For a smooth closing, it’s better for the seller to move out before closing. But is it always possible? Are there other solutions?
Serious Costa Rica real estate agents will write up an offer to purchase – sale agreement on the Costa Rica property for sale. This offer should show what the buyer and the seller agreed on.
The info should include the sales price, closing date, home inspection, who will pay the legal fees, the real estate commission, and any other occurrences from both sides of the negotiations.
All GoDutch Realty agents do it this way, so there won’t be any surprises and you can have a smooth closing.
Once there is an agreement between buyer and seller, the offer should be submitted to the buyer’s attorney. The attorney will then write up the option to purchase –sale agreement, to make it official. Once this agreement is signed by both parties the buyer will usually put earnest money in escrow with his/her attorney or with a title company. The earnest money is usually 10% of the agreed-on sales price but the percentage depends on the negotiations.
Walk-through before closing
If you want to get your Costa Rica real estate closing to be a success and bring it to the finish line, do a walkthrough before the closing. You should do this just to make sure that everything is ok with the property. I have seen sellers take electrical plugs, toilet seats, lamps, and the water pump. I have had sellers leave the windows open and when the buyer moved in the house was flooded with rainwater.
So I ALWAYS do a walk-through of the property before closing, even if the sellers get mad at me. Sometimes, they believe I don’t trust them, but I do it just to cover my own and my buyer’s behind.
I do prefer the sellers to move out before closing. So in the closing attorney’s office, both parties first sign the closing papers. THEN the buyer will receive ALL the keys to doors and gates, the remote controls of all gates, the alarm code, and all paid utility receipts and the seller will go elsewhere after closing.
Move out before closing or not
But there are always exceptions. So why do we have to worry about the seller moving out before closing or not? Once in a while, when we have a cash deal, we go straight to closing, without doing any option to purchase –sale agreement and there is no money down. This is what happened a few weeks ago and that’s why I am writing this blog today about it.
On the day I was leaving for the International Living conference in Cancun a couple of months ago, we received an offer on a condo for sale in Escazu. While on the way to the airport, we finalized the offers and counteroffers over the phone and I asked my son Andres to take care of the offer to purchase – sale agreement.
Power of attorney
It turned out that the buyer had already left the country. He left a power of attorney with his lawyer to close on his behalf. Everyone wanted to go straight to closing as soon as the corporate papers were shown to be in order for a transfer of the shares. This would be more or less a week. To their opinion, the time was too short to do a formal option to purchase – sale agreement. Unfortunately, I wasn’t there to discuss this matter.
We did not have any agreement on paper between the parties. And the buyer could have walked at any time, not particularly a situation I like to be in. The seller was going back to the US the next Monday and time was running out. She had some really nice art in her condo and needed to ship it back to the US. But were we going to allow her to ship it back without having secured her sale?
Of course not.
Lease-back or not
But what can you do with a seller staying in a Costa Rica condo until after the closing and then doesn’t move out? It will take you at least 3 months to evict anybody from any Costa Rica property. In Costa Rica, the rental law allows a tenant a minimum of 3 years, so a lease is really no good in a situation like this. That’s a good reason to make the seller move out before closing, isn’t it?
The only solution is a gentlemen’s agreement to allow the seller to stay in the sold Costa Rica property for a couple of days. That way, the seller will be able to ship everything and then return the property to the buyer. That is what we did in this case, though it was not the correct legal way.
Legally correct
If we would have done this legally correct, we would have had to do an option to purchase – sale agreement with a 30-day closing or before. That would have given the seller enough time to ship back the art and even give someone a power of attorney to close for her. She could have traveled when she was ready. And we could have closed after that or any time before the 30 days were over.
I was back in time from the International Living conference for closing and the sale of this property had a very happy ending. Stick with GoDutch Realty as your buyers’ agent and you will enjoy your next real estate closing even more.
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