Costa Rica has become very well known as a great place to consider buying property. Many people look to invest in land for development, for example residential, condominiums, hotels, medical offices and clinics, and general tourism services. But to do that, there are many pros and cons to be analyzed before buying. The hope is that you will find more pros than cons.
DO NOT RUSH.
Do not agree to any cash advances. Even if the person showing you the property seems honest or trustworthy. Even if they offer you a bargain or what seems like a good deal, do not rush. It is better to protect your interests with a contract option. That way you have enough time to think about buying, and make the necessary arrangements.
How can you do this?
You should contact your attorney, and have them check the title (this is the FIRST STEP). If the property is really an excellent choice, it is recommended that you establish a trust or escrow account so you can deposit and keep your money in a safe place. This is done with a local bank or an accredited escrow company (STEP). Now your attorney can conduct a study of the property you are considering buying with a due diligence study. You can analyze and study the title of the property, or any restrictions that may exist (STEP).
Why is it so important to conduct due diligence?
Costa Rica laws changes continuously, and are often complex. Moreover, the government recently approved a new law specific to aquifers and cadastral areas that can jeopardize your investment or plans for development.
The due diligence report usually contains the origin and history of the last 10 years, and other relevant elements of the property. The due diligence will help you to learn a number of important things about that property before buying, such as:
- a study of the zoning plan (if any), which determines if there are any concessions on the property
- municipality certifications are obtained regarding the status of payment of land taxes, land use and sewage
- a review of the property lines in regards to adjacent properties. These are considered to be key elements regarding the property as to the availability of public services
- determining if there are wells near or located on the property. This map of any wells is also reviewed in regards to general protection zones, such as the vulnerability or contamination of groundwater
All of these will help you make an informed decision regarding your project.
For the last step.
It is essential that while your lawyer is preparing the detailed report, you negotiate and sign an Option to Purchase Agreement, as this will give you enough time to hold and secure the property. If all goes well, a notary public must then issue and sign a Deed of Transfer for the property to complete the change of name at the Public Registry. It is recommended that you contact your attorney for legal advice regarding the documentation to be prepared, and in this way you protect yourself from any problems that may arise in the present or near future.
So do your homework. Never make any payments before making a detailed study of the property. Ask your lawyer to review the title of the property and its legal status. This is probably the best initial advice for anyone who is considering buying a property in Costa Rica.
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