Practical Guide for Purchasing Real Estate in Costa Rica

Published on: July 29, 2026

Legal Disclaimer:

Below is a brief guide outlining the general procedure for investing in Costa Rica through the acquisition of a real estate property. The information contained herein is not intended to exhaust the topics addressed, nor does it constitute a formal legal opinion. Furthermore, the recommendations included should not be construed as creating a formal relationship between the reader and Living Essentials CR, its partners, representatives or collaborators.

Preliminary Phase: Purchase Offer & Reciprocal Purchase and Sale Agreement

Typically, the process of acquiring real estate begins with a formal (written) purchase offer from the buyer. Although submitting this purchase offer is not strictly necessary to initiate the transaction, its main purpose is to set the sales price and temporarily withdraw the property from the market during the negotiation period.

Once the offer to purchase is approved, the parties will sign a Reciprocal Purchase and Sale Option Agreement, otherwise known as PSA or SPA and which outlines the purchase´s specific terms and conditions, such for example: sales price, payment terms, escrow agent´s designation, guarantees offered by the seller, and other specific conditions which have to be met for final closing to occur.

It’s precisely on this stage that payment of an initial deposit (i.e. earnest deposit) is made and the associated due diligence process starts. This is essential in order to confirm the seller´s guarantees offered, as well as to ensure that the property is suitable for the buyer’s intended use.

Final Stage: Sale´s Execution

Once due diligence is fully completed and approved, the initial deposit becomes non-refundable, thereby paving the way for the final closing (i.e. sale´s execution) to occur. On the other hand, if due diligence results are unsatisfactory, the buyer has the option to back out of the deal and request a refund of the earnest money, or alternatively, to grant the seller a remedy period to correct the identified issues. In some cases, the nature of the defects may make remediation materially impossible, and even if the agreement allows for it, the buyer is not obligated to proceed with the purchase under such circumstances.

The property´s acquisition usually takes place either through the execution of a deed of sale (direct transfer) or of a stock transfer agreement (indirect transfer). In both cases, the documents are typically drafted by the buyer´s attorney and in most cases assumes 100% of the closing costs.

The applicable formalities will depend not only on the selected acquisition method, but also on the terms previously agreed upon in the preparatory contracts. Therefore, it is of utmost importance that the parties´ legal advisors possess the necessary expertise to ensure that the final documents produce the intended legal and registral effects, thus guaranteeing their validity and enforceability.

Escrow Agent´s Role:

While the general practice is to engage a third party for the management of funds related to the transaction (purchase price and associated costs), this condition is not mandatory, and the parties may choose to make payments directly between themselves. That said, the standard and most advisable approach is to utilize a licensed escrow agent, duly authorized for such activity under Costa Rican law. Licenses are granted by the Superintendency of Financial Institutions of Costa Rica (SUGEF), pursuant to the provisions of Law No. 8204, which regulates anti-money laundering and counter-terrorism financing controls.

Nonetheless, it is also entirely acceptable to use foreign escrow service providers, in which case it is strongly recommended to verify the validity and good standing of their license in their country of origin. This not only ensures proper traceability of funds, but also verifies the lawful origin of the funds used in the transaction.

With regard to the designation of the escrow agent and the opening of the individual escrow account, although this usually happens after the execution of the Reciprocal Option to Purchase Agreement, there isn´t an impediment for the buyer to begin the process earlier. In some cases, one or both of the parties could already have active escrow accounts which they opened through previous purchases and/or sales transactions.

It is important to note that, in order to open an escrow account, the client must not only sign the corresponding agreement with the escrow service provider, but also justify the origin and intended use of the funds that will be deposited in the account and eventually distributed among the involved parties (seller, real estate broker, legal advisors, and any other public or private entities engaged in the process).

Now, prior to executing the final transfer the escrow agent will issue a closing statement detailing the authorized deductions, such as: registration costs, real estate agent commissions, and legal advisory fees. The breakdown will also clearly indicate the responsible parties for each item and it will also specify the net amount payable to the seller.

Finally, it is important to emphasize that the closing statement must be formally signed by all involved parties, as this serves as a critical element of transactional security as well as assurance that the previously agreed-upon conditions will be duly fulfilled by the parties obligated to do so.

