A few years back a buyer called me in a full panic, three days before closing on a house near Nosara. A “seller’s assistant” had emailed her fresh wiring instructions and asked her to send the whole purchase price directly, that afternoon, to “lock in the deal.” It was a scam. The real seller had never heard of this assistant. She didn’t lose a dollar, and the reason is boring: her money was already parked in escrow, and there was no version of the world where she’d wire six figures straight to a stranger. That’s the whole point of escrow. It’s why I won’t run a deal without it.
What escrow actually is
Escrow is a neutral third party that holds the money until every condition of the deal is met. You don’t hand cash to the seller and cross your fingers. You send it to a licensed, regulated agent who holds it, checks that the contract terms are satisfied, and only then releases it. If the deal falls apart for a reason your contract protects, the money comes back to you.
It protects both sides. The seller knows the buyer’s money is real and sitting there. The buyer knows the seller can’t touch a colón until the title transfers cleanly. Everybody sleeps better, and in twenty years I’ve never had an honest seller object to it.
SUGEF: why “registered” is the word that matters
In Costa Rica, any escrow agent handling these funds has to be registered with SUGEF, the national financial regulator, under the country’s anti-money-laundering rules. This isn’t bureaucratic theater. A SUGEF-registered agent operates under real oversight, keeps client money in dedicated accounts, and answers to someone if things go wrong.
So the single most important question you can ask any escrow service here is dead simple: are you SUGEF-registered? Anything short of a clear yes, with documentation to back it, is your cue to stop. Your attorney can confirm an agent’s standing in an afternoon.
Source of funds: get your paperwork ready early
Because escrow is an anti-money-laundering checkpoint, the agent has to know where your money comes from. This is called KYC (know your customer) and source-of-funds verification. It’s completely routine, and nobody is accusing you of anything. You’ll typically be asked for:
- A copy of your passport and basic personal information
- A completed source-of-funds form explaining how you earned the money (salary, sale of a home, investments, business, inheritance)
- Supporting documents such as bank statements, a sale closing statement, or investment records
Here’s the thing nobody tells you: gather this the moment you get serious, not the week of closing. A clean, well-documented source of funds is the single biggest thing that keeps a closing on schedule. When it shows up messy and last-minute, that’s when the calendar starts slipping and everyone gets tense.
How the money actually flows
Here’s the sequence in a typical Guanacaste purchase:
- Your Sale and Purchase Agreement names the escrow agent and the conditions for release.
- You complete KYC and wire your earnest-money deposit, then later the balance, to the escrow account, not to the seller.
- Due diligence runs. Title study, water letter, any contingencies in your contract.
- At closing, once the notary confirms the transfer is executed and conditions are met, escrow releases funds to the seller and pays out any agreed closing costs.
Notice that the money and the title move together, in step. You’re never stuck in the exposed spot of having paid but not yet owning.
Why you never, ever wire the seller directly
Let me be as plain as I can. Wiring money straight to a seller or an agent’s personal account throws away every protection escrow gives you. No neutral party, no oversight, no source-of-funds trail, and no way to claw the money back if something’s wrong with the title or the seller.
It’s also the exact setup wire-fraud criminals live for. They sit on a hacked email thread for weeks, spoof a name you recognize, send “updated” instructions at the last minute, and bet that you won’t pick up the phone to check. So build these habits and don’t bend on them:
- Treat any last-minute change to wiring instructions as fraud until proven otherwise.
- Confirm instructions by phone using a number you already trust, never a number printed in the email itself.
- Only ever send funds to a verified, SUGEF-registered escrow account.
How much does escrow cost?
Escrow fees are modest, usually somewhere in the few-hundred to around a thousand dollar range, and they fold into your overall closing costs, which run roughly 4.5% to 6.5% of the purchase price. Your attorney or escrow agent will quote the exact fee up front. Confirm who pays it in your SPA.
Can I use a US or Canadian escrow company instead?
For a Costa Rican property, you want a locally SUGEF-registered agent that operates under Costa Rican AML rules and coordinates with your notary. A foreign escrow company isn’t set up for that. Your Costa Rican attorney can recommend a reputable one.
What happens to my deposit if the deal falls through?
It depends on why. If a contingency in your contract fails, such as a title defect, a well-drafted SPA returns your deposit. If you simply change your mind outside those terms, you may forfeit it. This is exactly why the contract language matters, so have your attorney draft it.
The honest bottom line
Escrow is the safest and most ordinary way to move money in a Costa Rican real estate deal, and a SUGEF-registered agent with proper source-of-funds paperwork is simply how honest transactions get done here. Anyone steering you away from it is either careless or up to something, and I’ve never seen an exception. This is general guidance, so confirm the specifics and vet your escrow agent with your own Costa Rican attorney.
If you’d like me to connect you with vetted, SUGEF-registered escrow agents and a good attorney in Guanacaste, get in touch, or start exploring homes on our property search.