Guide to the Real Estate Closing Process in Costa Rica

The real estate closing process in Costa Rica can be complex for foreigners, but with proper guidance and understanding, it can be a smooth and successful experience. In this comprehensive guide, we walk you through each step of purchasing property, from preparing for closing to post-purchase responsibilities, including key costs and considerations.

I. The Closing Process

In Costa Rica, the transfer of property title must be executed through a property transfer deed before a Notary Public, who is also a licensed attorney. The Notary Public is responsible for drafting the deed, paying applicable transfer taxes, and registering the transfer with the National Registry. Once the deed is recorded, the original document is handed over to the buyer.

For properties held by a corporation, the closing attorney prepares the necessary documents to transfer ownership of the shares from the seller to the buyer.

Steps of the Real Estate Closing Process

1. Purchase Agreement
   The process begins with a real estate attorney drafting a purchase agreement that outlines the terms and conditions of the sale. Both the buyer and the seller must sign this contract.
   
2. Escrow Agreement
   An escrow company is selected to handle the transaction’s funds. Both parties sign an escrow agreement, ensuring that the deposit terms in the purchase agreement match those in the escrow agreement.
   
3. Document and Fund Submission
   Both the buyer and seller provide the necessary documents to the escrow agent. Once verified, the parties transfer the funds into escrow.
   
4. Satisfying Conditions
   The escrow officer and closing attorney work together to ensure all conditions, such as inspections and payments of utilities or taxes, are met as agreed.
   
5. Closing and Transfer of Title
   The closing attorney finalizes the property transfer deed, gathers the required signatures, and prepares the disbursement instructions. Once these steps are complete, the escrow agent releases the funds, finalizing the transaction.
   

Pre-Closing Checklist: Key Documents to Gather

• Utilities: Confirm that the seller has paid all utility bills and will leave a working telephone line for the buyer.
  
• Property Taxes: Verify that the seller has paid all property taxes and request proof of payment.
  
• Home Inspections: Arrange for any desired inspections well before closing to allow for necessary repairs.
  
• Property Inventory: Verify that any items listed in the inventory remain present.

II. Title Options and Ownership Structures

In Costa Rica, property can be titled in different ways:

• Personal Ownership: Property is titled in your individual name.
  
  • Pros: Simpler, lower setup costs, easier estate planning.
    
  • Cons: Exposes you to personal liability, less privacy, limited flexibility.
    
• Joint Ownership: Multiple individuals share undivided ownership.
  
• Corporate Ownership: Property is titled in a corporation’s name. This is common for foreigners and offers flexibility and asset protection.
  
  • Common Structures:
    
    • Corporation (Sociedad Anónima or S.A.)
      
    • Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L. or Limitada)
      

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Corporation vs. Limited Liability Company (LLC)

Feature	Corporation (S.A.)	LLC (S.R.L.)
Governance	Board of Directors (minimum: President, Treasurer, Secretary, Comptroller)	Managed by one or more managers (simpler structure)
Partner Relationships	Shares freely transferable unless stated otherwise	Quotas (shares) require unanimous partner consent
Social Capital	Can be in any currency	Must be in Costa Rican colones, quotas in multiples of 100 colones
Corporate Books	3 record books (General Assemblies, Shareholder Registry, Board Minutes)	2 record books (Quota Holders’ Assemblies and Registry)
Complexity/Flexibility	More complex but offers advanced corporate management	Simpler and suitable for smaller ventures

Both structures limit partner liability to their contributions and share similar tax and registration costs. The choice depends on your specific needs and should be guided by expert legal advice.

Ownership Costs for an LLC

• Initial Setup: $850–$1,250
  
• Annual Fees:
  
  • Corporate tax: ~$130
    
  • Education stamp: ~$10
    
  • Resident agent: ~$280
    
• Annual Filings:
  
  • RTBF (Transparency and Final Beneficiaries Register)
    
  • D195 (for inactive legal entities)
    

RTBF is a Central Bank-managed platform requiring disclosure of ultimate beneficial owners to combat money laundering.
D195 is an annual informational tax return for inactive legal entities, summarizing basic financial data without triggering tax liability.

