Buying a House in Costa Rica

The process of buying a house can be overwhelming, let alone trying to figure it out in a foreign country. We’ve lived in Costa Rica for eight years and have waited all this time to purchase property. We did house sitting when we first arrived. More recently, we’ve been renting. Finally, we’ve put down roots and bought our first house. In this post, we will give you an overview of the process of buying a house in Costa Rica. We’ll also share tips from our personal experience.

Buying a House in Costa Rica

We are not lawyers in Costa Rica (though Jenn was one in the US) and are not intending to give legal advice. This post is meant to provide background on the process. Real estate transactions in Costa Rica do not always go smoothly, so always hire a local lawyer to guide you and advocate on your behalf.

Finding a Property

Online Options

Costa Rica does not have a multiple listing system (MLS), Zillow, or any similar real estate websites. This makes it more difficult to see what’s available online.

Real estate companies do have websites with listings, but these don’t include everything that is available. Lower priced homes, especially, tend not to be listed online. Some agents don’t have websites at all, while others have outdated information.

So how do you go about finding a house to buy in Costa Rica?

Real Estate Agents

Real estate in Costa Rica is mostly done on a local level. By that we mean that most real estate agents cover a specific geographic area, rather than the whole country.

That means that it’s easiest to first figure out the general area where you want to live. Once you know that, you can ask around to find a reputable local real estate agent.

Real Estate Office Costa Rica

If you’re not sure where to live, we have a couple of articles that may help. Check out:

Planning a Long-term Visit to Costa Rica – Includes tips on what the different regions of the country are like.

Where We’ve Lived in Costa Rica – Gives the pros and cons of eight different towns we explored in our first two years here.

One important tip on real estate agents: As a profession, real estate agents are not as regulated as in other places, like North America and Europe. They can be licensed, but it is not legally required. So you will find some real estate agents that have little to no experience or training. This makes it extremely important to talk to some locals in the area you want to live to see who they have used and if they had a good experience.

Making an Offer

Now that you’ve found a place you love, it’s time to start the legal process.

Just like in real estate transactions elsewhere in the world, the first step when buying a house in Costa Rica is to make a formal offer (also called a letter of intent). This is just a basic letter that gives your intent to purchase the property from the seller.

Deciding an Amount to Offer

One of the most important parts of the offer is that it gives the amount you want to pay.

When picking a number, your real estate agent should be able to give you some comparable properties in the area.

Be sure to factor in closing costs. These are around 4% of the purchase price, so can really add up.

Real estate transactions in Costa Rica are most often cash deals, especially if foreigners are buying. Banks in Costa Rica will not lend to non-residents. And for legal residents, interest rates are often too high to make it worthwhile. Because of this, most people do a cash deal. Sometimes sellers will offer owner financing, so that is an option if you need it.

Tip: Most people will tell you that it is a buyer’s market in Costa Rica, and you can usually offer much lower than the asking price. In our experience, that is true for the most part. However, with Covid, we have seen a dramatic increase in people coming to Costa Rica to live or have a second home. This has caused some local markets to have much less available, driving up prices. In the area where we were looking, near Jaco on the central Pacific coast, there were few options at a reasonable price.

House for Sale Jaco

Earnest Money Deposit

Another important component of the offer is the earnest money deposit. The offer will say that you will make a deposit (usually 10% of the purchase price) as earnest money to show you are serious about the deal. This amount is usually deposited within 10 or so days of the accepted offer.

Counteroffer

The seller can counteroffer, giving a price above what you offered. Then you can go back and forth until you have a final agreed-upon price.

Hiring a Lawyer

Most people advise getting a lawyer involved before making an offer. Even though the offer is just a small part of the overall transaction, it is still important and best left to a legal professional.

Our real estate agent had an offer template that had too much information in it, in our opinion. We wanted it simpler and more open ended so that we wouldn’t be limited later in the process.

Purchase and Sale Agreement

Overview

Once you have a signed offer, your lawyer can start drafting the purchase and sale agreement (P&S).

The P&S is the formal, legally binding contract between you and the seller, so it’s important that it includes all necessary details.  

In our P&S, we wanted some of the furniture that was in the house during the showing, so we made sure to write that in.  

Payment Method

The P&S will have details on how the transaction will be funded.

If you have bank accounts in Costa Rica and plan to use that money for payment, then you will be able to make a simple in-country transfer at the time of closing.

