Closing Without an Escrow in Costa Rica? External Escrow? Is It Possible?

In Costa Rica, real estate transactions often involve an escrow company to handle funds securely. However, due to increasingly strict regulations from SUGEF (Superintendencia General de Entidades Financieras), dealing with Costa Rican escrow companies has become a bureaucratic challenge. The process, while intended to prevent money laundering, can be excessive, causing delays and frustrations for both buyers and sellers.

This raises an important question: Is escrow always necessary? The answer depends on where the seller wants to receive the funds and how the transaction is structured.

When Is a Costa Rican Escrow Necessary?

If the seller requires payment in a Costa Rican bank account, using a local escrow service is almost unavoidable. Due to banking regulations, transferring large amounts of money into Costa Rica without a proper explanation and documentation can be complicated. Escrow ensures that funds are legally registered and meet compliance requirements.

However, SUGEF’s procedures make opening an escrow account in Costa Rica highly bureaucratic, requiring extensive financial disclosures from both buyers and sellers. This has led many real estate investors to explore alternative options.

When Can You Avoid a Costa Rican Escrow?

If the seller does not require funds in Costa Rica, there are legal alternatives:

External Escrow Accounts:

A Costa Rican escrow company may manage an external escrow outside Costa Rica, bypassing local banking restrictions while maintaining security.
Alternatively, a buyer and seller can use an international escrow service in a jurisdiction with simpler regulations.

Direct Payments with a Hybrid Approach:

The down payment (earnest money) can be handled within Costa Rica using a local escrow.
The balance can be paid directly to the seller outside Costa Rica, reducing regulatory complications.
This method requires an experienced real estate attorney to ensure compliance with Costa Rican laws and contract security.

Legal Considerations When Avoiding Local Escrow

If a Costa Rican escrow is not used, certain steps are essential to protect the buyer and seller:

✔ A well-drafted sales agreement specifying the payment method, timelines, and compliance with tax regulations.
✔ A secure third-party account or trusted escrow service to hold funds until the title is transferred.
✔ Due diligence on the seller’s ability to receive funds internationally and any applicable tax obligations.

The Role of a Real Estate Attorney in Alternative Closings

Handling a closing without a Costa Rican escrow requires specialized legal expertise. The attorney must:

🔹 Ensure all funds are transferred securely while protecting the buyer’s rights.
🔹 Verify that the seller is legally and financially able to receive payment outside Costa Rica.
🔹 Ensure compliance with Costa Rican tax and reporting requirements.
🔹 Draft contracts that reflect the agreed payment structure and protect both parties.

At LandCo, we specialize in real estate closings that adapt to your needs—whether through a Costa Rican escrow or an alternative arrangement.

Final Thoughts: Is It Possible to Close Without a Costa Rican Escrow?

Yes, it is absolutely possible to avoid a Costa Rican escrow under the right circumstances. If the seller prefers to be paid outside Costa Rica, alternative solutions exist. However, structuring the payment correctly is crucial to ensure legal compliance and avoid risks.

If you are considering alternative escrow options or need guidance on your Costa Rican real estate transaction, contact us at LandCo. Our experienced real estate attorneys will ensure that your closing is secure, compliant, and hassle-free.

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