Why Buyers Should Never Pay Their Deposit Directly to the Seller

Escrow in Costa Rica real estate? Yes there is! If you are under contract to purchase a property, one of the best ways to protect yourself before closing is to have your deposit held by a neutral third party, such as an escrow company or your real estate broker, rather than paying it directly to the seller.

How Does This Protect You?

When your deposit is held in escrow or in the custody of a licensed real estate broker, the funds remain secure until all the terms of the purchase agreement have been fulfilled.

If the seller is unable or unwilling to complete the sale, it is generally much easier to recover your deposit because the funds have not been released to the seller. Instead, they remain with the third party, who is obligated to disburse the funds according to the terms of the purchase agreement or the instructions of the parties.

Once the closing takes place and the deed has been properly executed and transferred, the escrow company or broker releases the deposit to the seller as agreed.

Why Might a Seller Be Unable to Close?

Although most real estate transactions close successfully, situations can arise where the seller cannot complete the sale. Examples include:

• The seller is unable to provide the legal documents required to transfer ownership.
• A title or legal issue prevents the transfer of the property.
• The seller becomes incapacitated before closing.
• The seller breaches the purchase agreement or refuses to complete the transaction.

Holding the deposit with a trusted third party provides an added layer of protection and helps ensure that your funds are handled according to the terms of the contract, giving both the buyer and seller greater confidence throughout the transaction.

Need to know more about Deposits being held with a third party, escrow or with a realty broker? Reach out to Anthony Livoti at Homes Costa Rica for a free consultation.