| Deposits and Escrows
Let us hear what Rudy Matthews of Costa
Rica Real estate and Retirement properties has
to say about this subject: In Costa Rica a real estate transaction
is different. I have read various Internet articles about
crooked real estate transactions in Costa Rica. The first
step in protecting yourself here in a real estate 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 and not the way they are
done in the United States. For instance, real estate deposits
and escrows here are very different. Escrow accounts are
virtually nonexistent unless you are dealing with a company
like Stuart Title or have a legal arrangement with your
lawyer. I will focus on deposits, since you definitely
need to be aware of how they work in Costa Rica.
The majority of the time the deposit is going to be held
by the seller. Instead of held,'I should have said 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. Five percent
is a start, with a maximum of 10 percent. When asked how much
I would like to deposit, I usually say, the least amount of
money possible.'Then, when the seller names a figure I always
say it is too much. What is the least amount possible? It
is amazing how much sellers will come down to initiate a sale.
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, in many cases the seller has already spent the
deposit money. You can put a protective clause in your contract,
but the bottom line is, that deposits, once lost, are hard
to recover here. The one clause I advise clients to put in
the contract is that if the seller does not honor the contract
or other unforeseen circumstances occur, the buyer will be
returned double the original deposit. I do not think this
clause scares away anyone, but it might help you in another
situation. It is not uncommon for the seller to sell the property
to someone else if they offer a higher price.
You may think that if you lose your deposit you can take
the seller to court to recover it. The legal process can sometimes
take years.
Concerning monies, I advise clients never to use cash because
there is no paper trail and cash can do funny things to people.
Certified or regular checks from the United States can take
a long time to clear. It is better to open an account here,
wire your money and get a certified check from your bank in
Costa Rica.
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