Unfortunately, the stories are far too common: people losing thousands — sometimes millions — due to poorly executed real estate transactions or chaotic construction projects in Costa Rica. What makes these losses especially frustrating is that many of the people who fall victim to them were cautious, methodical, and responsible in their home countries. Yet something happens upon arrival: long-established instincts fade, red flags are ignored, and common sense evaporates.

People buy property without title.
They trust verbal promises.
They skip legal review.
They pay contractors in cash.
They “don’t want to bother” with due diligence.

And only after everything collapses do they look for help.

This blended guide is designed to prevent that outcome. It brings together the essentials of real estate ownership, construction safeguards, and financial protection through escrow, offering clarity for anyone considering buying real estate in Costa Rica or building a home.

It is not legal advice, but it provides the essential foundation every expat should understand.

Why Prevention Matters When Buying Real Estate in Costa Rica

In the U.S., Canada, and Europe, people treat legal advice as a preventive tool. They hire professionals before they sign. They conduct inspections. They compare reports. They scrutinize contracts.

But in Costa Rica, many only reach out after problems arise — when their money is gone, their project is stalled, or the land they believed they purchased was never legally transferable. Prevention is always cheaper than recovery. And when it comes to property, “cheaper” may mean the difference between a minor correction and a devastating financial loss.

If you are planning on buying real estate in Costa Rica, the first rule is simple:

Do not abandon the protections you would demand at home. Bring your common sense with you.

Legal Options for Owning Property in Costa Rica

Costa Rica provides foreigners with full constitutional property rights. You do not need citizenship, residency, or a corporation to own land. Your passport is sufficient. Understanding the available forms of ownership will help you start from a place of confidence and clarity.

Fee Simple Absolute (Dominio Pleno)

The strongest and cleanest form of ownership. Fee simple absolute provides:

• Full control
• Full transfer rights
• Full inheritance rights
• No conditions

Whenever possible, this is the preferred structure.

Tenancy in Common

Two or more people can share ownership in any chosen proportion. All owners have equal right of access and use. This is commonly used by friends, business partners, or family members who co-invest.

Tenancy by the Entirety

A category of ownership for married couples. Even if a deed does not specify 50/50, Costa Rican family law will treat the property as joint marital property, equally owned by both spouses.

Life Estate

A person may retain use of the property for their lifetime, with ownership transferring to heirs afterward. This is less common in Costa Rica but remains legally valid and often used for family succession planning.

What You Should Not Buy — And the Persistent Myth of Corporations

A widespread misconception claims that foreigners must use a corporation to buy property. This is incorrect. Many attorneys promote corporations to create additional billable work or to appear to offer legal sophistication.

You do not need a corporation to:

• Buy real estate
• Own a home
• Own a vehicle
• Open a bank account
• Reduce liability

If liability protection is a concern, the correct tool is insurance — not a corporation acting as a shell. Courts in Costa Rica increasingly apply the doctrine of piercing the corporate veil when corporations are used improperly.

Using a corporation when you are not operating a business introduces:

• Annual filings
• Mandatory declarations
• Registry compliance
• Fees and penalties
• Additional legal exposure

For most people buying real estate in Costa Rica, purchasing the property under your personal name is the simplest and most compliant option.

Essential Requirements: What Every Property Must Have

Before you make an offer — or during the due diligence period — the property should meet these non-negotiable criteria:

• A registered survey (plano catastrado) properly approved and recorded
• A property ID number (folio real) in the National Registry
• Clear, traceable ownership
• Verification of the chain of title
• Absence of liens, mortgages, or encumbrances
• Accurate boundaries and no encroachments
• Water availability (critical for building)
• Utility services or the ability to secure them
• Updated municipal property taxes

If a property has no survey and no folio real, this is an immediate red flag. The only exceptions involve larger tracts of land being subdivided — and only when the contract and escrow structure protect you adequately.

Special Property Categories That Require Extreme Caution

Even when buying real estate in Costa Rica, some property categories present unique risks. Understanding them early can prevent major losses and prevent future legal conflicts.

Maritime Zone (Zona Marítimo Terrestre – ZMT)

The first 200 meters from the high-tide mark belong to the State. The first 50 meters are public and cannot be occupied. The next 150 meters can be leased (concesión), but they cannot be privately owned by foreigners unless they are legal residents.

The ZMT involves:

• Municipal oversight
• ICT oversight
• Restricted transfers
• Long bureaucratic processes
• High incidence of corruption and disputes

If you want beachfront property, due diligence becomes even more critical.

IDA / IDER Lands

These lands were granted to farmers under social development programs. They often carry restrictions on use, transfer limitations, or requirements that must be met before the property can be sold legally.

A specialized legal review is essential before proceeding.

