Working with competent lawyers in Costa Rica!
Why You Need Competent Lawyers in Costa Rica for Your Loans
Regarding loans in Costa Rica, having a competent lawyer is crucial. This is because, as we have experienced, lawyers here can have vastly different opinions on matters related to mortgages and trusts. This article will discuss why working with competent lawyers in Costa Rica is important and what to look for.
What an interesting week. We had a lawyer representing a new lender tell us that a traditional mortgage loan is better than a loan in a trust. Lawyers here have very different opinions on that statement.
This large law firm had little understanding of the difference between a trust and a mortgage.
Generally, we do traditional mortgages rather than a trust — however, there are valid reasons for using one or the other. For example, the property is in an area with a much slower court system than in the Central Valley (Gran Área Metropolitana – San José urban area). It will also depend on if the borrower is deemed likely to be a reliable payer. Also, the ability of the borrower to make his balloon payment at the end of his loan term or a partial settlement with room for refinancing matters. This could be because he is waiting for something else to happen before he can repay the loan. Things like the sale of a property or proceeding from an awarded contract that must come due are things of that nature. All these factors determine which mechanism to use when making a loan.
Trusts are expensive for borrowers and lenders since, on a take-back, you have to pay the total transfer tax up front to take the property out of the trust and into the lender’s name — this is one reason to use traditional mortgages.
On the payback of another loan this past week, we had to wait over two hours for them to show up after they could not complete the documentation the night before. Our lender was with them the night before to receive his check and spent nearly 3 hours waiting! Yes, they were the bank’s law firm, but the inefficiency was inconceivable. They still managed to screw up the check amounts by a few hundred dollars! It was corrected in time for the closing.
There are competent lawyers in Costa Rica, and most specialize in specific practice areas. Our recommended lawyers understand loans. We work with a few to complete our loan documentation and review the properties in the registry. They also follow up within 4 weeks to ensure the loan was correctly submitted to the registry office. Believe it or not, many loans are not appropriately registered due to errors, and the lender is unaware of this. This is why Gap Investments takes the extra steps to protect private lenders.
To complete the loan, our recommended lawyers become your lawyers. They can represent you throughout the loan process. We recommend them because they understand the loan process better than most, as they have been doing many loans for private lenders for years. Our recommended lawyers are professional, speak English perfectly, and represent some of our biggest lenders. They cannot afford to make mistakes because we can change our recommendations anytime. We have never had a complaint to date about their performance.
You may love your lawyer, and we are not saying in any way not to use them for many things. Our recommended lawyers are just specialists in executing the paperwork for a perfect loan!
What You Need to Know
Understanding the Difference Between Trusts and Mortgages
First, don’t forget that a trust and a mortgage can both make sense. For example, a trust may be better if the property is in a place with a slow court system. It will also depend on how much the borrower can pay and how likely they will repay the loan. Also, it makes a difference if the borrower can make a “balloon payment” at the end of the loan term or a partial payment that leaves room to refinance. This could be because the borrower is waiting for something else to happen before they can repay the loan, such as the sale of a house or the money from a contract they won. All of these things affect how to go about getting a loan.
The Inefficiency of Some Lawyers
Unfortunately, we have also experienced inefficiencies with some lawyers in Costa Rica. For example, on one occasion, we had to wait over two hours for a borrower to complete the documentation. Our lender had already spent nearly three hours waiting the night before, and the bank’s law firm still managed to make mistakes in the check amounts by a few hundred dollars. While we understand that mistakes can happen, such inefficiencies can cause frustration and financial losses.
The Importance of Competent Lawyers
This is why it’s important to have competent lawyers when dealing with loans in Costa Rica. Not only can they save you time and money, but they can also protect you from errors and oversights that could cause problems down the line. We recommend working with lawyers who specialize in loans and have experience working with private lenders. These lawyers understand the loan process better than most, and they know how to execute the paperwork for a perfect loan.
Working with Our Recommended Lawyers
Our recommended lawyers are professionals who speak English and represent some of our biggest lenders. They have been doing many loans for private lenders for years and have a proven track record of success. Our Recommended Lawyers can help you get a loan and ensure everything is done right. They also follow up within four weeks to ensure the loan was correctly submitted to the registry office. This is crucial, as many loans are not appropriately registered due to errors, and the lender may be unaware of this.
In conclusion, having competent lawyers is crucial when dealing with loans in Costa Rica. Our recommended lawyers understand the loan process better than most and can protect you from errors and oversights that could cause problems down the line. They are professionals who speak English perfectly and have a proven track record of success. If you want to ensure that your loan is done correctly, we recommend working with our recommended lawyers.
-Written by Glenn Tellier (Founder of Grupo Gap)
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Frequently Asked Questions
Why is it important to have a competent lawyer when taking out a loan in Costa Rica?
A competent lawyer can help ensure the loan process is done correctly, all necessary paperwork is filed, and the property is properly registered. This can help protect both the borrower and the lender from potential legal issues in the future.
What is the difference between a traditional mortgage and a loan in a trust?
A traditional mortgage is a loan secured by a property, where the lender has a lien on the property until the loan is paid off. On the other hand, a loan in a trust involves placing the property in a trust, with the lender being the beneficiary of the trust. This can affect taxes, transfer fees, and legal processes differently.
What factors should be considered when deciding between a traditional mortgage and a loan in a trust?
Factors such as the property’s location, the borrower’s reliability, and the borrower’s ability to make payments and repay the loan can all influence which type of loan is best.
Why are trusts more expensive for borrowers and lenders?
Trusts can be more expensive due to the upfront transfer tax that must be paid to take the property out of the trust and into the lender’s name.
What are some common mistakes made during the loan process?
Errors in documentation, failure to properly register the loan, and delays in the loan process can all be potential issues.
How can working with a recommended lawyer help protect private lenders?
A recommended lawyer specializing in loans and understanding the loan process can help ensure that all necessary steps are taken to protect the lender and their investment.
Are there English-speaking lawyers available in Costa Rica?
Yes, English-speaking lawyers in Costa Rica can assist with loan documentation and other legal matters.
Why is it important to choose a lawyer who specializes in loans?
A lawyer specializing in loans will better understand the loan process, potential legal issues, and how to protect the lender’s interests. They can also help ensure all necessary paperwork is filed correctly and the loan is properly registered.
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