Effects of the new “SUGEF” regulations on real estate businesses


As of 2019, the government of Costa Rica has extended the authority of SUGEF to include oversight of real estate agencies. 

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.

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.

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 current laws, or 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.

Based on discussions with several well-established real estate agents within the country, and in our 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.

Century 21 Ballena Properties office has been SUJEF compliant since shortly after this protocol was put in place.  You can trust that our agents are licensed with CRGAR and NAR; and will serve you as best they can!

Do you have a question about this article or Costa Rica real estate? Feel free to reach out to us. 

Published by ajimenez

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