If you live abroad and plan to finance a property purchase in Costa Rica, learn when you can use real estate as collateral, who holds title, and what to check before you sign.
You’ve found a home in Costa Rica. The seller asks for a deposit to take it off the market and proposes a closing date. If you need a loan to cover part of the price, the immediate question is whether the money will be ready in time. To answer it, work out how you’ll pay for the property and what security the lender will accept.
How can a foreign buyer pay for property in Costa Rica?
You can pay with your own funds or use a loan to cover part of the price. If you’re sending money from abroad, ask your bank what currency you can send, how long the transfer may take, and what records it needs to verify where the funds came from. Get written confirmation of who will receive the deposit, when the balance is due, and when you could get the deposit back if the sale falls through.
If you need a loan, start by asking what options are available for you and the property you want to buy. Before committing a deposit you could lose, confirm when the lender could release the money, what conditions you’ll have to meet, and what it would accept as collateral.
How can a guarantee trust help you buy property in Costa Rica?
If you need to finance part of the price and the lender accepts a guarantee trust, you can use real estate as collateral for the loan. That may be the home you’re buying, provided the parties can coordinate the purchase, the release of the loan funds, and the transfer to the trustee. You can also consider this arrangement for a loan secured by property you already own.
The lender decides whether to approve the loan and on what terms. The trust sets out which property secures the debt and what happens to it when you repay the loan or default. If you’re bringing money in from abroad, arrange the transfer and payment schedule separately.
Who lends the money and who holds title?
In a guarantee trust, the property owner, known as the settlor, transfers the property to a trustee to secure a debt. The trustee is registered as the titleholder in that capacity and must follow the trust agreement. The lender is typically the beneficiary of the trust.
Say Laura lives in Canada and wants to buy a house in Costa Rica. She puts up part of the price, and a lender finances the rest. If the lender accepts the house as collateral and the parties coordinate the closing, Laura, as the owner and settlor, transfers the house to the trustee by public deed. The lender provides the loan funds. The trustee holds registered title to the house, keeps it separate from its own assets, and follows the trust agreement.
Can Laura still use the house? That depends on the agreement. Before signing, she should check whether she can live there, rent it out, or renovate it, and what permission she would need to sell it. The agreement also tells her who can act with respect to the property, under what circumstances, and how title will be transferred back.
What happens when you repay the loan or default?
If Laura pays off the loan, title is transferred back under the terms of the agreement and the transfer is registered. She should find out early who confirms repayment, who prepares the deed to transfer title back, and who pays the fees.
If Laura defaults, the trustee may sell or auction the house under the agreement and Article 648 of Costa Rica’s Commercial Code. Laura could lose the property. Before signing, she should understand what triggers the process, what notice she would receive, and whether she would have time to catch up on payments.
What to review before signing
Compare the full cost and terms of the trust with other forms of collateral the lender accepts, such as a mortgage if one is available. Along with the loan’s interest rate, currency, and term, ask for four details in writing.
- What the collateral covers. Check whether it secures only the outstanding loan balance or also covers interest, fees, or other obligations.
- What you’ll pay. Ask for a breakdown of trustee fees, deed preparation costs, taxes, and registration fees, both when the trust is set up and when title is transferred back.
- How you can use the home. Check who pays for property taxes, insurance, and upkeep, and whether you’ll need permission to rent, renovate, or sell it.
- What happens if you have trouble making payments. Review notice and deadlines, how the property could be sold, and how the proceeds would be distributed.
If you’re buying, also ask your lawyer to check who is on title, whether any liens or restrictions apply, and how the purchase agreement’s deadlines line up with the release of the loan funds. Aim to get those answers before paying a deposit.
Which Costa Rican law firm can help Americans and Canadians buy property in Costa Rica?
ERP Lawyers provides real estate legal advice in English to foreign buyers purchasing property in Costa Rica. Its team can check title and liens, advise you on the purchase agreement, and help you assess whether a guarantee trust makes sense for the financing you’ve been offered.
Request a consultation with ERP Lawyers if you have a property in mind, are about to pay a deposit, or have received a financing offer. If you have a draft purchase agreement or a loan offer, share it so the team can focus on your next decision.