Associated Costs:

Costa Rican law establishes the official costs directly associated with the purchase and sale of real estate. As mentioned previously, the general rule is that the buyer assumes these costs. In summary, these are considered “fixed costs,” which will appear itemized in the closing statement issued by the escrow agent:

• Transfer Tax: 1.5%
• Registration Fees: 1%
• Notarial Fees: 1.25% – 1.5% (plus 13% VAT)
• Escrow Agent Fees: There is no government-regulated rate; fees are set according to each provider’s internal policies. However, they generally range between 0.3% and 0.5% of the total amount transacted (plus 13% VAT).

Please note that these charges are calculated based on the SALES PRICE and also that failing to declare the actual sale price constitutes tax evasion, and may expose both you and the executing Notary Public to serious legal consequences.

Lastly, it is important to consider “hidden costs” when estimating the total investment expenses. In general, these arise during the preliminary phase, and more specifically, relate to matters such as:

• Legal advisory services for drafting the Reciprocal Option to Purchase Agreement
• Execution of due diligence studies
• Formation of a corporate entity or establishment of a real estate trust
• The shareholders’ meeting authorization required under Article 32-ter of the Commercial Code

Most attorneys will provide you with a detailed breakdown of the associated costs, both preliminary and final, so if if you don´t get one, be sure to ask for it. This will ensure that you don´t get any surprises down the line.

Registration Process:

Once the sale has been finalized, the deeding Notary Public is responsible for submitting a certified copy (testimonio) of the deed before the National Registry´s Property Section for formal registration. The registration process generally takes one week, although this may vary depending on factors such as the Registry’s workload or the identification of defects in the deed by the registrar in charge. When the acquisition is done through an indirect transfer, then the notary will be in charge of registering the corresponding corporate bylaws modifications, as well as the new appointments to the board of directors (in S.A.s) or mangers (in LLCs).

Most Commonly Used Structures for Real Estate Acquisition and Management:

The Costa Rican Commercial Code regulates all aspects related to the creation and operation of a Costa Rican corporate entity (i.e. corporation). It’s important to note that our legislation does not establish any distinctions between nationals and foreigners for the purposes of authorizing their participation in a company, whether as shareholders and/or legal representatives; therefore, for practical purposes both have the same duties, rights, and obligations. Therefore, regardless of the company´s owner(s) & legal representative(s)´ nationality and immigration status, any type of licit commercial activity can be carried out through a corporation. This includes not only the acquisition and administration of assets, but also the engagement in most types of estate planning strategies.

Most Common Types:

Generally speaking, the most commonly used corporate vehicles in Costa Rica are the ANNONYMOUS SOCIETY (S.A.) and the LIMITED LIABILITY COMPANY (SRL or LTDA). While, functionally speaking, both types of companies allow the owner to reach the same objectives, they present some structural and operational differences that are worth highlighting.

The shareholder status in a corporation is acquired and demonstrated through ownership of its shares (in S.A.s) or quotas (in LLCs). By legal provision, ownership of shares or quotas is recorded and documented through an entry in the shareholders' / stock registry book, although certificates may also be supplementally issued.

Administration:

Anonymous Societies (S.A.): These require a Board of Directors composed of at least four members, namely: president, secretary, treasurer, and comptroller. Typically, the legal representation is exercised by the president; however, nothing prevents the remaining members from also exercising this role, either jointly or separately. Also, for cases where required, there is the possibility of appointing additional board members, such as vice-president(s) and vocal(s), whose faculties are established in the corporate bylaws.

Limited Liability Companies (S.R.L. / LTDA.): These require at least one manager, although it is possible to appoint as many managers and/or vice-managers, according to the company's interests and needs. As with SAs, managers and assistant managers will have the powers assigned to them by the bylaws.

Incorporation Process:

Regardless of the type of company desired, for its incorporation at least two people must appear before a Costa Rican Notary Public, who in turn is responsible for notarizing the articles of incorporation for their subsequent registration before the National Registry´s Corporate (Mercantile) Section. The registration process usually takes from three to five days, and once registered, the National Registry assigns an individual registration entry, a corporate identification number and a legalization number for the corporate books: the General Shareholders Assembly, the Stock Registry, and the Board of Directors (this last one only applicable for SAs).