However, many foreigners keep their money elsewhere. Because of money laundering laws in Costa Rica, it is not advisable to try to wire in large sums of money from a foreign bank account.

We have heard horror stories of people’s money being held up for months by banks in Costa Rica. They require detailed documentation about where the money came from and do not release it until they are satisfied that the money was lawfully obtained.

If you plan on using a foreign bank account, your lawyer and real estate agent will probably suggest using an escrow company.

These companies facilitate the transaction by receiving money from the buyer, holding it in a separate bank account, and then transferring it to the seller at the time of closing. If the deal falls through for some reason, the money will be given back to you according to the terms of the P&S. See below for more on escrow companies.

Closing Date

The P&S will set a closing date. Since most deals are cash deals and you don’t have to worry about delays from a lender, many are done in as little as 30 days. We did ours in just over a month.

Due Diligence

The final important piece of the P&S is that it provides a due diligence period. This allows the buyer to do a home inspection to make sure there are no hidden defects, surveys, and things like that.

It also allows the buyer’s lawyer the check the property for liens, encumbrances, and any other legal issues that could cause a problem in the future. Usually, the seller is asked to provide documentation, such as recent utility bills, proof of payment of property taxes, etc.

Real Estate Agent Fees

The P&S also will say who is paying the commission for the real estate agents.

In Costa Rica, the commission can be 3-10% of the purchase price. Typically, it’s around 5-7% (plus 13% tax on the commission amount). This is split between the buyer’s and seller’s agent.

By default, the seller pays the agents’ commission, though the buyer can agree to take on some of the expense.

Closing Costs

The P&S should detail the closing costs. These include notary and attorney fees to transfer the title, registration fees, taxes, and government fees. They are calculated based on the purchase price and are around 4%.

Traditionally, the buyer and seller split closing costs. Now it seems that more often, buyers are paying the closing costs, and the seller pays the real estate agents’ commission. But this varies based on what you are paying for the property compared to the listing price.

The notary and attorney fees are separate from your own legal fees. The cost for your lawyer to prepare the offer, draft/review the P&S, etc. are billed separately.

Escrow Agreement

You will need a separate escrow agreement if you’re using an escrow company to get your money into Costa Rica. It will be between you, the escrow company, and the seller as well.

This agreement is fairly detailed and gives the escrow company the legal permission to be appointed as your escrow agent. It describes when the money will be released to the seller and includes specific bank details.

It also gives each party’s obligations. The buyer has to provide documentation so that the escrow company can be sure that the money has been lawfully obtained. These are the documents typically required:

  • 2 forms of government ID – A passport is fine. You do not need to be a Costa Rica resident to purchase property.
  • Utility bill showing current address
  • Proof of income supporting transaction amount (tax returns or W-2s along with six months of bank statements)
  • Bank reference letter – See below
  • Know Your Customer Form – This form is standard in Costa Rica. It asks for basic personal information, like your address, occupation, annual income, and where your funds came from (work, investments, inheritance, etc.).
Know Your Customer Form Costa Rica
The standard Know Your Customer form from the escrow company

Our Experience with Gathering the Escrow Documents

Getting all the documentation was easy for us, except the bank letter.

The escrow company wanted the letter to state the age of the account, average balance, and be signed by a bank representative. Our bank, Capital One, only issued automatically generated letters that were not personally signed.

To get a signed version, we would have needed to go to a bank branch in the United States. Since we live in Costa Rica, this would not have been easy. Luckily, the escrow company ended up accepting an unsigned version.

Escrow Companies

There are a few escrow companies in Costa Rica. The largest, which we used ourselves, is Secure Title Latin America. They have an office in San Jose.

We started out using a smaller company, but they were getting essential details wrong in the escrow agreement (even the purchase price!) so we quickly changed to STLA.

Escrow companies typically charge $600-700 to do a transaction, plus 13% tax.

Closing

This was the really stressful part for us.

We were waiting on some documents from the seller in order for our lawyer to finish the due diligence. Without the due diligence report and knowing that everything checked out legally with the property, we couldn’t close on time. So we ended up pushing back the closing date by a few days.

The closing itself was very simple. We went to the escrow company’s office in San Jose. There, a notary had the title transfer document ready for us and the seller to sign. It was only a couple of pages long—much different than when we had purchased property in the United States and needed to sign a tall stack of papers.

