Suscribe to our weekly newsletter
SYNDICATIONPosted: 01/01/2012 08:13 PM
Add Comment
By Ivo Henfling for The Easy Times
Costa Rica doesn’t have escrow laws like the United States has, but because there are so many foreign buyers of real estate in Costa Rica, some real estate attorneys as well as some title companies offer escrow services, though most call it a trust account. If you are planning to purchase a home in Costa Rica and you don’t already have the amount needed for the purchase in a Costarican bank account, there are some steps that I can recommend that will make your purchase easier on you.
1. Make sure you deal with a real estate agent in Costa Rica who knows what escrow is.
2. Make sure you already know your real estate closing attorney has an escrow account and he/she has a good reputation.
3. Make sure your real estate agent writes up the offer, including all the necessary details. Once approved by both you and the seller, the agent should get your real estate attorney to write up a reciprocal purchase - sale agreement that points out all the details of the purchase.
4. When you wire the money to the escrow agent, make sure you have all the data on the escrow account right, so the money won’t get lost on the way. Don't bring cash, Costarican banks will not accept more than a couple of thousand dollars in cash from you.
5. Most wires involve several banks; beware of wire costs charged by all banks involved. If you plan to write a check drawn on a US bank, be aware that the check will take 10 days to clear. This will make the agreement of no value for another 10 days and the property will stay on the market.
6. Don’t send more money to purchase furniture, home inspections and other things, without asking escrow agent.
7. The purchase – sale agreement says how much earnest money goes into escrow. The usual amount is 10% but it depends on what will make both buyer and seller feel comfortable.
8. The purchase – sale agreement should VERY clearly describe who gets the earnest money when the purchase – sale goes sour. Most agreements carry an arbitration clause that will allow both parties in case of disputes, claims or differences a pre-agreed on arbitrator like the Chamber of Commerce or the International Center for Conciliation and Arbitration of the American-Costa Rican Chamber of Commerce (“CICA”) to take the decision which party will get the earnest money in case of disagreement.
9. Many sellers insist on receiving the earnest money at the signature of the purchase –sale agreement. When I just started selling property in Costa Rica, I allowed for this as at the time, it made sense to me. The seller passed away before closing and the earnest money had disappeared. I will leave the rest to your imagination. Since then, I insist the earnest money goes into escrow.
10. If the purchase is all cash (without owner financing), the buyer has the right of attorney. Therefore, the earnest money should go to the buyer’s choice of escrow. If buyer and seller cannot agree on the escrow agent, a title company’s escrow service is a decent enough solution.
11. The escrow agent can cut all the right checks for closing, paying him/herself for closing fees, escrow fees and the real estate agent(s) involved.
12. Make sure that at closing, the escrow agent will disburse the right amount to everyone, together with a closing statement. Ask for the left over monies right away.
To keep this article short and concise, I will write a separate article about the options you have for escrow agents. Feel free to leave any questions or comments on this article.
By Ivo Henfling, your Costa Rica real estate broker. If you are looking to buy a home in Costa Rica or invest in a condo anywhere in the Central Valley or looking for any property for sale in Escazu, you need to call me. I would like those who are reading my articles are aware of the reason I write them: to transfer as much of my knowledge to the buyer of Costa Rica real estate and have them hire me or one of the American European Real estate group as a buyer's agent as appreciation for sharing my knowledge.
I have been selling real estate in Escazu for over 20 years and can show you hundreds of happy buyers of real estate in Escazu and other areas.
To me, a deal is not a good deal unless both buyer and seller are happy. Feel free to contact me.