How to Buy Property in Paradise Without Ending Up in Hell
1) Find a property that you love. Unless you live down here and have LOTS of time, you will need an agent to help you. Why? Because we have no MLS and properties have no addresses. In order to find properties efficiently, you need a guide who both knows what is for sale, and knows where to find it.
2) Ask your agent questions and expect solid answers. Some properties are “easier” than others. If you are looking at an empty lot or raw land, make sure your agent is honest and open enough to help you assess its potential for development. You need to consider the source of potable water, access to electricity, road conditions, area already cleared of trees and leveled, and more. If the property is forested, special conditions apply. Your agent should bring them up ahead of time so you have a reasonable idea of what to expect.
3) We write up a Letter of Intent ("LOI") and send it to the Sellers or their agent. The LOI is not comprehensive, but it specifies the price you are offering and the contingencies/conditions that are most important to you. It also specifies a time frame for closing, the amount earnest money, the type of purchase, and all parties involved in the transaction. Starting with an LOI saves time later, because the next step is much more detailed. Often the LOI goes back and forth until Seller and Buyer are satisfied with the terms and both sign it.
4) When the LOI has been successfully negotiated and signed by both parties, it is given to the parties' attorneys, who turn it into a much more detailed Sales and Purchase Agreement. The "SPA" uses the LOI as a starting point, then adds to it by specifying everything that is important to you and to the legal community. This can take some time because it nails down every detail and sometimes goes back and forth a bit before agreement is reached on the additional details.
5) While the SPA is in process, you set up an Escrow account here in the country. That isn't too complicated, but it is probably more involved than it is in your home country and requires extra time because they have to verify your sources of funding to ensure that no money is being laundered.
6) If you want to purchase in the name of a corporation, which we usually recommend, and you want it to be your own corporation instead of the Seller's, which we strongly recommend, you need to set up the corporation. It takes a week or two, costs somewhere in the neighborhood of $800.00 and isn't difficult. (NOTE: If you plan to apply for residency, and you plan to use your initial investment of >$200,000.00 as the basis for the application, be sure you assign enough shares to one party to get to that amount. Ask about this when you are setting up the corporation.)
7) When you have a signed SPA, you have the specified amount of time to send your Earnest money. That money is not at risk if your conditions are not met. If all of your conditions are met or you miss the deadline for finishing your due diligence without extending it, then the Earnest money goes "hard" and you will lose it if you don't follow through with closing. It is part of your job, our job, the Seller's job, and all attorneys' jobs to help you with due diligence so all bases are covered. You need to make sure you have enough time allowed in the Purchase Agreement to do a good job of this. 30 days is usually minimal; 60 days is usually enough.
8) Assuming everything checks out per the stipulations in the SPA, you send your balance due to the Escrow company and go to closing. The Escrow company disperses the money strictly per the terms in the SPA, which is why it's so important to have all of that specified ahead of time. Maybe they use some of it to pay off an existing mortgage, or some liens against the property, or commissions to agents, or attorneys' expenses, etc, and then the balance goes to the Seller.
9) After closing, your property will be registered in the national registry and you own it. Property taxes will be collected annually, as well as a fee to maintain your corporation in good standing.
10) Enjoy your piece of paradise!
The process is straightforward, tried and true, as long as you have a good agent working with you and access to honest professionals like attorneys, surveyors, soil samplers, engineers, and others as needed. Most horror stories happen because Buyers don’t work with reliable agents, or try to take a short cut around established practices. Do it right from the start and you will have no regrets.