THE ATTORNEY ESCROW/TRUST ACCOUNT IN COSTA RICA
Most of you reading this article will be either from the United States, or Canada, where it is taken for granted that Client funds are held in a separate escrow, or trust account by an Attorney and not co-mingled with the Attorney’s personal, or operating account for the law firm. In fact, such a practice of keeping Client funds in a separate escrow/trust would be mandated in most, if not all jurisdictions in the United States and Canada, along with strict accounting procedures to be complied with by the Attorney, and subject to sanctions for non-compliance. This is not the case in Costa Rica. Attorney accounts are not regulated in a manner that prohibits co-mingling of Client monies with the Attorney’s personal, or business account funds.
The Government Banking Regulatory Authority (SUGEF) does require Attorneys to register bank accounts with the Authority and be subject to supervision by the Authority, where large sums of monies are regularly transacted in the account by wire transfers, or checks. This is a procedure largely limited to Real Estate Attorneys, who regularly receive and distribute funds related to real estate purchases and sales in Costa Rica. This procedure is aimed at stopping money laundering, largely related to drug trafficking, and is not related to the holding of Client funds separately.
Parties utilizing the services of Attorneys in Costa Rica, particularly in the circumstances of real estate transactions, or other similar transactions involving substantial sums of money, should inquire of the Attorney at the out-set, as to how their funds will be protected and insure that no co-mingling of their funds with those of the Attorney will take place. There has been more than one occasion where the Attorney has “floated” their office rent payment on co-mingled Client money, only to be short on the Closing day in a real estate transaction undertaken for the Client.
By Rick Philps
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