Making sure your land won't go away

Costa Rica is the place to be right now, and you are not the only person looking for a piece of paradise. That’s why it’s very important that once you’ve seen the place you want to invest in, you sign a Purchase Sale Agreement, or an Option to Purchase. With this Agreement the Seller will exclusively reserve the property for you and will agree not to offer it a third party for the term of said agreement.

The term of this agreement will depend on how complex the transaction is and what you and the owner agree upon. Most of the time, you are expected to give a “down payment” or “earnest money deposit” as a pre-closing/good faith deposit to be held until completion of the purchase. This can be refundable or not, depending on the parties.

In Costa Rica it’s customary to give this deposit directly to the Seller. He will “hold it” until the term of the contract and eventual closing of the deal. A third party escrow account may also be used, with several companies, such as Stewart Title, offering such a service. This is an independent account where both parties, you and the Seller, will give specific indications to this third party, regarding the way these funds will go and when and to whom this warranty will be given.

Using an Escrow allows all parties to conduct their business under the strictest legality and also provides confidence that funds are protected during the real estate negotiation and that at the end of it, they will be distributed under the exact conditions previously established between parties.