What Actually Happens at a Costa Rica Loan Closing

Borrowers get quiet in the last week. The file is done, the number is agreed, and then a set of questions arrives that nobody asked earlier: what am I signing, who is in the room, and what happens to the mortgage I already have?

It is worth answering properly, because the closing is simpler than people fear and the fear is what makes people hesitate.

Here is the whole thing in one sentence: everything settles on the same day.

The existing mortgage comes off at the closing

This is the question borrowers worry about most, usually silently.

You already owe somebody. Now a new lender is coming in, and every lender GAP works with must hold first position — GAP does not arrange second-position loans. So how do you pay off the old one before you have the new money?

You do not have to. It happens at the closing, out of the loan.

In practice it goes one of two ways. Either the borrower has already cleared the old debt just before the closing out of their own funds, or — far more commonly — the payoff is made from the loan proceeds on the day. The old lien is released, the new mortgage is registered, and the new lender ends up in first position. You never have to find the money in between.

That is the whole trick, and it is why a lien on your property is not the obstacle people assume it is. What matters is that it is disclosed early. An existing mortgage does not stop a file. Discovering it late does.

Nobody has to go first

There is a small awkwardness built into any closing. The lender is expected to hand over money and the borrower is expected to sign. Somebody has to move first, and neither party particularly wants to.

An escrow agent solves that. The funds sit with a regulated third party ahead of the day — not with GAP, not with the lender, not with you. The mortgage is signed and presented for registration, and the escrow agent releases the money against the conditions everyone agreed to in advance.

It also means a lender in Calgary or Madrid does not need to be in the country. Most of them are not.

What you actually sign

The mortgage is executed before a notary and presented to the National Registry. In Costa Rica a notary is a lawyer with a specific public function, and this is squarely their job — drafting the instrument, identifying the parties, and getting it presented.

If the property is held in a company, whoever signs has to have current authority to bind that company. Check that before the day, not on it.

Read the loan documents before you are sitting at the table. Payment dates and amounts, what happens if a payment is late, what constitutes default, what the lender can do about it, and whether you are allowed to repay early and on what terms. Every one of those is easy to ask about a week before and uncomfortable to raise while everyone waits.

What it costs you on the day

Nothing up front. There is no valuation fee or legal review charge to pay before closing.

The loan fees are deducted from the loan at closing, which means they come out of the proceeds rather than out of your pocket. You should know the exact figures before you sign, and they belong in writing in the loan documents. Ask for them in advance if they have not been put in front of you.

How long it takes

Once the complete file is in and due diligence is finished, a qualified loan can close within ten business days.

Read that carefully, because the important words are “complete” and “finished”. The ten days start when the file is ready, not when you first make contact. The part that takes time is getting the documents together — title, plano, liens disclosed, municipal and corporation taxes current, company papers if there is a company. That is the stretch you control.

After the closing

The mortgage is presented for registration and goes through the Registry. You start making interest payments on the schedule in the documents, and the principal is due at the end of the term.

Confirm at the closing exactly where your payments go and who to contact if something changes. Two minutes then, instead of a scramble on the first payment date.

The short version

• Everything settles on the same day.
• An existing lien comes off at the closing, paid either just before or out of the loan.
• The new lender ends up in first position. Always.
• Escrow means nobody has to hand over money or sign first.
• Nothing is payable up front; the fees come out of the loan.
• Ten business days from a complete file — and the file is the part you control.

WhatsApp: +506 4001 6413
Email: info@gap.cr
What a complete file looks like →

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Glenn Tellier, founder of Grupo GAP

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)