III. Understanding Closing Costs When Buying Property in Costa Rica

One of the things that often surprises first-time buyers in Costa Rica is how formal and transparent the cost structure is when transferring property title. However, it’s equally important to plan for these costs upfront so there are no surprises at closing. Closing costs in Costa Rica typically range between 3.5% and 4% of the property’s registered purchase price, separate from any real estate commissions. These costs are usually split 50/50 between the buyer and the seller unless otherwise negotiated, and this arrangement should be clearly detailed in the purchase agreement.

Here is a breakdown of the typical components included in closing costs:

• Property Transfer Tax: The largest single expense, set at 1.5% of the property’s registered purchase price or fiscal value (whichever is higher). This tax is due when the Property Title Transfer Deed is submitted to the National Registry.
  
• National Registry Fees and Documentary Stamps: These mandatory fees total approximately 1% of the registered price, funding public institutions and are non-negotiable.
  
• Notary Public Fees: By law, the Notary Public drafts and executes the Property Title Transfer Deed. Their fees usually range between 1% and 1.25% of the property value, covering deed preparation, due diligence, and registration.
  
• Escrow Fees: Handling funds through a licensed escrow company is highly recommended and often required. Fees vary from $600 to $1,200 per transaction and are typically shared between buyer and seller.
  
• Additional Due Diligence Costs: Depending on the property, location, and buyer preferences, costs for surveys, inspections, or environmental studies may apply. These are usually at the buyer’s expense and are not mandatory but recommended.
• When budgeting, buyers should plan for approximately 4% of the purchase price in closing costs, plus any additional costs for inspections or appraisals. Ensuring all transactions go through formal channels — escrow, registered deeds, and formal invoicing — is key to a clean, transparent purchase.
  

III. Closing Costs: Example for a $200,000 Property

To put this into perspective, here is an example of estimated closing costs for a property priced at $200,000 (approximately ¢100,000,000 colones):

Item	Amount (in colones)	Amount (in USD)
Stamp Duties (including Additional Agrario Stamp Duty)	¢841,520	~$1,683
Transfer Tax	¢1,500,000	~$3,000
Professional Fees (Honorarios)	¢1,239,250	~$2,478
Value Added Tax (13% IVA)	¢161,102.50	~$322
Total Estimated Expenses	¢3,741,872.50	~$7,483

This total represents approximately 3.7% of the property value — right in line with the typical 3.5% to 4% range.

IV. Post-Closing Responsibilities

Once the closing is complete:

• Transfer Utility Bills:
  Update the names on all utility accounts (electricity, water, phone, internet). This can be more complex than expected, so discuss with your real estate agent and attorney.
  
• Municipal Notification:
  File a Property Tax Declaration Form with the local municipal government to reflect the change in ownership. 

V. Key FAQs

✅ Can foreigners buy property in Costa Rica?
Yes! Foreigners enjoy the same rights as citizens, except for restrictions in the Maritime Zone.

✅ What is the Maritime Zone?
The first 200 meters inland from the high tide line are governed by the Maritime Zone Law:

• First 50 meters: Public Zone, no private ownership or construction allowed.
  
• Next 150 meters: Restricted Zone, requires a concession (lease) managed by the local municipality and ICT (Tourism Institute). Foreigners must have 5 years of legal residency, and corporations must be at least 51% Costa Rican-owned to qualify for concessions.
  

✅ How long does closing and registration take?
Closing typically takes 1–2 months after signing the purchase agreement. 

✅ Is using an escrow account required?
Not mandatory but strongly recommended for secure handling of funds.

Conclusion

Owning property in Costa Rica can be an excellent investment, but it’s crucial to understand the legal, financial, and administrative aspects involved. Whether you choose to title the property in your personal name or through an LLC or Corporation, each structure has its pros and cons. Working with a trusted real estate attorney is essential for a secure and seamless transaction. If you’re considering a purchase or need guidance on choosing the best ownership structure, contact our team at Across Borders Legal.