We are in high season here in the southern pacific zone. The months of November through April are typically when there are more tourists here than during the rainy months.

There is another type of “high season” happening right now as well. This has more to do with world conditions. I know, those from the States are going to think that Mr. Trump is pushing many to look elsewhere. And I suspect that this is true to some extent. I think that Mr. Trump has been good for my Costa Rica real estate business. I think Mrs. Clinton would have been as well. Such is the world that we live in.

However, our property buyers here are not just from the States. We’ve got buyers from Canada, despite their currently weak currency. These people are buying property and essentially paying 30% – 40% more due to the exchange rate on their currency. One has got to wonder – why?

France, Germany, Great Britain – all are providing us here with buyers. Again: why? There are economic, political and security issues happening in various areas of the world. I suppose that greater analytical minds would come up with the cause and effect links in trying to answer the question. But I find that there is one common thread when I talk with these people.

The Reason:
is pushing, and the promise of less stress, is pulling people to consider a life in Costa Rica. Simpler living is highly attractive. Costa Rica offers this and it (simple living) seems to be the antidote to whatever may be happening in one’s home country.

Uvita, Dominical, Ojochal and the surrounding areas that make up Costa Rica’s southern pacific zone are all seeing an influx of buyers. But there is more. There are some big-money players who are making some moves here that are notable. There are condominium complexes being constructed, and sold at a good clip. There are town homes, urbanization projects and upgrades to some of the antiquated infrastructure in some of these areas.

There is some talk of giving Uvita a facelift. This is much needed. With both Dominical and Ojochal, you turn off the coastal highway and drive into the town. In Uvita, the highway passes right through the town. Up till now its growth has happened with hardly any attention to the aesthetic and it is essentially a strip-mall, Costa Rican style.

This is a pity since Uvita could really have been (or be made to be) one of the most beautiful towns on the planet. So if these well funded entities see the beautifying of the town as in their best interests, great! Although it’s hard to imagine what can be done, short of tearing the whole thing down and starting over again.

The Envision Festival is going on currently. This has become one of the largest events of the year. Kudos to the organizers. I’ve heard that 7,000 people attended last year, but that about half that number are here now.

Uvita Costa Rica's Crunchy Envision Festival

2017 Envision Festival Uvita Costa Rica

Some of the Ticos complain a bit about Envision, claiming that the drugs, nudity and general licentiousness is disrespectful to their culture. I suspect that there is some truth to these allegations, but for me, I’ve never met an Envisioner I didn’t like and the festival provides a time of some fascinating people watching.

I’ve not  personally ever attended. I can hear the music from my home well, the bass notes anyway, and I routinely provide rides to those thumbing to the grocery store and back. There is also the complaint of them being a bit odoriferous, but I can’t speak to this having lost my olfactory sense some years back. So I get along fine with them in my car and always enjoy their upbeat spirit.

So between the time of year and world conditions, sales are good here in the Zone’s real estate market.

About Property Prices:
During the recession, there was not much of a market here. It hit hard and us realtors languished waiting for the anomalous inquiry that might result in a sale. I actually got into brokering hard money loans during this time in an effort to not only make a little commission, but to also help some land owners to not lose their properties.

Prices plummeted during the recession. This was an interesting time. The pre-recession time was a “boom”. The biggest challenge for a buyer then was being able to find an available real estate agent. I felt like I should put a Baskin Robbins “take a number” device at the door. Some of these buyers were our good-old bread and butter retirees, looking to retire to Costa Rica. However, there were lots of folks who refinanced their homes and then found themselves cash-rich and wondering what to do with it. The causes of the recession helped to fuel some of that heady boom and resulted in pushing prices up to a rather silly level.

So the fall of pricing some 40% – 50% during the recession could appropriately be called a correction.

Much of our land here is still at recession pricing. There hasn’t been a big upward push on prices since then. The demand for houses is strong and so we’re starting to see some upward movement there – all very rational though. This is no heady boom. Its simply that the inventory which was glutted post-recession, is finally starting to get mopped up. This was inconceivable in the years following the recession due to the glut.

I still get asked sometimes why it seems that everything is for sale. I find this interesting since I have to really work to find properties for some of the criteria lists I build for my clients.

Yes, I suppose everything is, in fact, for sale, at some price. However, finding what you want, finding that screaming ocean view with good access and amenities nearby, and all this in your budget, can sometimes be a bit daunting.

And then there is that wonderful amenity “simplicity”. I wonder if this could be put at the top of the list. Right up there with “ocean view”. I’m thinking that this one amenity is the primary mover of the current strong market we’re seeing here in The Zone.

