going to be protected properly. On the other hand, it is a common practice for NorthAmericans to work with the attorney referred by the real estate broker and/or developer.

Working with the attorney referred to you by the person or company interested in selling the property could create a conflict of interest, Costa Rican property transfers are handled entirely by Costa Rican attorneys acting as Notaries. Notaries are supposed to be impartial, but it's logical that if the attorney/law firm has an ongoing commercial relationship with the Seller, it might not be in his best interest to be meticulous and thorough in the necessary Due Diligence prior to the Closing.

Before buying properties in Costa Rica it is necessary for the specialized real estate attorney to conduct a serious Due Diligence in order to carefully study the title and investigate possible:liens, restrictions, encumbrances and many other legal aspects that have to be addressed.

Please take this advice based on our experience over the last 20 or more years in witnessing and directing real estate transactions of very different nature across all Costa Rica.

Remember that the legal fees and expenses for Real Estate transactions are basically standardized in Costa Rica with established percentages, so if you are going to have to pay essentially the same with any lawyer, make sure that you avoid going with the professional suggested by the Real Estate brokers, the safety of your investment is entirely in their hands and depends on the seriousness of their job.

Augusto Arce, attorney

CEO

GLC Legal

About The Author

Augusto Arce is a Managing Partner of the lawfirm GLC.
His legal expertise is in the following errors:
Real Estate, Real Estate Development, Foreign Investment, Corporate Law, Commercial Law, Immigration Law, Labor Law, Gaming Law, Intellectual Property, Business Law.
You can reach Augusto at info@glcabogados.com
You can also meet Augusto (and other experts) in person at our 7 Day Moving To Costa Rica Relocation Retreat.