When you're looking to take out a mortgage loan on your property, the mortgage lenders…
Do not gamble with your down payments in Costa Rica! This is a story of a woman who made a mistake and lost big because of it.
This week we ran across a very interesting and sad scenario that explains why you do not gamble with your down payment in Costa Rica! A client (borrower) contacted us to look at a potential development on one of Costa Rica’s premier beaches. The property was fully permitted, with a ton of direct beachfront property with gorgeous views, rather large and shovel-ready. Worth its weight in Gold! We were very excited to offer the financing for the project when we asked her how much money she put down on the property, she told us the amount, and of course, we wondered if it was in escrow (it was not). She had put 25% down and had the other 25% in her bank account and asked us to provide the balance to complete the purchase.
We felt confident that we could accomplish this, so we agreed to meet and discuss her options in San Jose the following day after the site visit. On December 27th, we all got together to discuss further and found out that her purchase agreement had expired on December 19th. We asked her if she had an extension, and she said “no” then we asked very politely,y “do you still have the 25% in your bank account?” She responded that because of the current situation (the purchase option had expired), she decided to send it to the land owner directly that night, thinking that that gesture would buy her more time. Glenn’s head hit the table, and I advised her that she had just walked into the Casino and threw the dice on craps! Without a proper extension of her purchase agreement or an escrow account, she is basically at the mercy of the landowner. Of course, she swore that he was a great man and had the best lawyers, the best broker, etc. (same old same old with the best lawyers in CR). I told her to go find out if they were willing to do an extension on the purchase agreement. She and her partner left, and within half an hour, I began to receive text messages stating that “there is a problem” … following text was “I’m screwed.” The worst part…. the amount of money transferred to this gentleman with no escrow account and no extension on the purchase agreement was more than 30 million dollars (YES, you read that correctly). Now for the real surprise, she is Costa Rican.
The point is that everybody in Costa Rica must use common sense, a good lawyer who works in your best interest, a broker you can trust, and does his proper due diligence. Never put any money down on a property unless you are sure you will get the majority of your deposit back if you cannot complete the purchase or you will receive the balance of the monies from a secure source to complete the purchase! If she only would have come to us sooner…
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