Before signing a purchase agreement in Costa Rica

A property can seem perfect during a visit and still hide a legal encumbrance, a discrepancy in area, or a payment condition that completely changes the deal. If you're wondering Before signing a purchase promise agreement in Costa Rica, you should review the following: * **The Property:** * **Legal Status:** Verify that the property is legally registered and free of liens, mortgages, or any other encumbrances. You can do this by requesting a certified copy of the property's title (Certificado de Bienes Inmuebles) from the National Registry (Registro Nacional). * **Boundaries and Measurements:** Ensure the property's boundaries and measurements described in the deed match the actual physical boundaries. * **Zoning and Land Use:** Check the municipal zoning regulations (uso de suelo) to confirm that the property can be used for your intended purpose. * **Taxes and Municipal Fees:** Verify that all property taxes (impuesto de bienes inmuebles) and municipal fees (tasas municipales) are up to date. * **Utilities and Services:** Confirm the availability and connection of essential services such as water, electricity, and internet. * **Physical Condition:** Conduct a thorough inspection of the property's physical condition, including the structure, roof, plumbing, and electrical systems. Consider hiring a professional inspector. * **The Purchase Promise Agreement (Opción de Compraventa):** * **Parties Involved:** Ensure the names and identification of the buyer(s) and seller(s) are correctly stated. * **Property Description:** Confirm the property description matches the official title information. * **Price and Payment Terms:** Clearly understand the total purchase price, the amount of the deposit (prima), the payment schedule, and the method of payment. * **Deposit (Prima):** Understand the terms regarding the deposit, including whether it is refundable and under what conditions. * **Closing Date (Fecha de Cierre):** Confirm the agreed-upon date for the final sale deed signing. * **Contingencies:** Identify any conditions that must be met before the sale is finalized (e.g., obtaining financing, satisfactory inspection). * **Default Clauses:** Understand the consequences for either the buyer or seller if the agreement is not fulfilled. * **Responsibilities for Expenses:** Clarify who is responsible for notary fees, registration fees, legal costs, and transfer taxes. * **Right to Assign:** Determine if the buyer can assign their rights and obligations under the agreement to another party. * **Governing Law and Jurisdiction:** Note the laws that will govern the agreement and the jurisdiction in which any disputes will be resolved. * **Legal Counsel:** * **Attorney Review:** It is highly recommended to have a Costa Rican attorney specializing in real estate review the purchase promise agreement before you sign it. They can identify potential issues, explain the legal implications, and ensure your interests are protected. By carefully reviewing these aspects, you can significantly reduce the risks associated with purchasing property in Costa Rica., the answer begins by understanding that this document should not be treated as a simple reservation: it sets commitments, deadlines, and consequences that can have a relevant patrimonial impact.

The purchase agreement is usually the step before the deed of transfer is granted. It does not transfer ownership on its own, but it can obligate the parties to fulfill what has been agreed upon or to assume the foreseen consequences if they fail to do so. Therefore, a prior legal review allows for negotiation with information, documentation of what was actually agreed upon, and reduction of uncertainties before handing over money or renouncing other options.

What to check before signing a purchase agreement?

The document must accurately reflect ownership, parties, price, payment method, and the expected date for finalizing the transfer. However, a well-drafted promise does not substitute for due diligence on the property or on the party intending to sell it.

Each case requires a particular analysis. It's not the same to buy an inhabited house as a lot for development, a condominium, a farm with complex access, or a property acquired through a company. The key is to first verify the legal and material situation, and then convert the findings into clear conditions and clauses.

Identity, capacity, and powers of the seller

The first step is to confirm that the person or entity signing has the right and authority to sell. It must be verified who is listed as the registered owner and if they match the person presenting as the seller. When there is more than one owner, all must participate or be validly represented, as applicable.

If the property belongs to a company, it is advisable to review its legal personality, validity, and powers of representation. It is not enough for someone to be a partner, de facto administrator, or family member of the owners. Whoever signs the promise must have sufficient authority to bind the company in that transaction.

It is also wise to identify if any powers have been granted to third parties and review their scope. A signature without adequate powers can open an avoidable discussion right when progress was expected toward closing.

Real estate registry study

National Registry information allows us to understand essential aspects of the property: ownership, liens, annotations, easements, encumbrances, restrictions, and relevant background information. A mortgage, an attachment, an annotated lawsuit, or a disposition limitation do not necessarily make the transaction impossible, but they do require a concrete strategy and well-defined closing conditions.

For example, if a mortgage exists, the promise must state how it will be canceled, who will manage the necessary documents, and when the property will be released. If there is an annotation, the buyer needs to understand its origin, its possible effect, and whether it must be lifted before formalizing the deed.

