The Role of the Closing Attorney in Costa Rica
At every Costa Rica real estate closing, the role of the closing attorney should be clear. Each real estate agent works different and usually many details are left to the closing attorney.
And the choice of a closing attorney is not always in the power of the real estate agent. In a cash purchase, the buyer has the choice of the closing attorney. The real estate agent can, of course, recommend the buyer who to his/her opinion is the best closing attorney to work with.
In case of a mortgage by a Costa Rican bank, the bank’s attorney will do the closing. In the case of owner financing, the seller will want to protect his interest and generally, there are two attorneys involved.
For this reason, I would like to clarify some details that during the real estate purchase process will be important.
I. Earnest money and establishing Escrow When Possible
In all real estate transactions that we handle we prefer to designate our escrow company as the escrow agent for the earnest money deposit. Some Sellers will accept this while others will insist on holding the earnest money deposit. This changes on a case by case basis and depends a lot on the real estate agent and his/her interest in securing this deposit.
Regardless, the conditions of escrow and disbursement of the earnest money deposit to either the Seller or the Buyer needs to be fully addressed and understood by all parties to the transaction.
On many occasions, we find contracts that are vague regarding the disbursement of the earnest money deposit and vague as to what constitutes a breach of the closing terms and conditions of the agreement.
II. The Responsibility of the Closing Attorney.
It is very important to have the buyers real estate agent involved with the closing attorney throughout the transaction to avoid miscommunication or misunderstandings. If the buyer hires the closing attorney, the attorney will perform the following:
1. The Initial Title Search
Most title searches initiate with an initial online title search which is conducted at the National Registry website. Depending on the property and the findings of the initial search the title search can be expanded to include a manual search of the National Registry Archives.
2. Due Diligence
The attorney and buyer must contemplate the amount of due diligence required and the proper time allotted for completion.
3. Drafting the Purchase Agreement
If retained to do so the Attorney will draft the purchase agreement either a Reciprocal Promise to Buy and Sell or a Purchase Option depending on the transaction. The Buyers agent will supply the necessary information on the property, price and other details to draft this agreement.
4. Preparing the Transfer Deed
In Costa Rica, the transfer of property title can only be executed by a property transfer deed before a Notary Public who in turn pays the applicable transfer taxes and records the property transfer deed. It is the responsibility of the closing Attorney to draft the deed and record it in the National Register. Once the recording is completed he must deliver the original document to the Buyer.
If the sale is being done by way of a stock transfer of the corporation the closing Attorney will prepare all necessary documents to transfer ownership, the board of directors and powers of attorney of the property from the Seller to the Buyer.
Attorney Roger Petersen of P Law Group specializes in Costa Rica real estate and is fully Bi-lingual English and Spanish. As a foreigner, you will feel totally comfortable using him as a closing attorney. Roger is also the author of “The Legal Guide to Costa Rica”.
Roger is also the author of “The complete guide to Property Taxes and the New Luxury Home Tax in Costa Rica”.
If you purchase a property in Costa Rica, using your IRA or 401K, Roger is the expert attorney on this matter. He also offers the following services:
- Real Estate Closings
- Property Title Searches
- Due Diligence
- Escrow Accounts
- Development Planning
- Residential and Commercial Leases
- Title Insurance
- IRA Investment Property Purchases
- Purchase and Sale Agreements
- and any matter incidental to your real estate transaction in Costa Rica.
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