Some foreign buyers of Costa Rica and Panama real estate just assume that this works the same as it does back home. Well this is not true.
Let’s start at the beginning. Buyers, as well as sellers of Costa Rica and Panama real estate, do not use escrow. They just agree on the sales price. Then at the signature of the purchase option, the buyer hands the earnest money, whatever it is they agreed on, over to the seller. At closing the earnest money is deducted from the sales price.
It could happen that sellers can pass away before closing. Before closing, it also could happen that the seller or the seller’s family long spent the money on other things. And because of the death of the seller, the property could not be sold.
Also, the seller can use the same earnest money they received from their buyer, to get a purchase option for the house that they were planning to buy. So when the first deal goes bad, the second does too. Do you want to get involved in a weird deal like that? Of course, you don’t!
The use of escrow takes the stress out of home ownership and our real estate agents will always recommend the use of an account during a real estate transaction. It ensures that the property and the title are “clean” before closing the real estate transaction.