A Costa Rica real estate closing can be a nerve-racking issue if you don’t know what you are doing. Or worse, if you’re not in the good hands of a knowledgeable realtor.
I just went through the nicest real estate closing of my life as described in part I and part II. This was a long and tedious closing process of filling out documents. And then more documents after that to apply for a Costa Rica bank mortgage.
Getting to a Costa Rica real estate closing is just like driving a bad Costa Rican road. One that is full of potholes.
After the documents, follows an even more nerve-racking bank appraisal, and home inspection done by the same appraiser. That gives anyone heartburn.
The Home Inspection
As you can read in my other blogs, the BAC San José’s appraiser did not only an appraisal but also a home inspection. Now I appreciate all the work our home inspector Tom Rosenberger † used to do. He was charging half for 5 times as much work as this appraiser did for the bank.
As usual, the appraisal, even though the buyer was getting a bargain, came out much lower than the agreed sales price. This happened mainly because they took 50% of the construction value. That happened because they thought the house was built 50 years ago.
On the land value, they took 1/3rd of the property at $6/m2, because the slope is too steep to build on. I have never seen a property within the Central Valley sell at this ridiculous price. I still don’t know where appraisers get their property prices because we do not have any comps in Costa Rica.
Important to know: If the buyer really wants to make sure he will end up owning the property, it is the buyer’s attorney who should do the closing. Just to make sure that the title is transferred correctly. NEVER use the seller’s attorney.
In case of a bank mortgage, the bank’s attorneys do the closing. The bank wants to make sure the title is transferred and appears clean of any liens in the National Register.
In case of a corporation take-over (buying the company that owns the property title), there is a transfer of the shares, change of the board of directors, and the powers of attorney, the buyer has to bring his/her own attorney to the closing. That’s because the bank won’t do all this. The bank’s attorneys only care about getting the mortgage lien slapped on the property and that is as far as they go.
The bank only cares about the fact that the mortgage gets registered on the property. It doesn’t matter who OWNS the property or who owns the Corporation that owns the property.
The perfect closing
The most perfect Costa Rica real estate closing turned out to be pretty easy. It was the transfer of shares of the Limited Corporation. We needed the buyer’s attorney who constituted the Limited Corporation to first write the necessary information in the companies´ books. He should have done years ago when the corporation was constituted. After we received a certification from the CCSS (Caja) and the gardener had signed off on his workers´ comp we were ready to close.
The bank was asking for a lot more additional paperwork and extra work to be done. But those were all produced by buyers and the seller in record time.
Although this was not an easy closing, with a lot of small details, it was still the most perfect Costa Rica real estate closing I’ve ever had. Buyers and the seller are my heroes and I am looking forward to the next real estate closing like this. I hope it will be soon. You can see the buyer’s testimonial here (Keith and Marlin Watlington).
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