The Attorney Closing Fees are usually split 50/50 between buyer and seller unless negotiated differently. The Real Estate Agent should ensure that the real estate commission agreement is specified within the Buy-Sell Agreement signed by the Buyer and the Seller.
Nonetheless, the agent should also include provisions which contemplate a commission split in the event of a default by the Buyer.
Additionally, we include a clause which authorizes the escrow agent to disburse the commission directly to the real estate agent simultaneously at closing.
The Attorney must abide by the Fee Schedule established by the Costa Rican Bar Association (Decreto Ejecutivo No. 32493) Compliance with the minimum Attorney Closing Fees schedule. This compliance is mandatory for all Costa Rican Attorney´s / Notaries.
Attorney Closing Fees
For Costa Rica, real estate transactions the current minimum Attorney Closing Fees passed in November of 2005. These minimum fees are based upon the value of the transaction as follows:
- First 10 Million Colones 2%
- In excess of 10 to 15 Million Colones 1.5%
- Values in excess of 15-30 Million Colones 1.3%
- Those values in excess of 30 Million Colones 1.0%
Also bear in mind, that this fee is for drafting and filing the property transfer deed. Any additional services including the drafting of purchase agreements, escrow and the like may carry additional fees.
Property transfer tax
In addition to the Notary Fee, the parties must deliver to the Notary the applicable transfer taxes and registry fees due on the transaction and these typically include:
(a) Property Transfer Tax of 1.5% (b) National Registry Fee of .5% (c)
Documentary Stamps of Approximately .6%
There is a common practice to transfer the stock of a corporation (S.A.) instead of the property itself to avoid the property transfer taxes. From our standpoint, it is much cleaner to transfer the property outright since it involves one legal transaction filing.
To purchase a corporation involves in addition to the Costa Rican property title due diligence also some degree of corporate due diligence. Since there are no centralized corporate debt filings in Costa Rica there is no way to check for hidden liabilities. As such, when purchasing by way of a corporation the client is advised and must approve it accordingly.
Keeping the Transaction Smooth
If the closing attorney and the real estate agent follow the guidelines set forth above and work together during the entire closing process the closing should be smooth. We don´t like surprises at closings and neither do the parties to the transaction. Therefore, it is also very important to pay attention to the Attorney Closing Fees and who pays them, to keep the transaction smooth.
By dealing with all issues up front and well in advance of closing we can address any problems that arise. This way, the closing is limited to the exchange of funds and execution of the closing documents.
Attorney Roger Petersen specializes in Costa Rica real estate and is fully Bi-lingual English and Spanish. As a foreigner, you will feel totally comfortable using him as a closing attorney. Roger is the author of “The Legal Guide to Costa Rica”.
In addition, he is also the author of “The Complete Guide to Property Taxes and the New Luxury Home Tax in Costa Rica”. If you purchase a property in Costa Rica, using your IRA or 401K, Roger is the expert attorney on this matter.
You can contact his office for his services through his website.
Mr. Petersen also offers the following services:
- Real Estate Closings
- Property Title Searches
- Due Diligence
- Escrow accounts
- Development Planning
- Residential and Commercial Leases
- Title Insurance
- IRA Investment Property Purchases
- Purchase and Sale Agreements
- And finally, negotiations and any matter incidental to your real estate transaction in Costa Rica.
Contact us now for our assistance in your Costa Rica property purchases.
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