After we signed, the escrow company released the money to the seller, and we got the keys. We are now happy homeowners and can’t wait to move in! We are still doing some renovations, which we’ll tell you more about soon.

After closing, the notary presents the transfer document to the Registro Nacional (National Registry), and the purchase is formally recorded. You can check the Registry’s website to make sure everything was property recorded. It shouldn’t take more than a couple of weeks.

Note: To use the National Registry’s website, you’ll need to create an account. Once you’ve done that, go to “Consultas Gratuitas,” then “Consultas por Numero de Finca.” Enter the province and your finca/plot number, and the property’s current registry information will come up.

Costa Rica National Registry property lookup
Screenshot of Registro Nacional website – You can look up your property using this site to make sure the deed was properly recorded.

Problems We Encountered and Tips for Buying a House in Costa Rica

Lawyers

Overall, the process for us was fairly good. However, like many things in Costa Rica, it can be slow. We were waiting for the due diligence report from our lawyers until the very last minute, with the closing date approaching, which was quite stressful. We had one major legal issue outstanding that could have stopped the sale completely. It would have been nice to have that resolved much sooner in the process.

In our experience, lawyers in Costa Rica are not as experienced and knowledgeable. That doesn’t mean that there aren’t awesome lawyers out there, there definitely are, but they can be harder to find.

You’ll want a lawyer who speaks English most likely, which narrows it even more.

The law in Costa Rica seems less definite in many ways as well. For example, in the United States when a title search is done, you can go online to review a property’s chain of title. For any outstanding title or other issues, lawyers can search caselaw dating back hundreds of years to find an answer. In Costa Rica, some things like taxes and other liens can be reviewed online, but much less is available in general.

When buying a house in Costa Rica, having a lawyer who is not only knowledgeable and experienced in real estate, but also responsive, is another essential. We have heard of many lawyers who do not answer their phones or emails, and when they do, it still takes them way too long when something is pressing.

There are lawyers in San Jose, or you could ask around locally to see who other people have used. Your real estate agent may also have a recommendation.

Bank Transfers

Another difficulty we had was with sending the money. Our bank (Capital One) made it extremely difficult to send the money to the escrow company using our regular online banking. The escrow company had a bank account in the United States, where our bank was located, but we still needed to have a security code sent by text message.

Although we have Magic Jack for international calling, it does not allow for automatic text messages. We tried to have a family member receive the text, but that didn’t work either. Eventually, we had to call the bank’s wire department and make the transfers by phone.

This required uploading documents to verify our identity to their secure portal and being on the phone with them for hours at a time! Not everyone who we spoke to understood the process of doing a wire transfer by phone. But once we got ahold of the right people, the process was fine.

We did have to wait a bit. They did not do the transfers instantly. Rather, after we requested it, they called a few hours later to confirm the transaction.

The process probably differs a lot by specific bank. Just keep in mind that when you go to make a transfer, it may not happen right away. So avoid sending money close to those P&S deadlines, if possible.

Conclusion

Even with the stress of buying a house, we are still thrilled to be homeowners! It will be wonderful to have a place of our own for our family. We hope this post helped answer some of your questions about buying a house in Costa Rica.

Casa Costa Rica

Have a question about buying a house in Costa Rica or want to share your experience? Leave a comment below.

Looking for more information about living in Costa Rica? Check out these posts:

FAQs About Moving to Costa Rica – Learn the basics of moving. Covers residency options, buying a car, renting vs. buying, and ways to make money.

Where to Live in Costa Rica: Planning Your Research Trip – Living somewhere full time is a lot different than vacationing. Check out these tips on what to look for in the areas you are interested in.

Building a House in Costa Rica – Weighing the pros and cons of buying vs. building? Check out our post to see what’s involved in building a house.

Starting a Business as an Expat – We had a company in Costa Rica for several years. Read our post for our experience and important things to look out for.

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32 Comments

      1. Where is the quieter part of Jaco? I love the close proximity to the beach but always assumed it’s touristy and busy.

        1. Most of Jaco itself isn’t quiet, except the very southern end. There are some towns to the north and south that are much quieter, though. For example, Esterillos, Bejuco, or Quebrada Ganado. Most properties in these towns aren’t quite as close to the beach, but it’s still just a short drive if you’re looking for something more peaceful.

