Purchasing property in Costa Rica can be an exciting step, whether it’s for relocation, investment, or lifestyle. However, when the purchase involves bank financing, the process adds several layers of complexity that require both strategic planning and solid legal guidance. Understanding each stage of the transaction helps prevent delays, anticipate potential issues, and protect your interests from the start.
At Pignataro Abogados, we guide our clients through every phase of the property acquisition process, ensuring a smooth and secure experience.
1. SPA and Loan Kickoff
Duration: Up to 3 business days for the Sale and Purchase Agreement (SPA); loan application timeline varies.
The process typically begins with the negotiation and signing of the Sale and Purchase Agreement while simultaneously initiating the bank loan application. This stage involves gathering Know Your Customer (KYC) and credit documentation required by the bank.
Our recommendation:
Ideally, the loan application should already be in progress when the SPA is signed. It’s essential to include specific clauses in the SPA that address the possibility of delays or conditions related to the bank’s approval process.
2. Due Diligence and Financing
Duration: Legal and technical due diligence (approximately 30 calendar days); bank financing process (around 60 calendar days).
At this point, the buyer’s legal team conducts a comprehensive due diligence review—analyzing property ownership, encumbrances, zoning regulations, and related permits. Simultaneously, the bank performs its credit and payment capacity assessment, negotiating key terms such as interest rates, repayment period, and guarantees.
This dual process ensures both legal and financial feasibility before moving forward.
3. Due Diligence Approval and Closing Negotiation
Duration: Approximately 30 calendar days following due diligence approval.
Once the due diligence report is approved and no major issues are found, the transaction proceeds to final negotiation and coordination of closing logistics. At this stage, it’s common to require an automatic extension clause, allowing additional time (usually 30 days) if the loan has a high probability of approval but is still awaiting final confirmation.
Such flexibility is crucial to avoid losing a deal due to bureaucratic timing differences between legal and financial processes.
4. Closing
Duration: Variable — requires advance coordination.
The final stage involves preparing and executing the public deed of sale and loan documents, which must be reviewed by attorneys representing the buyer, seller, and bank. This is often the most document-heavy and time-sensitive phase, demanding careful follow-up and attention to procedural detail.
At closing, the bank disburses the funds, the property title is transferred, and the buyer officially becomes the new owner.
Final Thoughts
Navigating a real estate transaction financed through a bank loan requires a clear understanding of each stage and its legal implications. With the right planning and legal guidance, you can anticipate challenges and ensure the process runs smoothly.
At Pignataro Abogados, our real estate law team specializes in advising both local and foreign clients throughout the entire acquisition process. From reviewing contracts and conducting due diligence to representing clients at closing, we safeguard your investment every step of the way.