In Costa Rica just like most other countries around the world it is customary to tender an earnest money deposit in real estate transactions.
In Costa Rica a deposit is known locally in several different names such as “deposito de garantía”, “arras confirmatorias” or “reserva”. The amount of the deposit is generally negotiated between the buyer and the seller. The seller will generally want to get as large of a deposit as possible while the buyer prefers as little a deposit as possible. The more customary deposits are in the 5% to 10% range. The deposit is refundable depending on the contingency or due diligence conditions indicated in the Purchase Agreement. However if one of the parties fails to abide by the terms of the Purchase Agreement the deposit can become non-refundable. To make sure you do not put your deposit at risk be sure you clearly understand the Purchase Agreement. Pay specific attention to the breach or termination of the agreement section of the Purchase Agreement since it will dictate how the deposit is to be handled. It is recommended that you use the services of an approved Escrow company to ensure that the deposit is held by a third party. If the deposit is given directly to the Seller and they refuse to give it back for any reason you would have to initiate legal action which is time consuming and costly.
