Aside from starting the financing process, the first real step you’ll take toward putting down a deposit on a piece of property will be preliminary due diligence. We’ll get into the details of comprehensive due diligence in the next chapter, as they depend on a number of factors and are often very involved. For the purposes of this chapter, however, there are a few basic, initial checks for deal breakers that you should make immediately before even making an offer. No one wants to waste two months navigating price negotiations and lining up financing only to find that the “owner” does not have the authority to close the deal.

Start by meeting the owner. As mentioned before, this is an important step for putting you in a better bargaining position, as well as for avoiding several kinds of fraud. This won’t be as important if you’re dealing with an established development with its own sales office and a track record, but when buying a farm from a Costa Rican or a house from a foreigner it becomes crucial. If you can’t meet the owner, talk to him or her on the phone or otherwise make contact that confirms the owner’s wish to sell. As mentioned before, the blocking of access to the owner isn’t necessarily a red flag, however it should make you cautious.

Next, look up the property on the National Registry’s Web site. Every property in Costa Rica has a number – called the finca number – under which it is inscribed in the National Registry. Ask the owner for this number and go to the Web site www.registronacional.go.cr. After the welcome page, click on the icon labeled Bienes Inmuebles, near the top of the homepage. In the menu on the left side of the screen, click on Servicios en línea, then click Solicitud de Informe. The next screen is where you enter the number of the finca. The number you have will look something like this: 5-065078 F 000. The first number will be a number, one through seven, that indicates the province where the property is located– in this case Guanacaste, or five. Select the province number from the pull down menu. The next number is the number of the property, or Número de finca. Type it into the second field manually. The following letter indicates whether the property is a piece of land (M) or a condominium unit (F). Pick the appropriate letter from the pull down menu. Finally, type the last three numerals – the Número de derecho – into the fourth field. Type in the letters that you see in the squiggly little picture (it’s a measure to keep computer programs from automatically accessing the Registry) and click Consultar.

The next screen should be a big blue box with lots of Spanish-language legal jargon in it. For the moment, all you’re interested in is the line near the bottom of the page that says Anotaciones and another just under it that says Gravámenes. Next to both of those words you want it to say NO HAY, meaning there are no liens or encumbrances. That’s the easiest scenario. Of course, liens and encumbrances are not deal breakers (people sell properties with mortgages on them all the time) but at the very least this step will tell you what exactly you’re negotiating over. If any liens or encumbrances do turn up, you may want to have the results of your search translated or go over it quickly with your lawyer.

In addition to liens and encumbrances, the registry search will tell you who owns the property. The first line under the heading Propietario contains that information. There you will see either the name of a person or, as is increasingly common, the name of a sociedad anónima, or corporation. Properties owned in the name of corporations are fairly common practice in Costa Rica as a way to avoid the property transfer tax and protect the asset from seizure in the event that the owner is personally sued. While ownership through an S.A. should not necessarily raise a red flag, it is a signal you will have to delve a little deeper. Either now or later in the due diligence process, you or your lawyer will have to answer the following questions:

• Who has the power of attorney to dispose of the corporation’s assets (ie – this property)?
• Is that the person with whom you’re negotiating?
• Does the corporation have any other assets? Any debts?
• Is it a new, clean corporation, or an old on with a history?

The process of doing a complete background check on a corporation is a complicated one and best left up to your lawyer, although Chapter 8 on due diligence will provide you with details of what your lawyer should be looking for. Finally, this might sound strange, but visit the property several times and during several different times of day before you start negotiating over it. A surprising amount of buyers purchase property in Costa Rica without even seeing it. Maybe you have that kind of money. More likely, however, you’re going to want to know if there’s an autobody shop next door, if the view is as described, if the driveway is drivable, and if the “rainforest” and “beach access” advertised actually exist.

As a side note, many responsible brokers have already done a certain amount of basic property background checking before listing the property. They will have files on the property that contain tax and utilities receipts, as well as provide you with any other documentation that might be needed to establish ownership. Still, even responsible brokers won’t have all this background data for newly or un-listed properties, though they may be willing to assist you with these preliminary steps.