Costa Rica continues to attract buyers from around the world looking for a vacation home, retirement property, investment opportunity, or development land. The country’s natural beauty, political stability, and strong property rights make it an attractive destination for foreign investors.
As a real estate attorney in Costa Rica, I have had the opportunity to assist clients in transactions ranging from residential purchases to development projects, beachfront properties, agricultural land, and commercial investments. While every transaction is unique, I often encounter the same avoidable mistakes.
Most buyers do not get into trouble because they make reckless decisions. More often, problems arise because they assume the purchasing process works the same way it does in their home country, or because they rely on information that was never independently verified.
The good news is that most of these issues can be identified and addressed before closing if the proper legal and technical due diligence is performed.
1. Failing to Conduct Proper Legal Due Diligence
One of the most common mistakes foreign buyers make is assuming that if the seller appears as the registered owner and the property has no obvious title issues, everything else will work itself out.
In reality, title ownership is only one piece of the puzzle. A proper due diligence process should examine mortgages, liens, easements, annotations, municipal records, water availability, zoning regulations, environmental restrictions, access rights, condominium limitations, and any legal issues that may affect the property’s use or value.
I recently represented a buyer in the acquisition of a property where water service appeared to be available and active. On the surface, there seemed to be no concerns. However, during our due diligence review, we discovered that the previous owner had accumulated a substantial outstanding balance with the water provider. As a result, certain permits and approvals could not be processed until the debt was resolved.
Fortunately, this issue was identified before closing. We advised our client not to proceed with the transaction until the matter had been addressed and the outstanding balance paid. Had the buyer completed the purchase without conducting proper due diligence, they could have found themselves owning a property that could not be developed as planned until someone assumed responsibility for a debt they did not create.
The purpose of due diligence is not simply to identify problems. It is to identify them before they become your problems.
2. Assuming You Can Build Whatever You Want
Many buyers purchase property with a specific vision in mind. Some plan to build a retirement home, others intend to develop rental villas, multiple residences, or projects that can eventually be sold individually.
Unfortunately, owning land does not automatically mean that every development concept is legally feasible. Development potential depends on a wide variety of factors, including zoning regulations, road frontage requirements, water availability, setbacks, density restrictions, environmental regulations, and planning criteria established by local authorities and national institutions.
Several years ago, a client purchased a property with the intention of eventually developing multiple units that could later be sold individually. I was not involved in the original acquisition, and I do not know what level of due diligence was performed at the time of purchase. However, when the client later approached me to establish the condominium regime necessary to separate and sell the units individually, we discovered that the proposed project did not comply with certain planning and regulatory requirements applicable to the property.
Unfortunately, by that stage the property had already been owned for several years. What appeared to be a straightforward development strategy became significantly more complicated and required the client to explore alternative approaches. The lesson is simple: if your goal is development, confirm that your project is legally viable before purchasing the property—not years later when substantial time and money have already been invested.
3. Ignoring Environmental and Technical Due Diligence
Environmental issues are among the most underestimated risks in Costa Rican real estate transactions. Costa Rica places significant importance on environmental protection, and properties may be affected by wetlands, protected areas, river setbacks, forest regulations, biological corridors, environmental restrictions, or other limitations that are not immediately visible during a property visit.
In one transaction, a prospective buyer was offered the opportunity to conduct a comprehensive technical and environmental due diligence review before completing the purchase. Ultimately, the buyer decided not to proceed with that additional investigation. After the acquisition was completed, environmental concerns affecting the property became the subject of discussions with government authorities and significantly impacted the owner’s plans for future development. While every situation is different, the reality is that environmental reviews are usually far less expensive than discovering environmental restrictions after becoming the owner. A beautiful property can still come with limitations that dramatically affect its value, development potential, and future use.
4. Failing to Plan Ownership and Succession From Day One
Many buyers focus exclusively on finding the right property and negotiating the purchase price. Questions about ownership structure, estate planning, succession, asset protection, and future transfers are often postponed until years later. In many cases, that is a mistake.
Depending on your objectives, it may make sense to acquire property personally, through a Costa Rican corporation, through a foreign entity, or as part of a broader estate planning strategy. The right structure can simplify future transfers, facilitate partnerships, improve succession planning, and provide greater flexibility if the property is eventually sold or developed.
Over the years, I have worked with property owners who returned years after purchasing because they wanted to bring in investors, transfer ownership to family members, restructure a development project, or prepare their assets for future succession. In many cases, these objectives could have been addressed more efficiently and at a lower cost had they been considered before the original purchase. Buying the right property is important. Buying it through the right structure is equally important.
5. Focusing Only on the Purchase Price
The purchase price is only one component of the overall investment. Many buyers spend considerable time negotiating the purchase price while overlooking the broader financial picture. Transfer taxes, registration fees, legal fees, escrow services, municipal taxes, condominium fees, insurance, maintenance expenses, and operational costs should all be considered before making a final decision.
For investment properties, buyers should also analyze projected income, management costs, maintenance reserves, occupancy expectations, and long-term operating expenses. A property that appears attractive based solely on its acquisition price may tell a very different story once all ownership costs are considered. Understanding the full financial picture is just as important as negotiating a favorable purchase price that’s why Magma Legal also includes a business due diligence.
6. Rushing the Process
Excitement can be one of the biggest risks in a real estate transaction.
It is natural for buyers to worry that another purchaser may submit an offer first, especially in highly desirable areas. However, rushing through due diligence or shortening review periods can expose buyers to unnecessary risk. The transactions that tend to create the greatest problems are often the ones where buyers feel pressure to move faster than the facts allow.
A properly drafted purchase agreement should provide sufficient time to conduct legal, technical, environmental, and regulatory investigations before the transaction becomes unconditional. Buyers should fully understand what they are purchasing before committing significant funds. Real estate opportunities come and go. Legal problems often stay with the property for years.
Final Thoughts
Buying property in Costa Rica can be one of the most rewarding investments a foreign buyer makes. The country offers exceptional opportunities for personal enjoyment, retirement, investment, and development. At the same time, every property comes with its own legal, regulatory, technical, and environmental considerations. The most successful buyers are rarely the ones who move the fastest. They are the ones who take the time to understand exactly what they are purchasing before closing.
Throughout my practice, I have seen transactions proceed smoothly because potential issues were identified early, and I have seen others become unnecessarily complicated because critical questions were not asked until it was too late. Most real estate risks can be managed. The key is identifying them before the purchase—not after.
When buying property in Costa Rica, the goal should not simply be to acquire real estate. The goal should be to acquire it with confidence.