Here are seven red flags foreign buyers should take seriously.
01Pressure to close quickly
A rushed closing is one of the clearest warning signs. A buyer should have enough time to review the property, the seller, the contract, the escrow conditions, and any issue that could affect the transaction.
02Unclear access to the property
Access is not only a practical matter. It is also a legal one. If access depends on a private road, easement, informal permission, or neighboring property, it should be carefully reviewed before closing.
03No clear water or electricity availability
For many buyers, especially those planning to build, utilities are essential. Lack of water or electricity availability may not always make a purchase impossible, but it can significantly affect the buyer's plans, timeline, and budget.
04Inconsistencies between the registered property and the physical reality
The registered title, cadastral map, boundaries, and actual possession should be consistent. If the map does not match the land, or if boundaries are unclear, the buyer should not ignore it.
05Seller documentation is incomplete
If the seller is an individual, identity, marital status, and authority to sell may be relevant. If the seller is a corporation, corporate standing, legal representation, shareholder approvals, tax status, and beneficial ownership compliance may need to be reviewed.
06The contract does not protect the buyer's deposit
The purchase agreement should clearly regulate the due diligence period, refundability of the deposit, escrow instructions, closing conditions, and consequences if a negative finding appears.
07The property cannot be used for the buyer's intended purpose
A property may be legally transferable but not suitable for the buyer's plan. A residential home, commercial project, condominium development, agricultural use, or hospitality investment may each require different reviews.
Final Thoughts
The presence of a red flag does not always mean the transaction should be cancelled. Sometimes the issue can be corrected, negotiated, insured, clarified, or reflected in the contract. But ignoring a red flag is never a good strategy.
At MG Law, we help buyers identify, understand, and manage real estate risks before closing in Costa Rica.