Buying Property in Costa Rica

Donations

You can legally, in Costa Rica, transfer your assets via donation.

The donation is in general terms as any contract, an agreement among two or more people in which they declare their will to originate, modify or to extinguish a legal relationship of an economic nature. Nevertheless, there is no payment in a donation, and only one of the parties benefit financially from this type of contract.

This contract gratuitously transfers a property belonging to the donating part to a receiving party, which only needs to accept. According to our legislation, the acceptance must be done within one year from the date of the deed of donation, and the donating party must be alive at the moment of the acceptance. The donor can indeed withdraw the donation before the acceptance of the person receiving the asset, as interpreted by our case law.

The object of the contract of donation, namely the control over the asset which the donor wants to transfer to the other party, should be individualized and be clearly specified in such a way that there is no confusion regarding the asset or assets the donor wishes to give away. Deeds of donation that do not comply with this requirement are not valid. For example, one cannot donate “one’s lands”, “one’s patrimony” or “one’s future assets”.

The donation must meet the formalities set forth in our Civil Code. As a general rule, the donation must be done by means of a public deed through a Notary Public. This formality is required as the party donating the asset, is suffering a deterioration in its patrimony, and the law needs to make sure that there is a thorough understanding of the consequences of the donation by all parties involved. If the asset to be donated is not a property but a movable asset, the simple delivery of such asset suffices.

In order to be qualified to donate, the donor must be mental and legally able (have the capacity to act); the asset must be, of course, his legal property, and he must expressly state his intention to donate. If the donation is to be done through a third party, this person must be appointed with a special power of attorney (poder especialísimo), which must specifically state the asset to be donated and the person to receive the asset.

In order to be able to receive an asset through donation, the person must be at least conceived at the time of the deed of donation; the right of the receiving person remains pending as article 31 of the Civil Code sets forth that a person exists when he or she is born alive, but they are deemed alive for all that favors them including 300 days before its birth. This means that donations to unborn children can be done within those 300 days before birth. The acceptance would come from the parent or custodian of the child.

Legal entities can donate according to their nature if their articles of incorporation allow for this to happen, but it must be expressly allowed. Commercial entities such as S.A.s or SRLs cannot transfer assets via donation, as this is an obvious detriment to their holdings.

A donation does have the effect of transferring the property, but it is not exactly the same; for example, a sales-purchase agreement may be contested.

A bankrupt person is not legally able to donate assets, as fraud against creditors will always be presumed. A donation may also be revoked (as opposed to a sales-purchase) if the person receiving the donated asset seriously offends the donor, or his close relatives, for a criminal accusation from the donor against the person receiving the donation. This is of course, based on the lack of gratitude of the person receiving the donation regarding the person freely delivering the asset to them. The offended party must act quickly, within one year of receiving the offense, in order to be able to revoke it. Even if the property has been transferred to a third party or mortgaged, the receiving party must indemnify.

Special donations are for example the mortis causa donation, which is set forth in the event of death, which is to be accepted before such death occurs, as opposed to wills which require no acceptance; the donation as payment, in which a person donates in order to repay debts or services not payable otherwise; the donación a carga, in which the donation is made with a specific purpose which becomes the obligation of the person receiving it; and the conditional donation, where the donation depends on future or pending facts.

A donation, even though a contract without a value (no price is paid) and a valid form of transferring assets especially through family members, must pay the same fees and taxes as a regular sales-purchase transfer.

Banking in Costa Rica

Whether you’re planning to settle in Costa Rica for the long term or simply looking for a safe place to exchange a few dollars, an important decision you will need to make is "What Bank Should I Use?"

Costa Rica offers a wide range of banking and financial services catering to personal as well as business banking. Recent government reforms and the introduction of private banking have also made Costa Rica an attractive choice for investing.

Costa Rica’s banking system consists of the central bank; three state-owned banks, which account for nearly half of total banking assets; a state-owned mortgage bank; 18 commercial banks; four mutual house-building companies; 12 private finance companies; and 27 savings and loans cooperatives. In addition, there are 30 investment and retirement funds or trusts run by both state and private commercial banks and the state insurance company.

The Central Bank of Costa Rica is in charge of establishing banking policy. It is then up to the SUGEF (the General Supervisory Agency of Finance) to enforce compliance with Central Bank policies. All banks (both public and private) are subject to the policies dictated by the Banco Central de Costa Rica.

When choosing a bank, take into consideration both personal convenience and what fees the bank charges. Get information on the types of accounts available and their associated fees from several banks. Internet services offered by both state run and private banks have improved in leaps and bounds over the past couple of years.

Most banks in Costa Rica now offer savings and checking accounts in Dollars and Colones. Banks do differ, however, on the amount of time it takes to cash foreign checks and the availability of ATMS. It is also very important to note that while interest is much higher on colon accounts, there is a monthly devaluation of the colon to the dollar, so you might not be earning as much as you expect. Many also offer Credit or Debit cards, if you meet the requirements (but not all are internationally accepted). All banks will also have different requirements for opening accounts or obtaining credit cards, possibly including banking or personal references, identification, and most likely minimum deposits. Opening hours for most banks are from 9 am to 3 pm.

State run banks are backed by the Costa Rican government and are therefore usually considered safer. They are also located in practically every town in Costa Rica. On the down side, long lines are frequent and bilingual staff is not always available (especially outside the central valley).

Private banks usually offer quicker and more personalized service, shorter lines and English speaking staff. However, they may have fewer branches available outside of the central valley. The great majority of private banks are connected with banks outside the country so that transfers can be done relatively quickly.