Escrow Services for Real Estate Acquisition in Costa Rica
The Prudent Option for Real Estate Acquisition in Costa Rica: Using Escrow Services
When contemplating the purchase of real estate in Costa Rica, one of the most prudent options is to hire the services of an escrow agent.
Escrow services provide a secure mechanism for transferring funds between a seller and a potential buyer. This process involves hiring an escrow company as a third party to manage these financial transactions in exchange for a fee. The standard fee structure typically consists of 0.25% of the total funds to be transferred, with a minimum charge of approximately $800.
It is important to note that many local residents in Costa Rica, including legal professionals, may not be familiar with the concept of escrow services. This is because Costa Rican buyers often transfer the escrow money directly to the seller, and the remaining balance is then transferred from their personal bank account.
However, for foreign buyers whose funds for the purchase come from abroad, it becomes necessary to establish a secure place for these funds, along with the required documentation certifying their origin. The quickest and safest method to achieve this is by hiring the services of a local escrow company.
Foreign buyers who do not have legal residency in Costa Rica may face difficulties opening a bank account in the country. Therefore, using escrow services becomes an ideal and secure alternative for depositing escrow funds, making down payments, final payments, and facilitating the entire transaction process.
When considering the purchase of real estate in Costa Rica, the first step is to make an offer. After acceptance, the buyer’s legal advisor drafts a formal agreement known as a “promise to purchase.” This agreement aims to remove the property from the market and typically requires an escrow deposit or down payment, which is negotiable but generally set at 10% of the total agreed sale price.
At the time of closing, the escrow agent will deposit the remaining balance in favor of the seller, as well as any other fees and expenses that need to be settled during the transaction, such as legal fees or real estate agent commissions.
For any inquiries, feel free to contact us at lalfaro@lexincorp.com and info@lexincorp.com.
Written by: Leonardo Alfaro
