By Brooke & Daphne Rochester | Pacific Properties Luxury Real Estate | July 2026
In thirty years of guiding buyers through property transactions on Costa Rica's Central Pacific coast, we've seen nearly everything. We've watched buyers find the right property, negotiate the right price, hire the right attorney — and then wire their deposit directly to a seller's personal account because someone told them "that's just how it's done here."
It is not how it's done here. Not safely.
Escrow is the single most important protection a buyer has in a Costa Rican real estate transaction. It is not optional, not a formality, and not something to negotiate away to simplify the process. In a legal environment that is genuinely buyer-friendly in almost every respect, the one area where we consistently see buyers lose money — sometimes substantial amounts of it — is in transactions where funds were transferred without proper escrow in place.
This guide explains exactly how escrow works in Costa Rica, why it matters more here than in many other markets, and what to look for when choosing the right escrow provider for your transaction.
What Is Escrow, and Why Does It Matter Specifically in Costa Rica?
Escrow is a legal arrangement in which a neutral third party holds funds on behalf of two parties in a transaction — releasing those funds only when specific, agreed conditions have been met. In a real estate transaction, this means your deposit and, ultimately, your purchase funds are held by an independent, licensed entity rather than transferred directly to the seller.
In the United States and Canada, buyers are often accustomed to a mature infrastructure of title companies and settlement attorneys who routinely perform this function under regulatory oversight. In Costa Rica, that infrastructure exists — but it's less standardized, and the responsibility for identifying and engaging a legitimate escrow provider falls more squarely on the buyer and their team.
Here's why that matters: Costa Rica has a notary-based property transfer system. Closing happens through a licensed notary public, not a title company. The notary's role is critical and specialized, but holding buyer funds in escrow during the transaction period is typically handled separately — either by the buyer's attorney, a licensed escrow company, or an international financial institution operating in Costa Rica.
Because the escrow function isn't automatically bundled into the closing process the way it is through a title company in the U.S., buyers who don't specifically ask for it, arrange it, and verify it sometimes find themselves in transactions where their deposit is sitting in an account they don't fully control — with limited recourse if things go sideways.
In 30 years, every buyer who lost money in a Costa Rica real estate transaction had one thing in common: funds transferred without proper escrow in place.
How the Deposit and Escrow Work in a Costa Rica Property Purchase
Understanding the sequence helps. Here is exactly how a properly structured transaction flows from first offer to closing:
Step 1 — Letter of Intent (LOI) and the Initial Deposit
Once you've identified a property and agreed on a general price, the next step is signing a Letter of Intent (LOI). This document formalizes your interest, establishes basic deal terms, and is accompanied by an initial deposit — typically 5–10% of the purchase price.
This is the moment escrow becomes critical. The deposit is real money, and it needs to go somewhere specific. In a properly structured transaction, the LOI designates an escrow holder and the deposit is wired directly to that escrow account — not to the seller, not to the listing agent, and not to a personal account of any kind.
At this stage, many buyers feel social pressure to move quickly. The seller may suggest that wiring to their attorney's trust account is standard practice. The listing agent may say that's "how all deals are done." These statements may even be technically accurate — some transactions do work this way — but they represent meaningfully less protection than a true third-party escrow arrangement, and they are not your only option.
Step 2 — Due Diligence Period
Once the LOI is signed and the deposit is in escrow, the due diligence clock starts — typically 30 to 45 days. During this period, your attorney conducts a full title review at the National Registry (Registro Nacional), verifies that there are no liens, encumbrances, unpaid taxes, or legal disputes, confirms zoning and permit status, reviews any HOA documentation, and investigates any Maritime Zone considerations if the property is near the coast.
The escrow deposit remains in the escrow account during this entire period. It is not released to the seller. If due diligence reveals a disqualifying problem — a title defect, an unpermitted structure, a lien the seller failed to disclose — you have the legal right to exit the transaction and recover your deposit in full, provided the escrow agreement includes the appropriate contingency language.
This is precisely why the quality of your escrow agreement matters as much as the identity of your escrow holder. A well-drafted escrow agreement specifies exactly what conditions must be met before funds are released, what happens if due diligence uncovers a problem, and what the timeline and process for a refund looks like if the deal doesn't close.
Step 3 — Purchase and Sale Agreement (PSA)
If due diligence comes back clean, you and the seller sign a Purchase and Sale Agreement. This is the binding contract governing the transaction — price, timeline, conditions, penalty clauses, and closing mechanics. The escrow agreement is typically updated or superseded at this point to reflect the PSA terms.
Additional funds may be deposited into escrow at this stage, depending on the deal structure — particularly for higher-priced transactions where the initial 5–10% deposit will be supplemented by additional funds prior to closing.
