Escrow in Costa Rica. ☎️ A tool for transactions in Costa Rica.
Escrow in Costa Rica is a way to do property transactions securely. The escrow account secures the funds since they are released until the land purchase occurs. This guarantees a secure transaction. It can also be used to sell the asset and receive payment in the United States in your account. The escrow company acts as an agent and is the third party that manages the account. Once the notarized transfer deed is signed, at the closing date, the funds held in escrow are released.
What is an escrow contract in Costa Rica?
The word “escrow” comes from the French “escroue”, which refers to property titles in old French. Escrow is a business contract. An impartial third party, known as an “escrow agent,” is designated to hold money or documents temporarily. Once the contract´s conditions are met, the escrow agent must execute the instructions in the said agreement. An escrow agreement is usually dependent on another contract, such as a land purchase.
How does the escrow agreement work in a property transaction?
The escrow agent holds documents or funds in an independent escrow account that he manages as an impartial third party. He releases the funds to the designated beneficiaries when the notarized purchase scripture is signed. These recipients and the amounts given to them are previously designated in the escrow agreement. If escrow is used to hold documents, he will transfer the documents to the recipient in the escrow contract once the conditions of the principal agreement have been met. This is why escrow agreements are sometimes called the “cousins” of trust agreements.
What business transactions can be done with an escrow account in Costa Rica?
Escrow, is mostly used to purchase land in Costa Rica. The buyer and seller, look for an escrow company, to be the designated agent. They all sign an escrow agreement in which all parties indicate how the moneys are to be distributed, once the land purchase agreement is signed and finalized. The buyer then deposits the purchase price in the escrow account, and is kept there by the escrow officer, pending the closing. That being said, it can be used for any type of business transaction, not limited to real estate.
Are escrow agents regulated in Costa Rica?
The parties that receive and manage financial resources in escrow and trusts must be duly registered in SUGEF. SUGEF is the Costa Rican Financial Superintendency. This State organization audits banks and financial institutions, as well as oversight to persons that receive amounts of money and third-party funds in administration. It´s similar to the Office of the Comptroller of Currency in the United States of America.
So when you choose an escrow company, you first want to ensure it´s duly registered in SUGEF. I also recommend you select an escrow company that has been in the market for years to add another level of security. Escrow can be a secure way to transact the property, but finding a reputable escrow company is essential. I like to close with Secure Title Costa Rica, as they have been in the business for years.
Final thoughts.
Most escrow companies have an account set up internationally for your convenience when you intend to purchase land in Costa Rica. If your money is in a US bank, the escrow company will most likely send you their account in the United States to deposit the funds in escrow.
About the documents, you can expect to show your passport identification, and you will need to sign KYC documents and the escrow agreement for the distribution of funds once the principal contract is signed. The most important thing about documentation is showing the funds’ legal origins. Escrow transactions are usually quick, so closing should not take long. Contact me as a notary public and attorney to close if you wish to buy land in Costa Rica. I will help you with all the steps of the way, to make your purchase land in Costa Rica, a safe and enjoyable experience.
Dr. Christopher Pirie Gil.