  1. Thank you very much for such a detailed article on buying a house in Costa Rica. It is very helpful and makes one think about it twice. Extremely valuable information.

  2. Very interesting and helpful. However, one question. You said “commission can be 3-10% of the purchase price. Typically, it’s around 5-7% plus 13% tax. ” Is that 13% of the sales price? Or 13% of the commission amount?

    1. Hi Richard, Sorry, that is confusing. The real estate commissions are usually 5-7% of the purchase price. The 13% tax (VAT) is just on the commission part. We will update the article to make that clearer. Thank you!

  3. Is there a capital gains tax on home value appreciation? The difference between what you paid for a house and the price you sell it for?

    1. Hi Roy, Yes, our understanding is that Costa Rica has a 15% capital gains tax (it took effect in July 2019). But if you use the house as your primary residence, you are exempt. There are other particulars that you would want to look into but that’s the general idea.

  4. Great article and so timely! My husband and I are about to buy property in the Caribe after 5 years of living and learning here. It’s exciting and overwhelming as you say. Our biggest hurdle is figuring out a way to get money down here from Canada… The banks in Puerto Viejo are making it almost impossible and the esgrows we’ve contacted all require documentation that requires us to go back to Canada, and we’ll, that’s not happening anytime soon. Who knew you couldn’t spend your own money freely! HA!

  5. Dear Jen and Matt, I am an inactive Marine(there is no such thing as a former Marine) and my wife and I spent a Month in CR a few years ago. I was a Principal at an International School in Manama and we brought all the teachers who wanted to participate in this Forum at the Int. School in San Jose. This was about 10 years before and we loved it as the prices were reasonable, the people wonderful and I always hoped to return one day. When I returned with my wife I found that the prices to visit any locations was outrageous. the dining establishments that was considered 4-5 stars? cost an arm an a leg. We stayed the entire time in San Jose and visited just about every Museum and places to visit and loved it. We vowed not to return but since receiving your information on just about everything about CR, I am more interested in returning. We stayed for 30 days that time and only 4 day when the school visited.
    I do have a few questions however, While in Nicaragua I was close to the Ambassador for the USA and the Marine Security. I was a Scout Sniper in the Corps and did a lot of shooting while there. Will I be able to do the same in CR? My wife is from Mexico and she is a citizen now of the US and she is the Head of the Language Dept at her school here in Phoenix, Az and she speaks Spanish, English and Thai and she is also employed by the IB and Pamoja Education . She does much of her work for these two companies, online, and my next question is will she have good Internet connection since this is most important? We stayed at a B&B in San Jose and the price was reasonable and we were about 1 mile from the Church of Jesus Christ of Latter Day Saints (Mormons) and we took a Taxi to the Mormon Temple which was a bit farther away. We had visited in June and the weather was good with little rain and the Government shut off the water supply each day for several hours since they were worried about the water supply for the people. Is this a problem that you found while living there? My wife and I are Educators and will it be possible to get a teaching job in CR? Thank you for your articles, as they are very informative and interesting. Keep them coming.

    1. Hello Gerald, Yes, Costa Rica is quite expensive, especially compared to the rest of Central America.

      On your questions, I think you can’t have a firearm unless you are a citizen of Costa Rica or permanent legal resident. Permanent residency takes several years to get. You have to be a temporary resident first in most cases.

      Internet is pretty good now in most of the country, so your wife should be fine. Many people work online here now. Internet is especially fast and reliable in the San Jose area.

      Water shutoffs do happen on occasion, but it is not how it used to be. Definitely not something that happens every day. Where we live on the central Pacific coast, the water stops working at times during dry season when there are a lot of people around like during holidays. We have a water tank at our house so aren’t affected by this.

      I hope that helps. If you have any additional questions, feel free to reach out through our video chat service.

  6. Hey Jenn & Matt,

    What an interesting and informative article, thank you for sharing your experience in such a detailed way. Wishing you lots of luck with all the preparations for your new home.

    Kind regards from Switzerland

  7. Hi Jenn & Matt, I’ve purchased property with just lawyers. A friend of mine has purchased 13 properties there with just a lawyer. You can just go up and down the street asking for properties. No need for a real estate agent as they don’t provide an essential service in Costa Rica. They are just salesman and listing agents in my opinion. Better to have a good lawyer who understands the ins and outs of property law and deals directly with the seller in my experience.

