Executing a properly drafted Sale and Purchase Agreement (SPA) is a fundamental step in the acquisition of real estate in Costa Rica. This document establishes the clear rules, terms, and conditions governing the transaction, providing legal certainty and protecting the interests of all parties involved. Beyond serving as a roadmap toward closing, the SPA defines the rights and obligations of buyer and seller, reduces misunderstandings and risks, and creates a structured framework for resolving potential contingencies before the transfer of title takes place.
In practice, the SPA is also a key document from a financial and compliance standpoint. Banks may require a signed agreement when the buyer is obtaining financing, and both financial institutions and escrow agents often request a copy to receive and process funds from abroad which are related to the transaction in Costa Rica. As a result, the agreement not only governs the private relationship between the parties but also becomes an essential instrument for the proper channeling of purchase funds and regulatory compliance.
The content of a Sale and Purchase Agreement cannot be underestimated, and it must be drafted and created by a knowledgeable Costa Rican attorney. It must clearly regulate the amount and treatment of any deposit, including the conditions and clear rules under which it becomes refundable or non-refundable and how it will be applied toward the purchase price.
So it is binding, the agreement must be executed by the registered owner of the property or by a duly appointed and registered representative with sufficient legal authority to bind and dispose of the property. It must also specify the exact purchase price, the full registered description of the property as it appears in the National Registry, the parties’ addresses in Costa Rica for notification purposes, the agreed closing date, and a defined due diligence period detailing the scope of legal, technical, and regulatory review.
Additionally, the SPA should address any required repairs, improvements, or conditions that must be satisfied prior to delivery of the property, confirm the existence of a duly registered survey, and clearly allocate responsibility for transfer taxes, registration expenses, notary fees, escrow fees, and broker commissions. It should also specify whether the transfer includes furniture, equipment, appliances, or other movable assets as part of the transaction, to avoid future disputes.
In summary, a carefully structured Sale and Purchase Agreement is not a mere formality but a critical legal instrument that ensures transparency, allocates risk appropriately, creates a legal commitment between the parties, and facilitates a smooth and secure closing process. Engaging legal counsel from the negotiation stage is essential to ensure that the agreement accurately reflects the parties’ intentions and provides the necessary safeguards for a successful real estate acquisition in Costa Rica.