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Costa Rica’s Closing Process in Real Estate

Costa Rica’s Closing Process in Real Estate

The real Estate Agent’s responsibility depends on his role in the transaction. He can be working for you (the purchaser) or the owner of the property (seller). This person usually gets his commission or pay from this transaction. It must be established as to whom he or she is working for so that the agreement on commissions must be set. Therefore, during the initial stages of the transaction, you and your real estate agent must put agreements in writing.

One of the major responsibilities of a real agent is to make sure that the property that was listed by the seller for purchase must be free from any payables or duties. By doing so, the agent must make sure that the title is legitimate. He or she can verify this by going online and accessing the National Registry site (www.registronacional.go.cr). In that site, he can get the property survey map and the title report.

This may look easy for you but there have been numerous instances wherein real estate agents have encountered problems on properties during the closing process. This must be avoided. In order to make sure you are about to acquire a legitimately documented property, always determine if the property is legally recognized for purchase and other data are in order such as the title number (updated) and its survey number.

Here are the most common types of ownership of real estate properties in Costa Rica:

• Personal: One individual owns the property.
• Joint: More than one individual owns the property. Each of these individuals must have undivided interest on the property. Locals refer to this ownership as “derechos.”
• Corporate: A corporation owns the titled property. Real estate agents must verify with the land owner (seller) that he or she has the right authority to transact with the buyer (corporation). Corporate documents must be procured from the seller.

Another responsibility of the real estate agents is that they should spend a majority of their time with you (as the buyer). Once the buyer decided what to purchase, the agent will then negotiate the price between the seller and buyer. Terms and other conditions can be discussed during the negotiations.

The real estate agents will also be preparing the purchase agreement as well. The forms are already set up and are commonly used. The forms are said to be modeled on a purchase agreement in the U.S. so you won’t be confused with it.
One thing that you should know is that Costa Rica is noticeably formal in terms of the documents’ execution as specified by law. The contract may be considered null and void if there’s a failure to comply on the process.

Common pre-sale contracts used in the country are the “Opcion de Compra” or Purchase Agreement and “Promesa Reciproca de Compra Venta” or Reciprocal Promise to Buy and Sell.
These contracts don’t necessarily mean that the property (estate) has been passed on to the buyer. However, by setting this up, the terms and other conditions have been set into place and must be followed by both parties (buyer and seller).

Agents may get the services of an attorney during the creation of the agreements. If you have already hired the services of a lawyer, you can have that person look over the contracts.

After the pre-sale contracts have been made, the scheduling of the closing data will be made.

By the way, when you are purchasing a fully-furnished house (that is, with all the utilities and amenities), make sure that the seller already paid his or her dues during the past months until the last minute. This is to ensure that you won’t encounter any problems in terms of the bills once you settle yourself in your new home. Also make sure the necessary taxes have been settled by the seller as well.

The real agents must take charge when it comes to home inventory review. Before the closing of the sale is made, the agent must make sure that the items and properties specified on the contract are actually present on the property itself. Therefore, the inventory list is an integral part of the negotiations.
Last but not the least is for the agents to check the zoning applicability of the property. It is important since the you will be informed beforehand as to what you can do with the land.

Escrow
Both the seller and buyer must be fully aware on the escrow process wherein the payment will be transferred from the former to the latter. Vagueness on some purchase contracts usually lead to confusion and disagreement from both parties and may even lead to the cancellation of the purchase transaction. Refer to a qualified escrow agent in terms of dealing with this process.
Meanwhile, you can get an attorney that will solely take the responsibility on the closing of the purchase. There are lawyers who concentrate in this latter stage of the purchase. This will be an advantage for both parties since the processing time will be cut short.

Property Transfer Deed Preparations
The transfer of a titled property can be done after a property transfer deed is executed before a notary public. The closing attorney’s responsibility is to create and record the deed. Once this is done, he will then give the original document to you. The attorney can also process the other documents that the seller must give up and turn over to you as well.

After the Closing Sale
After you officially acquire the property, you may need to consider the following incidents and issues that you may encounter.

• You need to change the name specified on the bills under your name. It must be the duty of the property seller to do the necessary changes. According to previous transactions, new owners usually have a hard time making these seemingly easy changes and will end up maintaining the former owner’s name. Refer with your attorney as to how this will take place. This also applies to water and electric bills.
• Delivery of the utility bills to you may become a challenge as well. You can ask the real estate agent to get copies of the past utility bills in order to determine the billing address. Some former owners usually have the bills sent to a P.O. box while other have it sent to the physical address. As a foreigner owning a property in Costa Rica, it would be very inconvenient if you find yourself not having the basic utilities just because you missed the payment date.
• The turnover of the property had been recorded in the National Registry. However, this may not have been updated in the local government. Therefore, you need to have the records updated on the local government level. This is to avoid miscalculated property taxes and other issues as well. If you are still adjusting to this, you can ask for the help of your attorney. You may need to fill up a number of forms.

Commissions and fees to settle
Once everything is smoothened out between you and the seller, there’s still one more matter to settle. This is the commissions of the real estate agents and the fees for your lawyer. Commissions and fees to settle
 

Newsflash

Property insurances in Costa Rica
Getting a house or property through mortgage credit may require you to pay other fees too. However, these fees will go to the insurance policy in order to protect your home especially when there are unavoidable occurrences such as sudden landslides or other disasters. Settling of the insurance policy payments is usually required once you buy a property in Costa Rica.
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