Are you going to make an offer on Costa Rica property? Have you hired a professional real estate agent to assist you in your property purchase? I hope you did.
I have told you before that taxi-drivers, bartenders and pole dancers also sell property in Costa Rica. Can they offer you a well-structured purchase of your dream property? Do they know how to make a formal offer on Costa Rica property? I bet they can’t.
One of the most important parts of purchasing Costa Rica property is to structure a written offer on Costa Rica property signed by you.
This offer includes every single detail that is part of the negotiation. In many countries, a written and signed offer by a buyer is binding but in Costa Rica it is not. Unless a notary public turns this offer into a legal agreement that is called an option to purchase – sale agreement. Nonetheless, binding or not, presenting a written and signed offer on Costa Rica property shows the seller that you are a serious buyer.
A written offer, signed by both parties, is a great tool for the notary public or closing attorney to have all necessary information to formalize the agreement through this purchase-sale agreement.
What information should be in the offer on Costa Rica property you want to purchase? This varies depending on what is negotiated between buyer and seller and depending on the type of property. Let me spell it out for you here.
Buyer and seller information
First of all, the document should have the names and ID numbers of the buyer and the seller. Also, it should carry the name and ID number of the corporation if the property is owned by one. It is important to identify each party.
The full property information should be disclosed. This includes:
- The property location: the Province, the County (Canton) and the district,
- The registered property number (Folio real)
- The property survey number (Número Plano Catastrado)
- The registered size of the property.
Terms and conditions
The terms and conditions of your offer should include
- The price you offer
- Form of payment
- Any earnest money deposit involved
- Where will this earnest money be held (escrow?).
Formalization of the option to purchase – sale agreement and closing cost
At which date has the option to purchase – sale agreement to be formalized and who will pay for the legal cost of this option. Who will pay for the closing cost (legal fees, transfer tax, stamps and registry fees)?
Liens, annotations, and encumbrances
Make a statement that the property deed (escritura) shall be delivered free of any liens, annotation, and encumbrances at closing. Existing mortgages are to be deducted from the purchase price and retained by the BUYER’s attorney and canceled to the mortgage holder. The mortgage has to be cleared in the public register and the cost is for the SELLER.
Make a statement when the closing date and title deliverance shall be. You can say on such and so date or before (or no later than).
Utilities and property taxes
A wide range of costs involved has to be paid before closing. Make a statement that the property shall have all utilities connected and all bills paid up to the closing date. Said utilities and bills include but are not limited to property tax, municipal tax, luxury home tax, corporation tax, power, condominium fee, water, and phone.
The SELLER also has to deliver at closing:
- A certification by the municipality showing up to date property tax
- A certification by the condominium administrator showing up to date condo fee
- In case any employees will stay on the property after the transfer of the title, a proper liquidation of the worker’s comp.
Maintenance of the property before closing
The SELLER should acknowledge that during the term of this option to purchase – sale agreement and prior to delivery of the property to the BUYER the maintenance of the property is the sole responsibility of the SELLER.
As such the SELLER must maintain the whole property in the same condition as it is today. This should include every structure located on the property, landscaping, and gardens. This also includes all but not limited to the water holding tanks, septic tank, and swimming pool and its equipment to be able to function normally. Any maintenance required to restore the property to the condition which it was prior to closing, is the sole responsibility and expense of the SELLER.
Real estate commission
This is an important part of the agreement if there is a real estate agent involved. Make clear who pays the real estate commission. Also, what is the percentage (or amount) of the commission, and who pays it? Normally the seller pays the real estate commission.
Additional terms and conditions
Additional terms and conditions are as important. These could include
- Home inspection request
- Furniture and appliances inventory if it applies
- Will the phone line will stay on the property or not
- Does the buyer want to assign someone else as the official buyer of record
- Request a copy of the bylaws or financial statements of the HOA in case of a condominium
- Or any other matter that is important to have in this agreement.
As you can see, you will be so much better off to have a knowledgeable real estate professional take care of your offer on Costa Rica property. Choose the right real estate agent to work with and even your attorney will appreciate you do so. For any Costa Rica real estate purchase or sale, contact us now.
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