Step 4 — Closing and Fund Release
Closing in Costa Rica takes place through a licensed notary public, who prepares the transfer deed (escritura), presents it for signatures, and registers the transaction in the National Registry. Escrow funds are released to the seller simultaneously with — or immediately following — the successful registration of the new title.
This simultaneity is the final and most important protection escrow provides. You do not transfer money and then hope the title gets registered in your name. The funds move when — and only when — the legal transfer is confirmed. In practice, this means your escrow agreement should specify that the release condition is confirmed registration in the National Registry, not simply the signing of the deed at the notary's office.
Who Should Hold Your Escrow Funds in Costa Rica?
This is where buyers have meaningful choices, and where the quality of that choice has real consequences.
Licensed International Escrow Companies Operating in Costa Rica
The strongest option for most international buyers is a licensed escrow company that specializes in real estate transactions in Costa Rica and operates under regulatory oversight — either in Costa Rica, in the United States, or in both jurisdictions simultaneously. Several reputable providers operate in this market, some Costa Rican and some U.S.-based with Costa Rican operations.
The advantages: regulatory accountability, professional indemnity insurance, standardized escrow agreements with clear release conditions, and the ability to hold funds in USD in a segregated account that is not commingled with operational funds.
We work regularly with established escrow providers in this market and are happy to make introductions. Ask us directly.
What You Should Never Do
Never wire funds directly to a seller's personal bank account. This is the most common mistake we see, and it has no legitimate justification in a property transaction of any size. A seller who insists on a direct personal wire as a condition of accepting your offer is either uninformed about standard practice or is asking you to accept risk they know you shouldn't accept.
Never wire funds to an account you haven't independently verified. Wire fraud in international real estate transactions is a real, documented threat worldwide. Always verify escrow account details through a direct phone call to the escrow provider — using a number you found independently, not one provided in an email — before initiating any wire transfer.
Never let the listing agent hold your deposit. A listing agent represents the seller. Full stop. Even an honest, well-intentioned listing agent should not be holding your deposit — it creates a conflict of interest that no one benefits from, including the agent.
What Should a Good Escrow Agreement Include?
Whether your escrow is held by a dedicated company or your attorney, the written escrow agreement should contain the following:
Clear identification of the parties. Buyer, seller, and escrow holder identified by full legal name, passport or cedula number, and corporate entity if applicable.
The exact amount being held and the currency. Costa Rica real estate transactions are typically denominated in USD. Confirm this explicitly.
The specific release conditions. Not "at closing" — but the precise legal events that trigger release. For a properly structured transaction, the primary release condition should be confirmation of title transfer registered in the National Registry in the buyer's name (or the buyer's corporation).
Due diligence contingency language. A clear statement of what happens to the deposit if due diligence reveals a disqualifying issue — who gets the money, on what timeline, and what process is required to initiate a refund.
Dispute resolution mechanism. If the buyer and seller disagree about whether release conditions have been met, who resolves that dispute and how? A good escrow agreement has an answer to this question before the dispute happens.
Timeline. When does the escrow arrangement expire? What happens to funds if closing doesn't occur by the agreed date?
Fee structure. How is the escrow holder compensated, and who pays? (Typically the buyer, typically 0.25–0.5% of the held amount for a dedicated escrow company, or included in the attorney's legal fee.)
Red Flags to Watch For
In three decades in this market, here are the escrow-related red flags that have preceded nearly every bad outcome we've witnessed:
"We don't normally use escrow for transactions this size." There is no transaction size too small to warrant proper escrow. We have seen buyers lose $20,000 deposits and $500,000 deposits. The process is the same regardless of the amount.
"Just wire the deposit to the seller's attorney — it's the same thing." The seller's attorney works for the seller. An escrow holder works for neither party; they work for the agreement. These are not the same thing.
"We need the money before we can take the property off the market." A legitimate seller will accept a deposit into a properly structured escrow account. The urgency framing is a pressure tactic.
"Escrow will slow everything down." Setting up a basic escrow arrangement with a reputable provider typically takes 24–48 hours. It does not meaningfully delay a transaction. If someone is telling you it does, ask yourself why they're in a hurry to skip it.
Last-minute wire instruction changes. If the bank account details for your escrow wire change at any point — especially close to closing — treat this as a potential fraud indicator. Verify all changes through direct phone contact with the escrow provider before acting.
Escrow for Different Types of Costa Rica Transactions
The escrow considerations vary slightly depending on the type of property you're purchasing:
Resale properties (titled, existing homes or condos): Straightforward escrow structure as described above. Due diligence is the primary contingency; title transfer is the release condition.
Beachfront or concession properties: Additional escrow complexity because the release condition may need to include not just National Registry title transfer but also municipal confirmation of concession transfer approval. See our full guide on Beachfront Property and the Maritime Zone Law for the specific due diligence requirements on concession purchases.
