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How Does Escrow Work in Costa Rica real estate?

How Does Escrow Work in Costa Rica real estate?Why use escrow in Costa Rica real estate and how does it work? Some foreign buyers of Costa Rica real estate just assume that this works the same as it does back home. Wrong!

Let’s start at the beginning. Buyers, as well as sellers of Costa Rica real estate, do not use escrow. They just agree on the sales price. Then at the signature of the purchase option, the buyer hands the earnest money, whatever it is they agreed on, over to the seller. At closing the earnest money is deducted from the sales price.

I have experienced some sellers to pass away before closing. Before closing, we found out that the seller or the seller’s family long spent the money on other things. And because of the death of the seller, the property could not be sold.

I have also experienced that the seller used the same earnest money they received from their buyer, to get a purchase option for the house that they were planning to buy. So when the first deal goes bad, the second does too.

Do you want to get involved in a weird deal like that? Of course, you don’t!

So learn how escrow accounts in Costa Rica function before you do any business. In case you wonder, “fideicomiso” is the correct word in Spanish.

Why Escrow?

The use of escrow takes the stress out of home ownership and our real estate agents will always recommend the use of an account during a real estate transaction. It ensures that the property and the title are “clean” before closing the real estate transaction.

How Does Escrow Work in Costa Rica real estate?
Costa Rica escrow puts a stop to money laundering

Escrow accounts in Costa Rica are very strictly controlled by SUGEF (Financial Institution Superintendency) for money laundering, so there are very few attorneys who hold an account unless they do a lot of Costa Rica real estate closings.

A law firm will usually have someone in their office act as an escrow agent, representing a trust or escrow company, who will have a separate bank account that they will call an escrow or trust account. The Costa Rican law and banking systems do not function the same way as they do in other countries.

Escrow options

Escrow in Costa Rica can function in different ways

1.    The use of an escrow account, in US dollars or Costa Rican colones, to hold money that is deposited by a buyer of Costa Rica real estate so the transaction can be completed. The use of this money, when the money will be disbursed by the escrow agent and in which way, will be described in the purchase option or in the agreement.

2.    The use of escrow to hold the books and shares of a corporation that owns the property. This is a great protection for the seller while the buyer makes the final payments. In this case, it functions as a trust for a short term.

3.    If you are not a Costa Rican citizen or resident, banks in Costa Rica will not allow you to open a bank account until you are. Meanwhile, if you are buying a property, escrow is a perfect way to transfer your money to Costa Rica to make your real estate transaction possible.

How Does Escrow Work in Costa Rica real estate?
Know your Customer Form

Money laundering issues

The escrow agent, before you wire the money into his/her escrow account, will send you a form that is called “conozca su cliente” or “know your customer”. This form is needed to show your funds are absolutely clean and not subject to money laundering.

The form will request

  • your personal information,
  • your employment information,
  • the purpose of the transaction,
  • a certification that you’re not a person who performs important public functions,
  • and to finalize a statement that the funds being sent to the escrow account were funds acquired in legitimate activities and are not the proceeds of any criminal activity or that contravene international money laundering regulations.

The form also holds the wire instructions. As well as an explanation of what will happen with the funds in case of a dispute.


When the contingencies in the agreement or purchase option are met, the agent will pay the closing money to the seller and record the deed. Thus transferring the property to the buyer. At this point, escrow is said to be closed.

If you purchase Costa Rica real estate through one of our affiliates, we will help you set up. For any questions, contact us.

Feel free to leave your comments on this blog. If you like this article, please feel free to share it on your social media.

Contact the AE MLS Costa Rica

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While we’re at it, I DO want to remind our readers that we appreciate any referrals you can send us. Finally, please remember the American-European real estate Group’s agents when you refer a real estate agent. Because we DO appreciate your business.

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Ivo Henfling

Your West-side of San Jose real estate agent, covering Escazu and Santa Ana, Rohrmoser and Ciudad Colon. 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 or Santa Ana, you need to contact Costa Rica real estate agent Ivo Henfling. Ivo has been selling Costa Rica real estate on the westside of San Jose, in the locations of Rohrmoser, Sabana, Escazu, Santa Ana and Ciudad Colon for over 20 years and can show you hundreds of happy buyers of real estate in Escazu and those other areas. For Ivo, a deal is not a good one unless both buyer and seller are happy.

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