By Flamingo Beach Realty
Buying real estate in Costa Rica is genuinely exciting, and for most international buyers, it is also the first time navigating a legal and contractual framework that differs meaningfully from what they know at home. One area that generates consistent questions — and occasional confusion — is the role of contingencies in a purchase agreement. Contingencies are the conditions that must be satisfied before a sale can close, and understanding how they work in Costa Rica's real estate market is one of the most practical things a buyer can do before making an offer on a Flamingo Beach property. This guide explains what they are, how they are structured in Costa Rica, and why they matter.
Key Takeaways
- Real estate contingencies are conditions built into a purchase agreement that must be satisfied before the transaction closes — if they are not met, the buyer typically has the right to exit the contract and recover their deposit.
- Costa Rica does not have a standardized MLS or a uniform purchase contract, which means contingency language varies by transaction and must be carefully drafted and reviewed by a qualified local attorney.
- The most common contingencies in Playa Flamingo and Guanacaste transactions cover financing, due diligence, title verification, and inspection — each serving a specific protective function for the buyer.
- International buyers purchasing in Costa Rica should never waive due diligence protections in the interest of speed — property rights, title status, and permitting history require independent verification before any purchase.
What Is a Contingency?
A contingency is a condition written into a purchase agreement that gives one or both parties the right to exit the contract without penalty if the condition is not met. From a buyer's perspective, contingencies are protective mechanisms — they define the circumstances under which a buyer can walk away and recover their earnest money deposit rather than forfeiting it.
In the United States, Canada, and other markets where standardized contracts are the norm, contingencies follow familiar templates. In Costa Rica, where there is no standardized purchase agreement and transactions are governed by the Civil Code rather than a common law framework, contingency language is custom to each contract. This is one of the primary reasons we strongly recommend that every buyer work with a qualified Costa Rican attorney who is independent of the transaction — not the seller's attorney, and not a notary acting on behalf of both parties.
Due Diligence Contingency
The due diligence contingency is the most important protection available to a buyer purchasing property in Costa Rica. It provides a defined period — typically 30 to 60 days in Guanacaste transactions — during which the buyer can investigate the property, its title, its legal status, and its physical condition, with the right to exit the contract and recover the deposit if the findings are unsatisfactory.
In Playa Flamingo and the broader Guanacaste market, due diligence covers several categories that buyers from North America or Europe may not encounter in their home markets:
What due diligence should cover in a Costa Rica purchase:
- Title search: Costa Rica uses the National Registry (Registro Nacional) to record property ownership. A thorough title search, conducted by an attorney, verifies that the property is titled in the seller's name, that there are no liens or encumbrances, and that the title history is clean.
- Survey verification: The registered survey (plano catastrado) must match the physical property boundaries. Discrepancies between the survey and the actual land are not uncommon and must be resolved before closing.
- Permitting and construction legality: In coastal areas like Playa Flamingo, construction permits and municipal approvals must be verified. Unpermitted structures are a known issue in coastal Costa Rica and become the buyer's problem after closing.
- Maritime Zone (Zona MarÃtima Terrestre) verification: Properties within 200 meters of the high tide line in Costa Rica are subject to the Maritime Zone Law, which restricts private ownership. Buyers should verify that any property near the beach is titled rather than held under a concession — and understand the implications if it is a concession.
- HOA status and fees: For condominiums and gated communities, the financial health of the homeowners' association and any outstanding assessments should be reviewed as part of due diligence.
Financing Contingency
Many international buyers purchasing in Playa Flamingo and Guanacaste do so with cash, which is common in Costa Rica's luxury market. For buyers who plan to finance the purchase, however, a financing contingency is essential. Mortgage financing in Costa Rica for non-residents is limited and often arranged through developer financing, international lenders, or seller financing rather than Costa Rican banks, which typically do not offer mortgages to non-residents.
If financing is part of the buyer's plan, the purchase agreement must clearly state that the transaction is contingent on the buyer securing financing on terms acceptable to them. Without this clause, a buyer who cannot secure financing may forfeit their deposit.
Inspection Contingency
A professional property inspection is a standard part of any responsible purchase, and in Playa Flamingo's tropical coastal environment, it covers concerns that do not appear in more temperate climates. Salt air accelerates corrosion on metal components. Humidity creates conditions for mold and pest activity. Roof condition, foundation integrity, electrical systems, water supply (municipal or well), septic systems, and pool equipment are all standard inspection items that a qualified local inspector will assess.
The inspection contingency gives the buyer the right to request repairs, renegotiate the price, or exit the contract based on inspection findings. It should be clearly drafted with a defined timeline for inspection and a process for communicating findings to the seller.
Frequently Asked Questions
Is it common to waive contingencies in Costa Rica to make an offer more competitive?
We do not recommend waiving due diligence or inspection protections regardless of market conditions. The risks specific to Costa Rica — title irregularities, unpermitted construction, Maritime Zone complications — are significant enough that proceeding without proper verification is genuinely dangerous for a buyer. In competitive situations, shortening the due diligence period is more appropriate than eliminating it entirely.
How is a deposit handled in a Costa Rica real estate transaction?
Earnest money deposits in Costa Rica are typically held in an escrow account managed by a reputable escrow company or attorney. We strongly recommend the use of a licensed escrow service for all transactions. The deposit amount is negotiable but typically ranges from 5 to 10 percent of the purchase price. The contingency language in the contract governs the conditions under which the deposit is returned to the buyer or released to the seller.
Do Costa Rica real estate contracts need to be in Spanish?
Yes. Under Costa Rican law, the formal purchase deed (escritura pública) must be executed in Spanish before a licensed notary public. Purchase agreements leading up to the deed can be bilingual, and many contracts used in the Guanacaste market for international buyers are prepared in both English and Spanish. Having an independent attorney who can review both versions is essential for any buyer who is not fluent in Spanish.
Buy Property in Playa Flamingo With Flamingo Beach Realty
We have been guiding international buyers through real estate transactions in Playa Flamingo and across the Gold Coast of Guanacaste since 2016, and we understand both the opportunity and the due diligence required to purchase here confidently. We work alongside trusted attorneys, inspectors, and escrow professionals to make sure every buyer we represent is fully protected throughout the process.
