The 44-Step Due Diligence Checklist for Project Financing in Costa Rica

The Hidden Risks in Costa Rica’s Project Financing Landscape

Costa Rica’s breathtaking landscapes hide complexities that can derail even the most promising investment. What most investors don’t check is how seemingly minor oversights can cascade into major financial and legal complications that threaten project viability.

Critical Verification Points Often Missed

• The “water letter” (carta de disponibilidad de agua) represents a critical verification point that frequently trips up foreign investors. Without this document, your project cannot legally proceed regardless of other approvals or funding availability.
• Legal status of access roads to the property. In a recent case, we discovered a client’s “public road” was actually on private land with no formal easement, threatening their entire investment.
• Environmental setbacks and protected zones that may not be visible during standard site visits but can severely restrict development options.
• Hidden liens or claims against the property that may not appear in preliminary title searches.

The Six Pillars of Successful Due Diligence for Project Financing in Costa Rica

Successful project financing in Costa Rica requires navigating six critical categories of verification. Each represents a potential roadblock that could delay or derail your investment if not properly addressed before purchase.

1. Legal Due Diligence

Title searches uncovering hidden claims can reveal unexpected ownership disputes or encumbrances. One client discovered their property had an unregistered easement that would have cut directly through their planned building site.

11-point legal verification includes:

• Comprehensive title search and verification
• Zoning compliance check
• Easement and right-of-way verification
• Legal boundary confirmation

2. Technical Due Diligence

Soil testing and topographical analysis can reveal construction limitations that might not be visible during a standard site visit. These technical factors directly impact construction costs and feasibility.

10-stage technical review includes:

• Property survey verification
• Infrastructure assessment
• Soil stability testing
• Topographical limitations analysis

3. Environmental Due Diligence

Environmental impact assessments identify protected species or habitats that could restrict development. Costa Rica’s strict environmental regulations require thorough verification before proceeding.

5-layer environmental audit includes:

• Protected zones mapping
• Water management compliance
• Environmental impact assessment
• Setback verification

4. Financial Due Diligence

Property valuation and closing cost budgeting ensure your investment is financially sound. Accurate financial assessment prevents budget overruns and financing complications.

6-point financial verification includes:

• Property valuation analysis
• Tax liability assessment
• Closing cost verification
• ROI projection based on verified data

5. Practical Due Diligence

Site visits and community assessment provide critical on-the-ground intelligence about your property’s practical viability for development. These factors impact both construction and long-term project success.

6-step practical verification includes:

• Access road assessment
• Community relations evaluation
• Utility availability confirmation
• Practical development limitations

6. Funding-Specific Due Diligence

Lender requirements and investment viability analysis ensure your project meets the specific criteria needed to secure financing. These requirements vary by lender and project type.

6-criteria funding verification includes:

• Lender-specific documentation
• Investment return analysis
• Financing eligibility verification
• Collateral assessment

The Funding Connection: Critical Criteria for Project Financing Approval

What criteria make or break your project financing approval? Lenders in Costa Rica have specific requirements that directly impact your ability to secure funding. Our funding-specific due diligence ensures your project meets these critical criteria before you apply.

Investment viability stands as the cornerstone of successful project financing. Lenders scrutinize your project’s financial projections, market analysis, and risk assessment before approving funding. Without comprehensive documentation addressing these factors, your application faces significant hurdles.

Real-World Due Diligence Success: Case Study

A recent client was considering a $1.2 million property for hotel development in Guanacaste. Our 44-point due diligence process revealed that while the property had most permits in place, it lacked the critical water letter required for commercial development.

Rather than walking away from the deal, our team helped negotiate a 22% price reduction and worked with local authorities to secure the necessary water rights. The project is now under construction with full financing approval, saving our client over $260,000 while ensuring regulatory compliance.

The Essential Due Diligence Checklist for Project Financing

Our comprehensive 44-step verification process covers six essential categories to ensure your project is fully prepared for financing. Here’s a condensed overview of the critical verification points in each category:

Secure Your Costa Rica Investment with Expert Due Diligence

The difference between successful Costa Rican property investments and costly mistakes often comes down to the thoroughness of your due diligence process. Our 44-point verification system has helped investors secure millions in project financing while avoiding the pitfalls that derail many foreign investments.

GAP Equity Loans offers a solution for property owners seeking to leverage their Costa Rican real estate investments to access capital with competitive terms and a streamlined process. By following the 44-step verification process outlined in this guide, you can minimize risks and maximize the benefits of your project financing in Costa Rica.

Whether you’re looking to develop a hotel, residential community, or commercial property, thorough due diligence is your insurance policy against unexpected complications. Contact our team today to ensure your Costa Rican investment starts on solid ground.