Investing in real estate in Costa Rica presents exciting opportunities. The country’s natural beauty, growing tourism sector, and favorable lifestyle make it an attractive destination for international buyers and investors. However, buying property here is not without risks. Many expats have discovered, sometimes too late, that inadequate preparation can turn a dream purchase into a financial and legal nightmare.
Here’s a comprehensive guide on what to watch out for when buying property in Costa Rica, with emphasis on due diligence and working with the right legal professionals.
Financial Losses and Legal Issues
One of the most common stumbling blocks for foreign buyers in Costa Rica is inadequate due diligence. Failing to thoroughly investigate the property, verify the seller’s ownership, or confirm that the land is free of liens and encumbrances can lead to devastating consequences. Buyers risk losing not just their deposit but their entire investment.
In Costa Rica, verbal agreements are not legally binding. Too many expats have relied on a handshake deal or informal promises, only to find themselves embroiled in disputes later.
Another overlooked area involves local regulations. Property taxes, building codes, zoning laws, and environmental restrictions can create unexpected financial penalties if ignored. For example, certain beachfront or agricultural lands come with strict limitations. Without expert guidance, a buyer may unintentionally violate laws and face fines or even loss of property rights.
The Hidden Dangers of Unlicensed Agents
Unlike in some countries, Costa Rica does not have strict regulations governing real estate agents. This has created an environment where unlicensed or self-proclaimed “agents” operate freely, often targeting unsuspecting foreigners. These individuals may misrepresent property values, fail to disclose critical issues, or even facilitate fraudulent sales.
Working with such agents exposes buyers to serious risks, including inflated prices, properties with unclear ownership, or land unsuitable for development. To protect your investment, always ensure your real estate agent is reputable, experienced, and ideally recommended by a trusted attorney or professional network.
Why Working with a Bilingual Attorney/Notary is Critical for Expats
For expatriates, one of the biggest challenges in Costa Rica is navigating legal documents in Spanish. Contracts, municipal regulations, and property records are all written in the official language. Misunderstanding a single clause can have long-term financial consequences.
This is why hiring a bilingual attorney and notary is critical. In Costa Rica, only notaries (who must also be licensed attorneys) can formalize property transfers. A skilled bilingual lawyer ensures you fully understand every step, from the initial title search to final registration in the National Registry.
Moreover, a local attorney acts as your advocate, verifying that the seller has a clear title, ensuring taxes are up to date, and reviewing municipal or environmental restrictions that could affect your use of the property. For foreign investors, this is the difference between a smooth transaction and costly mistakes.
Avoid These Pitfalls When Purchasing Property in Costa Rica
To safeguard your investment, here are the top pitfalls to avoid:
- Skipping due diligence: Always conduct a title search and verify the seller’s ownership.
- Relying on verbal agreements: Insist on written, notarized contracts.
- Working with unlicensed “agents”: Partner only with reputable, vetted professionals.
- Ignoring local laws and taxes: Understand zoning, environmental rules, and municipal fees.
- Not hiring a bilingual attorney/notary: Language barriers can lead to costly misunderstandings.
- Overlooking reputable representation: A skilled attorney can identify red flags you might miss.
At American Law Partners, we specialize in guiding international clients, expatriates, and investors through the complexities of Costa Rican real estate. Our bilingual attorneys and notaries provide the legal protection you need to make informed, confident decisions.
Contact American Law Partners today to schedule a consultation and safeguard your property purchase in Costa Rica.
Frequently Asked Questions (FAQ)
- Is it mandatory to hire an attorney to buy property in Costa Rica?
Yes. In Costa Rica, only an attorney who is also a notary can formalize the transfer of a property.
- Are verbal agreements valid in real estate transactions?
No. In Costa Rica, verbal agreements have no legal validity. To protect your rights as a buyer, all commitments must be included in written contracts and duly notarized.
- What risks exist when working with unlicensed real estate agents?
Unregulated agents may inflate prices, hide legal issues with the property, or even facilitate fraud. For this reason, it is recommended to work only with reputable agents under the supervision of a qualified attorney.
- Why is it important to hire a bilingual attorney if I am a foreigner?
Legal documentation in Costa Rica is written in Spanish. A bilingual attorney ensures you understand every clause of the contract and protects you from misunderstandings that could lead to financial losses or legal problems.
About the Author
This article was written by Terry Steele, Attorney in Costa Rica (cédula de identidad 08-0111-0536, bar license 36269).
With over 35 years of residency in Costa Rica and extensive experience advising international clients in real estate, corporate law, and cross-border investments, Terry specializes in helping foreigners navigate property purchases and residency applications with confidence.