The study should also consider whether the property is subject to rights of way, usufructs, rights of habitation, or other encumbrances that may affect the intended use. The registry description is the basis, but it should not be evaluated in isolation.

Match between record, plan, and physical reality

A common mistake is assuming that the area, boundaries, and access observed during a site visit necessarily match the documents. Before committing, the registry information must be cross-referenced with the cadastral map and the physical condition of the land or building.

Differences can arise from closures placed outside the correct line, access routes used by custom without legal backing, buildings that encroach on setbacks or neighboring properties, or commercially advertised areas that do not correspond to the registered property. On a lot, a topographic survey can be particularly useful when there are doubts about boundaries, slopes, or access.

If the purchase depends on a specific feature, such as a view, a separate entrance, a street frontage, or a certain extension, it is advisable to document and verify it before signing. What is not precisely defined can later become a source of conflict.

Terms of Use, Permissions, and Environment

The promise must align with the actual purpose of the purchase. A property suitable for housing may not be suitable for commercial activity, a tourism project, an expansion, or a higher-density construction. Therefore, it is advisable to review the applicable regulations, land use zoning, access to services, and any relevant environmental or municipal restrictions.

In condominiums, internal rules, maintenance fees, assembly agreements, and restrictions on rentals, pets, renovations, or commercial activities must also be reviewed. These regulations can directly affect the practical value of the investment.

Properties located near rivers, coastal areas, protected areas, or with unconventional access require additional attention. In certain cases, special regimes, concessions, environmental limitations, or rights-of-way may be involved and must be analyzed before assuming a purchase obligation.

Outstanding taxes, fees, and services

The promise may state that the property will be delivered free of debts, but that phrase must be translated into specific checks. It is advisable to review the status of municipal taxes, condominium fees, utilities, and other charges associated with the property.

It should also be agreed how expenses incurred up to the closing date will be distributed and what supporting documents the seller will have to provide. If there will be a retention of funds to address any outstanding obligation, the mechanism must be clear and proportionate to the identified risk.

Price, premium, and payment terms

The price is not just a figure. The offer must indicate the currency, the premium or deposit amount, the payment date and method, the outstanding balance, and the necessary conditions for its release. When third-party accounts or escrow arrangements are involved, the fund handling instructions must be in writing.

It is essential to distinguish between a premium that is part of the price and a sum with consequences for non-compliance. The parties must understand what happens if the buyer fails to obtain financing, if the seller fails to clear a title encumbrance, or if a due diligence contingency is not met. These scenarios should not be left to later interpretations.

If the purchase is to be financed, the offer should include realistic timelines for approval and disbursement, as well as the effect of a bank rejection. If payment will be made with funds from abroad, it is also useful to anticipate transfer times, documentary evidence requirements, and currency fluctuations, where applicable.

Closing deadline and prior deliverables

The closing date must be achievable and linked to concrete obligations. The seller may have to deliver certifications, cancel liens, obtain permits, or vacate the property. The buyer, on the other hand, may need to complete inspections, secure financing, or to form a company To acquire.

A strong commitment specifies which documents must be presented before closing, who manages them, and what happens if any are missing. It is also advisable to define whether the deadline can be extended, under what conditions, and with what communication between the parties.

Do not leave the transfer of possession unregulated. It must be clear whether it will occur upon signing the deed, upon registration of the transfer, or on another agreed-upon date. If the property is occupied by the seller, tenants, or third parties, the handling of that occupation requires special attention.

Default, termination of the operation, and dispute resolution

Default clauses are not an afterthought. They should describe in balance what constitutes a default, what period exists for correction, what happens to the premium, and what the agreed-upon remedies are. The consequences should be consistent with the business and the circumstances verified during negotiation.

It is also useful to anticipate what will happen if due diligence reveals a material problem, such as an undisclosed encumbrance, a documentary inconsistency, or a restriction that impedes the intended use. A well-drafted condition precedent or termination clause can protect both parties from being bound to an unviable transaction.

The wording should avoid generic formulas copied from another contract. The needs of a family buying their home are different from those of an investor acquiring property through a company, and both are different from a transaction with financing, existing leases, or condominium properties.

The promise must respond to the actual operation

Signing quickly to “secure” a property can be understandable in a competitive market, but speed should not replace review. The promise is the time to turn verbal agreements into verifiable obligations, identify risks, and decide who assumes them.

At Punto Legal, the review of purchase agreements is part of a Real estate support oriented towards protecting the client's position from negotiation to the notary finalization. A preliminary consultation allows for document review, proposal of conditions, and ordering of the process before signing limits your options.

Before paying a deposit or signing a commitment, request a joint review of the document and the property's condition. An informed decision is not just about knowing what you are buying, but about knowing the conditions under which you are committing to buy.