Escrow in Costa Rica Real Estate

About a year ago, my business partner Ben, with his unique perspective on Costa Rica real estate, wrote about the changes with “escrow accounts” in his blog article- Wire Transfers, Escrow & An Investment Idea. He explained,

For years we have used a rather casual system here in Costa Rica by which lots of land was bought & sold. Buyers generally put 10% of the purchase price of a piece of property into escrow while we real estate guys and the lawyers went about being duly diligent making sure that the property was what it claimed to be. That money was put into what we called an “escrow” account.

signing costa rica-real estate contract

Escrow makes closing easier.

Well, as it turns out, those escrow accounts were anything but actual escrow accounts.  They were simply the attorney’s business bank account and he held the money pending the closing when he would then disburse the funds.

The process of buying a house or land in Costa Rica did include fewer steps, although I’m not sure it was necessarily a clearer or safer process for buyers and sellers.  Although we haven’t experienced any issue in our office, we have heard a few stories of deposits not being returned due to defects in the title or terms of the Purchase and Sale Agreement.  That is not the case now, as everything is clearly explained in the legal documents for a deal.

Escrow Companies In The Zone

Last week, we was visited by two lovely ladies from Stewart Title Company.  Even though our companies haven’t worked together (yet), they wanted to drop off their business card and a one sheet on “How To Open An Escrow Account”.  They went through it line by line and the words “Blog article!  Blog article!” kept echoing in my head.  It’s the life of a writer who also happens to be a Costa Rica real estate professional.

Ok, so you find your dream property in Costa Rica and negotiate a good price.  Your lawyer drafts up a Purchase and Sale Agreement, and all of the terms (including the escrow information) are contained therein.  Usually, your lawyer will recommend an escrow company he or she has worked with successfully.

These representatives typically speak English, and here’s what your escrow agent is required to ask for—

  • Two Forms of Identification (think- passport number and driver’s license)
  • Escrow Agreement (Stewart Title said it was 6 pages and basically summarizes terms of the deal)
  • KYC (Know Your Customer) Form (applies to individual shareholders of acquiring corporation with at least 10% of the shares)
  • Proof of Income (Tax Returns, W2 Form, CPA Letter, etc.)

The last one, Proof of Income, often raises the eyebrows of prospective buyers, but escrow companies have to ask for it since the Bank Secrecy Act was tightened when the Patriot Act was passed.  The IRS and other government agencies just want to make sure people are not laundering money in a foreign country like Costa Rica.  Simply put, banks in Costa Rica now require a legal document for private transfers of large amounts of money.  They will not release the funds to the seller if it is not provided.

There are still instances when property transactions and large amounts of money are kept out of the banks, but understandably most people don’t feel comfortable living with a stack of money in their house (even in a safe,) and I don’t blame them.

Depositing Monies In Earnest

Most sellers require a minimum of 10% of the purchase price to be held in escrow.  This is the earnest deposit.  This deposit is sent to the recently opened escrow account and tied to the terms in the contract.  If there is an issue that wasn’t disclosed or degrades the property in a significant way, the buyer can elect to cancel the deal and have their deposit returned.  Other common “terms “ that can result in a seller requesting their deposit back are—

  • Title- Issues can include improper registration in the National Registry (Registro Nacional), clouded ownership, probate, etc.
  • Property Size- Normally, contracts stipulate that “the size (in square meters) of X property will not differ more than 3% from register survey; however, I have never experienced a deal that did not close because of this issue.
  • Liens/Encumberances- Restrictions on the title/property that can be financial, environmental, or legal.

The vast majority of times, a good lawyer will uncover some aspect of the property (referenced above) that requires clarification and/or fixing.  In rare cases when there is no solution to the problem during due diligence, the buyer is able to request their deposit be returned.  Escrow isn’t the most exciting aspect of buying Costa Rica real estate, but it is important and it does work to the benefit of sincere parties.  Pura vida.

About Tigre

My first visit to Costa Rica was in 2002. I immediately fell in love with the warmth of the climate and people. After spending two weeks in San Jose, Puerto Viejo on the Caribbean side, and Tamarindo in Guanacaste, I knew there was a good chance I would return sooner than later. Sooner came just 6 months later when my uncle mentioned he was flying down to Costa Rica to close on a piece of property in the Southern Pacific Zone. On that trip I found my own piece of paradise above the small town of San Buenaventura, home to the San Buenas Golf Resort. Two years and 8 trips later, I decided to move to Costa Rica full time. Every day I am thankful for that decision.