Costa Rica is a remarkably beautiful country. The beaches and mountains would be hard to duplicate anywhere in the world. You may have heard of a "horror story" about Costa Rica real estate and people that have been taken advantage of. There is no need to dwell on the negative but instead be that educated, well informed person that makes the intelligent decisions before and during your transaction.

Deposits and escrows
In Costa Rica a real estate transaction is different. I have read with interest the internet articles concerning "crooked" real estate transactions and much is said about comparisons in the U.S. To compare is negative energy because you are in an apples and oranges situation. The first step in protecting yourself here in a real estate or any transaction is to realize you are in a different country governed by a different legal system and you fall under the umbrella of the way things are done here - not in the U.S. For instance, real estate depoists and escrows here are very differnt. Escrow accounts are pretty much non-existent unless you are dealing with Stewart Title or have a legal private arrangement with your realtor or lawyer. Deposits will be the focus since you definitely need to be aware of the deposit structure in Costa Rica with individual sellers.

The majority of the time the deposit is going to be held by the seller. Instead of "held", I should have used the word "given" to the seller. I do not think many sellers in Costa Rica hold deposits very long. Therefore, you should place as little money as possible in the hands of the seller. 5% is a start with a maximum of 10%. I will share with you my standard phrase over the years when buying real estate from individuals. When asked how much money I would like to deposit, I would state "The least amount of money possible". Then when the seller named a figure I always said it was too much and again "What is the least amount possible". It is amazing how sellers will come down to initiate a sell. If you back out as a buyer, the seller who already has your deposit will most likely keep it. I would venture to say in Costa Rica under normal circumstances the seller has already spent the deposit money. You can put protection clauses in your contract but the bottom line is deposits once lost are hard to recover here in Costa Rica. The one clause I advise clients to put in the contract is that if the seller does not honor the contract or other circumstances occur, the buyer will be given back double the original deposit. I do not think this clause scares anyone but it might help you in another situation. It is not uncommon for the seller to sell the propoerty to someone else if they offer a higher price. This has happened and can create a situation.

A seller in this circumstance may be willing to give you your deposit back and to appease you or in effect - get rid of you. You may recover double the deposit if you have the double deposit return clause in your contract. Of course, you are probably thinking that if you lose your deposit or the owners do not sell you will simply take them to court to recover. Taking them to court can be done if you are patient, patient, and patient. If you eventually win, you may recover if you are patient, patient, and patient throughout the years. I think you understand this insight into the court system here in Costa Rica. Concerning the money, I advise clients never to use cash because you have no paper trail and cash does funny things to people in Costa Rica. There seems to be this need to figure out how one can get there hands on cash and use it. Certified checks from the states and regular checks can take a lengthy time to clear. Better to open an account here, wire money and get a ceritfied check from the bank in Costa Rica. Be careful with deposits and control your money. Every day there are many real estate transactions that occur in Costa Rica without problems. As stated before I respect all professions and business institutions. I do, however, play the devil’s advocate in protecting my clients in real estate transactions. I am available for consultations and my fees are reasonable and fair.

Rudy Matthew