Pre-construction and new development: Escrow is if anything more critical here, because you are funding construction that hasn't happened yet. A proper pre-construction escrow arrangement holds funds in stages tied to verified construction milestones — not simply releases money to the developer on a calendar schedule. Insist on milestone-based escrow for any pre-construction purchase.
Corporate property transfers (buying a company that owns a property): When you buy a Costa Rican corporation rather than the underlying property directly, you're acquiring shares — and the escrow arrangement needs to reflect the specific mechanics of that transaction, including representation and warranty language about the corporation's liabilities. Your attorney should be especially thorough here.
The Cost of Escrow vs. The Cost of Not Using It
Licensed escrow company fees in Costa Rica typically run 0.25–0.50% of the held amount — on a $300,000 purchase, that's $750–$1,500. On a $600,000 purchase, $1,500–$3,000.
These are not costs to negotiate away. They are the price of having a professional, independent, regulated party responsible for the most important financial transaction you're likely to make in this country.
The cost of not using escrow — if something goes wrong — is 100% of whatever you wired.
We've sat across the table from buyers who saved the escrow fee and lost the deposit. We've never sat across the table from a buyer who regretted spending it.
Frequently Asked Questions About Escrow in Costa Rica
Is escrow legally required in Costa Rica? No, it is not legally mandated. But neither are seatbelts in some jurisdictions. The absence of a legal requirement does not make it optional for a prudent buyer.
Can I use a U.S. escrow company for a Costa Rica transaction? Some U.S.-based escrow and settlement companies do handle international transactions including Costa Rica. This can be an excellent option for buyers who are more comfortable with U.S. regulatory oversight. Confirm that the company has specific experience with Costa Rican real estate law and works with attorneys licensed to practice in Costa Rica.
What currency should the escrow account hold funds in? U.S. dollars. Costa Rican real estate transactions are priced and executed in USD. Confirm with your escrow provider that funds are held in a USD-denominated segregated account.
What happens to the escrow if I change my mind after due diligence? This depends on the terms of your escrow and LOI agreement. If you exit during the due diligence period for a legitimate, documented reason covered by the contingency language, you should recover your deposit. If you exit after the due diligence period has closed for reasons not covered by the agreement, the seller may be entitled to retain the deposit as liquidated damages. This is one of the most important reasons to get the contingency language right before you sign the LOI.
How long does the escrow period typically last? Most resale transactions in Costa Rica close within 45–90 days of the LOI and initial deposit. The escrow arrangement stays in place for that entire period until closing.
Does the seller also have protections through escrow? Yes — a properly structured escrow arrangement protects both parties. It confirms to the seller that the buyer has the funds, that the funds are committed to the transaction, and that a clear, objective release process exists. In our experience, sellers who resist proper escrow arrangements are worth examining carefully.
Our Role in Your Escrow Process
As your agents, we don't hold escrow funds — and we wouldn't want to. Our role is to connect you with the right independent escrow provider, review the escrow agreement terms alongside your attorney, and ensure the release conditions align precisely with the closing mechanics your notary will execute.
We've coordinated hundreds of closings on this coast. We know which escrow providers and attorneys perform reliably, and we know what the agreement language should look like for every type of transaction we handle — from straightforward condo resales to pre-construction deposits to complex beachfront concession transfers.
This is the part of the process that most buyers find the least interesting and that ends up being the most important. We take it seriously because we've seen what happens when it isn't taken seriously — and that's a conversation we'd rather our clients never have to have.
Ready to Buy Property in Jacó or the Central Pacific?
Whether you're at the beginning of your search or you've already identified a property and need guidance on structuring your deposit safely, we're here.
Read next:
- The Complete Guide to Closing Costs When Buying Property in Costa Rica →
- How to Buy Property in Costa Rica as a Foreigner — 2026 Guide →
- Beachfront Property and the Maritime Zone Law →
- Browse current listings →
- Read our complete Buyer's Guide →
- Explore Jacó and Central Pacific neighborhoods →
📞 Call or WhatsApp Brooke: (506) 8718-5591 📞 Call or WhatsApp Daphne: (506) 6286-7556 📧 [email protected] 📧 [email protected] Contact us online →
Pacific Properties Luxury Real Estate — Pastor Díaz Ave, Jacó, Puntarenas, Costa Rica 61101. Specialists in Jacó, Playa Hermosa, Herradura, Los Sueños, Esterillos, and the Central Pacific coast since 1994.
This article is intended as general educational content and does not constitute legal advice. Escrow structures and requirements vary by transaction type and parties involved. Always consult a qualified Costa Rican real estate attorney before transferring funds in any property transaction.
© 2026 Pacific Properties Luxury Real Estate. All rights reserved.
