Wrapping up a purchase process is even more important than shopping for a property. Maybe you have read John Doe’s first blog, “A big step in the property purchase process” in December last year. We are now 1 month later and time for wrapping it up.
John described the initial stages of their property purchase in Costa Rica in another blog. It all started with touring around the amazing Costa Rica countryside, meeting its friendly, welcoming citizens and other ex-pats. Then they found a real estate developer with a property they were very attracted to.
John and Jane Doe decided to go ahead with the purchase process by delaying their flights back home. It was necessary to stay two nights on the property and sign papers to purchase the property.
John’s story is a great one as it is a first-hand and interesting experience of purchasing a home in Costa Rica. The name John Doe was used so it won’t upset any people who are involved in the stories. Let’s see what John has to tell us about the purchase process:
Signing the documents
Now things get interesting. I had noticed when we signed the developer’s papers that they did not have an accurate description of the transaction. The developer informed us that the properties in his development were individually held within corporate structures, as is pretty common in Costa Rica.
However, when I read the two-page agreement, it indicated we would be purchasing the property FROM the corporation. I was not purchasing the shares of the corporation, the owner of the property, from the developer and his wife, the owners of the corporate shares.
Note that I am a designated accountant. So have some knowledge of corporate transactions, but not detailed legal matters, and certainly not laws and practices specific to Costa Rica.
Our good faith deposit
I pointed out this anomaly to the developer but said we were willing to proceed. This, in the full belief, that the developer wanted to sell the property, and that we wanted to purchase it. We paid the developer a $1,000 good faith deposit. This with a promise to advance a further 20% of the purchase price when we returned home and the balance in three months upon closing the deal (this upcoming February 2013).
Our own attorney
Now comes the fun part! On our return home, we initiated the process of taking funds out of our retirement plans, to finalize the down payment. We also wanted to have our own legal representation, independent of the developer. We engaged a lawyer who had been recommended by trusted sources and had him review the paperwork.
To say that the developer was not happy with this is an understatement. The lawyer wanted to correct the description of how the transaction would proceed. He prepared a document to “adjust” the original agreement we had signed, as well as a few other suggestions. This included one regarding a tax on the transaction, which he said was required.
The developer and his lawyer apparently had a different view as to whether this tax was required. I should mention that part of the deal with the developer was that he would cover all costs of the transaction.
Little did we know that the developer’s intention was that we would just let him handle the entire process, and follow his every command!
Cooperating with the developer
So needless to say, he was less than thrilled that we were retaining independent legal advice. Many times we were told “I have sold all the other properties in the development without having all the problems you are giving me. I don’t know why you don’t just do what I am telling you to do.” However, the more he insisted, the more concerned (suspicious?) we became. So we held to our guns in doing things in a way that we felt our interests were being protected.
We finally decided to leave the payment or non-payment of the tax in the developer’s hands. He was taking responsibility for the closing costs anyway. We managed to work through the changes our lawyer suggested, with the developer making it difficult at every stage.
Finally, he agreed to everything we needed. And in all honesty, there wasn’t much we had asked for…but it certainly made the process more difficult!
We felt as if we were between a rock and a hard place!
Soon, John Doe will deliver his next blog. John is writing this blog as things are happening, a real story in real-time. Thanks, John, for taking the time to write this story, I know that you are a busy man. We are all looking forward to the next step of your Costa Rica property purchase process and we’re all hoping your story will have a happy ending.