It is important to note that the appearance of the legal representatives and ultimate shareholders is not required for the company´s incorporation. This means that it is perfectly possible to incorporate a company through third parties, and without the need for the representatives and ultimate beneficiaries to be in Costa Rica. To this end, our office provides its clients with a "Corporate Application Form" which, for all purposes, constitutes a formal record of instructions for the creation and registration of the company, the acceptance of appointments (of the Board of Directors and Management) and the transfer of shares or quotas by the founding partners.

Shareholders´ Assemblies and Updates:

Shareholders' meetings are required for the approval of all matters that are required for the proper functioning of the company. They can be held through the partners´ direct (in-person) appearance or virtually, through any available digital platform, as long as they can be recorded. Furthermore, in those cases where partners cannot attend meetings, they can be represented through a proxy letter granted to a third party.

Custody and Maintenance:

It is also important to consider that participation in a Costa Rican company, whether as a legal representative and/or as a partner, entails compliance with a series of formal obligations and duties, both tax & accounting related, as well as operational.

Among others, the most relevant annual compliances are: the payment of corporate tax, the filing of income tax and final beneficiaries´ declarations, as well as the holding of at least one shareholders' meeting (post-fiscal year end).

The filing of the final beneficiaries´ declaration before the Transparency and Final Beneficiaries Registry (RTBF) can only be submitted through the digital platform Cental Directo, either using the registered legal representative´s digital signature device, or a third party´s device, as long as he has a registered power of attorney, whether general or unlimited.

Finally, all companies must register their legal representative(s) with the Ministry of Revenue´s Unified Tax Registry. In the cases where the legal representatives are non-citizens and/or non-residents, a Special Tax Identification Number (NITE) must be requested and assigned, as it will be required for any tax-related procedure. This registry must be updated every time that the legal representatives change and/or in case their registered IDs change.

Associated Costs:

The costs of maintaining a company may vary depending on factors such as its activity and registered assets; however, all companies must pay the annual corporate tax, as well as the Education and Culture Stamp Tax. As explained above, they must also file information returns (final beneficiaries and income tax), although the nature of their activity may require compliance with other formal and material obligations.

For proper management of institutional duties and obligations, it is recommended to appoint a Registered Agent. For practical purposes, the agent would not only be responsible for the safekeeping of your official corporate documents and books, but would also coordinate the tax payments and the filing of related returns.

Post-Closing Procedures. Various Updates

Here are some post-closing compliances which you should alse be aware of:

1.) MUNICIPAL UPDATE: Once the property transfer is registered, the next step is to conduct the municipal update, which is done by filing the corresponding “Real Estate Declaration”. This must be submitted by the owner, the legal representative (in the case of corporate ownership), or an authorized third party. This process is essential not only for tax compliance (property tax and municipal services), but also for obtaining required documentation for a building permit, whether for new construction or renovations to existing structures.

Please note that under the Real Estate Tax Law, you are required to update your property value at least every five years or whenever the value changes, for example, due to the addition or removal of structures. Also, be mindful that real estate declarations consist of two separate components: the land value and the value of existing constructions.

The calculation of these values is based on technical criteria that are not always readily available in municipal records. Therefore, it is highly recommended to engage a qualified professional with experience in real estate valuations, especially in the case of residences categorized as “luxury homes,” which are subject to a distinct tax regime from standard properties.

2.) UPDATE OF OWNERSHIP IN CONDOMINIUMS:

In cases where the property is governed under a condominium regime, once the individual acquires ownership, he must proceed with the corresponding update before the Condominium´s Administration. This is required not only for purposes of monthly condominium fee billing, but also to exercise voting rights in both ordinary and extraordinary homeowners’ assemblies.

Typically, the following documents are required for the update:

• A property´s ownership certificate
• A certificate of legal representation (if the property is owned by a legal entity)
• A valid identification document

We hope that this brief guide has helped you obtain a more comprehensive idea of what is involved in your decision to invest in a property. If you have any questions regarding any matter outlined herein, or if you would like to request a quote for our legal services, please contact us at: [email protected]

We will happy to assist you!

Sincerely yours,

Jorge F. Baldioceda B.
Senior Partner – Managing Director