“Good Faith” in Costa Rican Real Estate Transactions

by PuraVidaRentals on

Understanding “Good Faith” in Costa Rican Real Estate: What Foreign Buyers Need to Know

If you’re buying or selling real estate in Costa Rica, one legal principle you need to understand is “good faith” — or buena fe in Spanish. It plays a central role in all transactions and is one of the most important differences between Costa Rica’s legal system and that of countries like the United States.

🇨🇷 Costa Rica’s Legal System: Civil Law, Not Common Law

Costa Rica operates under a civil law system, based on written legal codes. In contrast, countries like the U.S., Canada, and the U.K. follow common law, where legal precedent and adversarial negotiation tactics often shape how contracts are interpreted or enforced.

In Costa Rica, good faith is not optional or interpretive — it is a legal obligation built into every contract, including real estate transactions.

🔍 What “Good Faith” Means in Practice

In Costa Rican real estate, all parties are legally required to:

• Act honestly and transparently
• Make a genuine effort to fulfill contractual obligations
• Communicate in a timely and reasonable manner
• Avoid deception, manipulation, or obstruction

This applies to buyers, sellers, attorneys, and agents alike.

⚖️ Key Differences from the U.S. Legal Culture

Foreign buyers, especially from common law countries, may expect more aggressive negotiation, firm deadlines, or even legal threats as part of the process. But these tactics are not appropriate or effective in Costa Rica.

For example:

• A minor delay does not constitute breach of contract if the parties are still cooperating in good faith.
• Unilateral changes to agreed terms (like payment method or closing date) may be seen as bad faith if not mutually agreed upon.
• Threatening legal action without substantial grounds could be viewed by courts as intimidation or manipulation — not a legitimate claim.

🤝 The Role of the Notary in Real Estate Closings

In Costa Rica, real estate transactions are executed by a notary public, who is also a licensed attorney. The notary’s role includes:

• Verifying ownership and property history in the National Registry
• Ensuring the legality of the transaction
• Drafting and executing the transfer deed
• Filing the change of ownership with public records

This centralized responsibility means that buyers and sellers can rely on the notary to protect the legal integrity of the transaction — provided they act in good faith.

✅ Best Practices for Buyers and Sellers

To ensure a smooth and legally sound closing:

• Communicate clearly and early. Don’t wait until the last minute to raise concerns or make changes.
• Respect agreed terms. Especially regarding timelines, payment methods, and delivery of documentation.
• Avoid threats or pressure tactics. They may be counterproductive and could damage your legal standing.
• Work with professionals familiar with both civil law and international clients.

Key Legal References on Good Faith in Costa Rica

Article 21 – Exercise of Rights in Good Faith

“Los derechos deberán ejercitarse conforme con las exigencias de la buena fe.”
“Rights must be exercised in accordance with the requirements of good faith.”

This article establishes that all rights must be exercised in good faith, underscoring its foundational role in contractual and property matters.

Article 22 – Prohibition of Abuse of Rights

“La ley no ampara el abuso del derecho o el ejercicio antisocial de este.”
“The law does not protect the abuse of rights or their antisocial exercise.”

This provision emphasizes that the legal system does not support the misuse of rights, reinforcing the expectation of fair and honest conduct.

Article 285 – Presumption of Good Faith in Possession

“En todos los casos en que la ley exige posesión de buena fe, se considera poseedor de buena fe al que en el acto de adquirir la posesión ignora que su título es defectuoso.”
“In all cases where the law requires possession in good faith, the possessor is considered to be in good faith if, at the time of acquiring possession, they are unaware that their title is defective.”

This article highlights the presumption of good faith in property possession, which can be particularly relevant in real estate transactions.

🔗 Accessing the Costa Rican Civil Code

For a comprehensive understanding, you can consult the full text of the Costa Rican Civil Code through the following official sources:

• Sistema Costarricense de Información Jurídica (SCIJ):
  
• Organization of American States (OAS) – PDF Version:
  

These resources provide the official legal framework that governs civil matters in Costa Rica, including real estate transactions.

💡 Final Thought

Costa Rica’s real estate system is built on trust, legal structure, and mutual cooperation. Whether you’re buying a vacation home or selling a property as a foreigner, understanding the principle of good faith is key to avoiding misunderstandings and completing your transaction smoothly.