    1. Hi Jay, We thought about not using an agent but are glad we did. Even though we are already very familiar with the area we bought in, we still had questions about the water, internet, etc. since these things vary a lot by town. Our agent also helped with figuring out the best offer to make. They specialize in this area and I think we saved some money because of their expertise. Agents are also good because they’re there to answer small questions throughout the process when a lawyer is not likely to do that. For many people buying, they aren’t sure where they want to live exactly so they can provide guidance on that as well. Some of it may be skewed of course, but if you know the right questions to ask, that helps. The key is finding a good agent. I can see not using an agent in some situations, though.

  8. Can I call for a five minute talk? My name is James and I am looking for a place, I still have three weeks b/4 I return to the US

      1. Hi as one o the post said you may not need a real estate agent,but as a Costarrican is definitely safer to get guidance from a person that know the area where you want to buy specially if is near the coast,many lawyers just want to get his money and run and leaving you with a bad headaches ..there is a lot of good people the are willing to help you and the most important help you never regret your purchase

    1. Hi Jenn and Matt:
      Thank you for the informative article. One pro tip to help you with receiving texts from the United States is to get a free Google voice account. I lived in Costa Rica for six months in 2019 and found my Google voice account to be indispensable.
      Thanks
      Tim

  9. Hi jenn and Matt I’m looking to buy in San Jose so would it be best to bring my money with me and open up an acct in San Jose to ease the process?

    1. Hi James, I think you’re only allowed to bring in up to $10,000 cash, and we wouldn’t recommend carrying that much in anyway for safety reasons. The escrow process wasn’t all that bad. It was mostly our bank in the US that made it difficult, but that will vary a lot by bank.

  10. Hi Jenn and Matt,
    Thank you for your wonderful blogs!
    My husband and I have been in Costa Rica for a year and bought a property and are building a small house in Ojochal Osa Penisula. We haven’t had many problems – just some hiccups, banking being at the top. But patience and strategy work well. Just a notation for anyone coming in who needs a phone # to receive texts from their bank that TEXTNOW works for us.
    It’s self-explanatory on their website but it gives you a US # that allows you to receive text instantly.
    Thank you again!
    Micki

    1. Hi Micki, Thanks for the tip on TEXTNOW. We’ll check it out. Part of our problem was that the bank could tell that the address for the phone number of our family member was different than ours in the US. So not sure if this app would work based on that with Capital One since it looks like it doesn’t have an address associated with it, but we will look into it. Usually we don’t have a problem with receiving these texts, but I think because it was such a large amount, they had different security measures in place.

      1. You’re probably correct even with TextNow.
        Whenever we’ve had any other problems making larger transfers it depends on what is happening in the States – like on Jan. 6th or the Texas storm or just recently the Hurricane in New Orleans but also in the East Coast. The Fraud division of Bank of America told us that is when the hackers come out in full force and the banks tighten up.
        In any case, we’re all fortunate to be here!
        Thanks again for your blogs!
        Micki

  11. We stayed in Cost Rica twice for a month each time. We got to know a couple that owned a travel agency. Booked hotels, transportation, tours etc. We got to know them quite well. They were originally from the states. They told us that it was very difficult to buy land and build a house in Costa Rica and that there was no legal system. They said that there was very little recourse if you get swindled or taken advantage of. I was pleased to read your blog which gave a different picture. However, I agree one needs to find a really good experienced lawyer .Thanks for all your information.

  12. How does one go about finding a lawyer for buying land? As a retired single female from US, I have questions about acquiring pensionado status before arriving for 3 months to look for land.

  13. Hi
    I Love all the Information on your site its very helpful
    So we have been looking for 6 years for the Right property between Estirillos. and. Ojechol
    Its very hard to find anything that is NOT considered a Luxury vacation Home and very expensive . Any thoughts on what avenue to use to find Nice homes at resonable prices in our area ?

  14. Hi! One thing that didn’t come up in your article that I’m curious about your opinion on. Whether to buy a property as individuals or as a Corporation that you form to have ownership of the property. Thanks!

  15. Great post! We bought raw land years ago right on the edge of the Cabo Blanco Reserve, and then sold it a few years ago as our priorities changed. Now we’re buying two homes on a great piece of property between Montezuma and Cabuya (southern Nicoya peninsula). We didn’t use an agent this time (just used our trusted lawyer) and it’s working out well. Congrats on your new adventure!!

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