Easements (Servidumbres)

In rural areas, it is common to encounter easements for:

• Access
• Water
• Drainage
• Electricity

Easements can substantially affect how you use and develop the property. Always confirm their existence and scope.

To Build or Not to Build in Costa Rica

Buying a completed home is generally the safer choice. Building, while possible, introduces far more risk — especially if you have never built a home before, or if you do not speak Spanish or understand local regulations.

The reality is:

Contractors in Costa Rica are not licensed, not regulated, and not required to meet professional standards.

Anyone can call themselves a contractor.

And this is where many people get burned financially.

The Importance of Hiring an Architect or Civil Engineer

If you decide to build, protect yourself by following these rules:

1. Hire a Licensed Architect or Civil Engineer

Architects and engineers are legally licensed and regulated by the Colegio Federado de Ingenieros y Arquitectos (CFIA). Contractors are not.

If problems arise, CFIA offers a formal mediation and arbitration mechanism — something you do not have if you hire a contractor independently.

2. Sign a Registered Contract

Any contract with an architect or civil engineer must be registered with CFIA. This guarantees:

• A record of obligations
• A formal scope of work
• Access to mediation
• Access to arbitration
• Legal and professional accountability

Without this registration, you lose these protections.

3. Subcontractors Must Report to the Architect/Engineer

You should not manage workers, materials, or scheduling.
Your architect or engineer must take full responsibility for:

• Hiring the crew
• Supervising the project
• Ensuring compliance with codes
• Managing payments
• Overseeing quality

This is essential for risk control.

4. When to Hire an Attorney

Hire an attorney to review your construction contract if:

• You do not personally know the architect or engineer
• You lack quality references
• You want independent due diligence

If the architect/engineer is reputable, experienced, and recommended by trusted people, an attorney is optional — but often helpful.

The Critical Role of Escrow in Construction Payments

One of the most significant mistakes foreigners make is paying contractors directly or advancing large sums without control mechanisms.

Escrow solves this problem.

Why Escrow Is Essential

• Protects your funds from fraud
• Ensures accountability
• Links payments to deliverables
• Prevents premature payouts
• Creates transparency
• Reduces disputes

Escrow should always be used when buying real estate in Costa Rica or building a home.

How Escrow Works for Construction Contracts

Your architect or engineer should authorize every payment.

The process should look like this:

1. Funds are deposited into a licensed escrow account.
2. Work is completed for a specific phase.
3. The architect/engineer verifies the work.
4. Written authorization is issued to the escrow agent.
5. Escrow releases funds only for completed milestones.
6. The next phase begins.

No verification = no payment.

This process prevents 90% of construction-related losses.

How to Buy Real Estate Safely in Costa Rica

The safest transactions follow a structured sequence. Rushing is your enemy; methodical steps are your protection.

Step 1: Hire Your Own Attorney

Never use the seller’s attorney.
Never use the agent’s attorney.
Independent counsel ensures your interests are protected.

Step 2: Make an Offer in Writing

Even if real estate agents in Costa Rica are not used to written offers, insist on it. Written terms prevent misunderstandings and create clarity.

Step 3: Sign a Purchase Agreement

Your purchase agreement should include:

• Legal identification of all parties
• Full property description
• Survey number
• Property ID number
• Purchase price (never declare a lower amount)
• Earnest money terms (never exceed 20%)
• Escrow instructions
• Due diligence period
• Closing date
• Identity of the notary public

A well-drafted purchase agreement is your roadmap to a safe closing.

Step 4: Use Escrow for All Funds

Earnest money and the full purchase price must go to a licensed escrow agent — never to the seller or their attorney.

If due diligence reveals problems, you should be able to withdraw and recover your deposit.

Step 5: Complete a Thorough Due Diligence Review

Your attorney must confirm:

• Registration in the National Registry
• Seller’s ownership
• Survey accuracy
• Boundary integrity
• Clean chain of title
• No liens or litigation
• Water availability (critical for building)
• Building permits for existing structures
• Municipal tax compliance
• Corporate good standing (if the property is held by a company)
• Structural inspection results

If any material issue is discovered, you have the right to withdraw.

Step 6: Closing Before a Notary Public

Once due diligence is complete, closing takes place before a notary public of your choosing. After signatures:

• The notary confirms execution
• Escrow releases funds
• The deed is submitted for registration

If purchasing by acquiring a corporation (not recommended), the closing involves transfer of shares and updating corporate books.

Final Thoughts

If you are considering a purchase or planning a construction project in Costa Rica, taking the time to understand these steps will help you approach the process with clarity, structure, and realistic expectations. Every property and every project carries its own details, and the safest decisions come from asking the right questions early, relying on licensed professionals, and ensuring that every step is documented and verified.

If you have questions about any part of the process or would like clarification on a specific situation, feel free to reach us with your questions or comments.