Buying real estate in another country can be exciting. The palm trees, ocean views, mountain breezes, and the promise of a simpler life can cloud even the sharpest judgment. Costa Rica, in particular, has attracted thousands of foreign buyers over the years—retirees, investors, and dreamers alike. Many have succeeded and are living happily in their homes under the tropical sun. But unfortunately, many others have learned painful and expensive lessons along the way.
If you have had problems buying real estate in Costa Rica—or are considering doing so—this article is for you.
When the Dream Turns into a Problem
Have you ever put money down on a property in Costa Rica, only to discover that:
- Construction has stalled indefinitely
- The promised infrastructure was never built
- The lot is still undeveloped years later
- The developer stopped answering calls
- Your down payment seems to have vanished
You are not alone.
One of the most common problems foreign buyers encounter is discovering too late that the developer used buyers’ down payments to finance earlier phases of a project that were never completed. In other words, your money was not protected—it was spent.
When global or local financial conditions change—as they have repeatedly over the years—banks tighten lending. Developers who relied on buyer deposits instead of solid financing suddenly find themselves unable to continue. Construction stops. Promises are broken. And buyers are left holding contracts that may be difficult or impossible to enforce.
The Core Issue: Assumptions
The biggest mistake foreign buyers make is assuming that real estate transactions work the same way in Costa Rica as they do in the United States, Canada, or Europe.
They do not.
Costa Rica has a different legal system, different business practices, and a different pace of problem resolution. While Costa Rica is a democratic and generally stable country, consumer protections—especially for foreign buyers—are not structured the same way as in North America.
You cannot assume:
- Your deposit is automatically protected
- A developer must complete a project by a certain date
- Your contract has the same safeguards you are used to
- A verbal promise carries legal weight
- A friendly, English-speaking salesperson is acting in your best interest
Assumptions are where many deals go wrong.
What Happens to Your Down Payment?
In many failed developments, the story follows a similar pattern:
- A foreign buyer pays a down payment
- The developer claims the money will be used for a specific phase
- Instead, the funds are used to cover unrelated expenses
- The developer expects future buyers or bank loans to fund construction
- Lending dries up or sales slow down
- Construction stops
- Buyers are left with little leverage
Recovering funds in this situation can be extremely difficult, time-consuming, and expensive—especially if the developer has no remaining assets.
What Should You Do If You Are Already in Trouble?
If you have already placed money on a property and the project has stalled, your first step is legal advice.
- If you already have a Costa Rican attorney you trust, sit down with them and review your contract line by line.
- If you do not have an attorney, get one immediately.
- Ask for referrals from long-term American or Canadian residents who own property in Costa Rica.
- Avoid attorneys recommended solely by developers or real estate agents.
A good attorney will help you understand:
- Whether your funds were legally protected
- Whether the developer is in breach of contract
- Your realistic options for recovery
- Whether negotiation, mediation, or litigation makes sense
Be prepared for honest answers—sometimes the truth is difficult to hear.
Hard Truth: You May or May Not Get Your Money Back
Some buyers are fortunate:
- The developer refunds the down payment
- A settlement is negotiated
- Another buyer steps in
Others are not so lucky and find that:
- Legal action costs more than the deposit
- Developers have no recoverable assets
- Court cases take years
- Enforcement is weak
This is why prevention is far more important than cure when buying real estate in Costa Rica.
Lessons Learned: What You Must Do Differently
Let’s talk about the lessons—because they matter.
Lesson 1: Never Buy Sight Unseen
Do not put a down payment on property in another country over the phone or internet without seeing it in person.
- Visit the property
- Walk the land
- Inspect access roads and utilities
- Verify surrounding development
- Talk to neighbors
If you cannot physically be there, wait.
Lesson 2: Hire Your Own Reputable Attorney
This is not optional.
You need a competent, reputable Costa Rican attorney who speaks excellent English and works for you—not the developer.
Your attorney should:
- Conduct a full title search
- Verify zoning and permits
- Draft or review contracts
- Ensure funds are properly handled
- Explain risks clearly
If an attorney discourages questions or rushes you, walk away.
Lesson 3: Demand Proper Use of Trust Accounts
If you are told your money will be held “in trust,” you must confirm:
- The funds remain in the attorney’s trust account
- The money is not released to the developer prematurely
- Payments are tied to completed milestones, not promises
Money should only be released after the developer has delivered the specific phase it is meant to pay for.
If your money leaves the trust account before work is completed, your risk increases dramatically.
Lesson 4: If Something Feels Wrong—It Is
This is simple but powerful.
If something:
- Feels rushed
- Sounds too good to be true
- Lacks clear documentation
- Comes with pressure to “act now”
Then do not proceed.
Costa Rica will still be there tomorrow.
Title Insurance: Read Everything Carefully
Some buyers take comfort knowing that Stewart Title operates in Costa Rica and offers title insurance.
This can be useful—but it is not a magic shield.
Important points:
- Stewart Title charges significant fees
- Coverage is specific and limited
- Not all risks are covered
- You must understand exactly what is guaranteed
Before signing anything:
- Read every document carefully
- Have your own attorney review the policy
- Do not assume title insurance covers construction risk, developer fraud, or contract disputes
Title insurance protects title—not broken promises.
“This Sounds Obvious”—And Yet It Keeps Happening
You might think, “This is too simplistic. Anyone should know this.”
And yet, people continue to get scammed.
Why?
- Emotions override logic
- Tropical settings lower defenses
- Friendly salespeople build trust quickly
- Buyers want the dream to be real
Scams do not work on ignorant people—they work on hopeful people.
Build Relationships Before You Build Houses
One of the smartest steps you can take is to:
- Spend time in Costa Rica before buying
- Rent first
- Talk to long-term expats
- Learn how things actually work
Establish a relationship with:
- A trusted attorney
- A reliable accountant
- Experienced property owners
Knowledge gained on the ground is invaluable.
A Simple Old Saying That Still Applies
There is an old saying many of us heard growing up:
“The wise man built his house upon a rock.”
That wisdom applies just as strongly to real estate in Costa Rica.
A solid foundation means:
- Due diligence
- Legal protection
- Patience
- Clear contracts
- Professional guidance
Without those, even the most beautiful dream home can collapse under pressure.
Final Thoughts
Costa Rica can be a wonderful place to own property—but only if you approach the process with caution, humility, and preparation.
Do not assume.
Do not rush.
Do not trust blindly.
And do not gamble with money you cannot afford to lose.
Learn from the mistakes of others, ask hard questions, and remember:
The best real estate decision is the one you make slowly and wisely.
If this article saves even one person from a costly mistake, then the lesson has been worth sharing.