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Thursday, March 30, 2023

How SUGEF is changing the real estate business in Costa Rica

As of this year, the government of Costa Rica has extended the authority of SUGEF to include oversight of real estate agencies. This article will examine how this new requirement is affecting the real estate industry in Costa Rica.

What is SUGEF?

“SUGEF” stands for “Superintendencia General de Entidades Financieras” (Financial Institution Superintendency). This organization audits financial institutions such as banks, savings and loans, and employee credit unions, to ensure they are complying with federal and international financial regulations. SUGEF is like the Office of the Comptroller of Currency (OCC) in the United States.

According to the SUGEF website, their mission is to “Dictate the general norms and guidelines that it deems necessary to promote the stability, solvency, and transparency of the operations of the audited entities.” There is no doubt the actual reason behind these new requirements is to prevent money laundering and protect buyers from fraud.

This fresh arrangement has resulted in several changes in how real estate companies operate and report transactions to the Costa Rican government.

The SUGEF Registration Process

Approval by SUGEF requires real estate agencies to provide extensive financial and ownership information. Here is an example of just some things they require:

  • Who owns the business?
  • Is the ownership entity local or foreign?
  • A full history of transactions since early 2019.
  • A list of vendors providing services to the agency (such as lawyers, accountants, banks).
  • The number of employees that earn enough salary to be in the local social security system.
  • Associated bank accounts

SUGEF registration is an online process and a digital signature (Spanish: firma digital) is a requirement. You can get digital signatures at most large banking institutions in Costa Rica. Importantly, digital signatures are only available to Costa Rican citizens or legal foreign residents.

Effects of the new SUGEF regulations on real estate businesses

There is no doubt these new regulations will increase overheads for all real estate agencies. More paperwork means more time, more time means more money and/or higher legal or accounting expenses.

Larger real estate firms should be able to absorb these costs without a tremendous increase in overheads. Most of the large agencies have multilingual admin staff trained to handle this paperwork, reducing the need to use outside legal or accounting services. They also can spread costs across more monthly transactions.

Smaller agencies will have a harder time complying with the new regulations for several reasons. First, many agents in Costa Rica are foreigners who are not fluent in Spanish. They may have to hire external service agencies (lawyers, accountants) to handle the documentation. Even with training, the language barrier can inhibit the ability to perform basic duties that are not a problem in places where the native language is English.

Second, some agents are not legal residents of Costa Rica and so cannot get a digital signature required for completion of the SUGEF registration. As a foreigner, the law allows them to own a company, but only someone with a digital signature can register said company with SUGEF. There are ways around this (such as giving a resident, or citizen, a power of attorney to get the digital signature), but there are risks to giving such authority to someone who is not a legal owner of the business.

Without a doubt, the new regulations will cause a sifting within the real estate industry. Most foreigners who have been selling real estate “on the side” will probably disappear altogether. Most full-time agents I have spoken to see this as a good thing since these “pseudo” agents rarely provide post-purchase support to the buyer, nor are they as well-versed in the potential pitfalls associated with purchasing a property in Costa Rica. Some full-time, independent agents may have to close shop or join larger agencies. Small real estate agencies may merge with other small agencies to share overheads. Hard to tell at this point – the shakeup is still in process.

Effects of the new SUGEF regulations on the buyer

First, transparency is the law. SUGEF requires real property ownership details and confirmation on sources of funds to approve any transaction. They will also require details about the owners of any corporation used in the purchase of a property.

Second, buyers can have a higher level of confidence in their agents. Before SUGEF oversight took effect, anyone with a laptop and a website could promote and sell properties from any place with Wi-Fi. This made Costa Rica a breeding ground for shady real estate dealers.

Now, only real estate agencies registered with SUGEF are authorized to handle property transactions in Costa Rica. This is a big step forward in security for buyers and sellers. Step one in your due diligence process should be to confirm that your agent is registered with SUGEF. If you are not sure how to do this, ask your local attorney to help you.

Third, non-realtor related closing costs may go up. For example, some law firms may increase fees to cover additional overheads related to SUGEF compliance. I’m guessing it won’t be much, but it is worth asking whatever law firm you choose whether the SUGEF requirements add a lot or a little to the closing costs.

Based on my discussions with several well-established real estate agents within the country, and in my own opinion, the new SUGEF oversight is an excellent thing for the industry. Yes, it increases costs slightly, and it was a laborious process to get registered, but it also legitimizes genuine agents and eliminates most of the “fly-by-night” shysters who have taken advantage of naïve new homebuyers in the past. The customer is well served by these new requirements, and that is the important thing.


Originally from New York, Joseph Emanuelli is a 12+ year permanent resident of Costa Rica and a SUGEF registered broker at RE/MAX Tres Amigos in Playa Hermosa.  You can reach Joseph by visiting his website, Costarican American Connection, or call him at 506-8358-6617 (cell) or 506-2672-4100 (office), or Toll free from the US and Canada 1-877-661-6074.

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