Transacting a hotel in Costa Rica is not a simple real-estate deal; it is the transfer of a going concern whose value resides in land and buildings, operating permits, staff, reputation, digital channels, and forward bookings. What follows is a concise, academic-pragmatic guide—structured as a thematic flow rather than numbered steps—that synthesizes industry best practices from legal, tax, and operational perspectives for both sellers and buyers proceeding in a direct, principal-to-principal transaction.
A successful process begins well before contracts are drafted. Sellers should frame the transaction with a market-grounded narrative: what the asset is, why it outperforms (or can), and where its upside lies. That framing earns leverage later—during diligence, price verification, and closing adjustments. In parallel, buyers should define the investment thesis (stabilized yield, repositioning, or redevelopment), the preferred structure (asset vs. share purchase), and the risk tolerances that will drive conditions precedent and holdbacks.
Positioning the business. Start by assembling defensible evidence of performance and value. Benchmark occupancy, ADR, and RevPAR against a realistic comp set (same scale, segment, and locus of demand), identify direct competitors’ unique selling propositions and pricing behaviors, and quantify local pipeline risk from announced hotel developments. Bolster this with visible proof of online traction: quality of website and booking engine, channel mix, social presence, review velocity and sentiment, and ranking stability. Where possible, translate these datapoints into a short investment case—what a sophisticated counterparty needs to believe for your price to be fair. From the buy-side, pressure-test that narrative with a forward model that normalizes one-offs, seasonality, and reinvestment needs; a clean model will later anchor diligence and escrow mechanics.
Documentation discipline. Organize everything the counterpart will reasonably request: corporate and title documents; municipal license (patente), health and alcohol permits; supplier and OTA contracts; payroll and CCSS compliance evidence; insurance certificates; tax filings and payment proofs; utility accounts; PMS/channel manager contracts; asset inventory; and any franchise/management agreements. Completeness de-risks diligence and, for sellers, shortens exclusivity.
Confidentiality first. Before exchanging sensitive data or granting property access, execute a mutual or one-way NDA. It should explicitly cover financials, guest data, rate plans, third-party contracts, and the mere fact of negotiations. A well-drafted NDA protects value in the event the transaction stalls and reduces operational noise during the process.
Term-setting via LOI. A non-binding letter of intent is the workhorse for aligning economics and choreography. It should define: consideration and currency; structure (asset purchase of real estate, FF&E and business assets vs. share purchase of the hotel-owning company); exclusivity period; due-diligence scope and duration; deposits and escrow; principal conditions precedent (e.g., financing, satisfactory diligence, regulatory or third-party consents); targeted closing date; and headline representations, warranties, and indemnity architecture. The share-purchase path can streamline permit continuity and contract assignments but demands heavier warranty and indemnity protection. The asset path simplifies legacy liability risk but increases the number of transfers required post-closing.
The definitive contract. In Costa Rica, the binding sale instrument is the Sale and Purchase Agreement (SPA)—often styled locally as an Opción de Compraventa—which sets out the operative terms, representations, warranties, covenants, conditions, remedies, and closing procedure. It should attach (or incorporate by reference) an itemized inventory; the form of the notarial transfer deed (escritura de traspaso) for real property; escrow instructions; forms of assignments (e.g., website domain, software licenses, vendor contracts); and a closing checklist. Because real property transfers must be executed before a Costa Rican Notary Public (who is also an attorney) and recorded at the National Registry, the SPA’s closing mechanics must dovetail with the notarial deed and registration workflow. In practice, the escritura is read and signed at closing and then recorded; the registry update follows thereafter.
Diligence with operating-business rigor. For hotels, diligence is multidimensional:
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Title/registral & zoning. Confirm clean title at the National Registry (folio real), boundaries that match the recorded survey (plano catastrado), and the zoning/land-use lawful for hotel operations. Beachfront assets may involve Maritime Zone concessions, requiring special scrutiny of concession terms and compliance.
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Legal compliance. Verify the municipal business license, health permits, liquor license (if any), ICT registrations, and good standing of the owning entity. Validate employer registration and contributions with the CCSS (social security) and mandatory workers’ compensation coverage with INS; both are required for lawful operation and for maintaining the municipal license.
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Labor & HR. Map headcount, contracts, accrued benefits, and contingent liabilities (severance, vacations). Structure choices (asset vs. share) drive whether staff remain with the entity or require termination/re-hire; reflect this in closing adjustments and covenants.
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Financial & tax. Walk through historical P&Ls, occupancy, ADR and channel mix; reconcile PMS data to bank statements; test working-capital seasonality; and identify tax exposures. Note Costa Rica’s real estate transfer tax (1.5% of price or fiscal value, whichever is higher) and the capital-gains regime (generally 15% on gains; a 2.25% election may apply once for assets acquired before July 1, 2019). These are not mere abstractions—they affect price netbacks and who pays what at closing.
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Physical & environmental. Commission independent inspection of structures, MEP systems, pools, wastewater systems, fire/life safety, and any special plants (e.g., desalination). Obtain repair estimates where issues surface; use findings to agree credits or seller remedies.
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Commercial & digital. Inventory everything “soft” that makes a hotel trade: brand assets, domain, email, PMS and channel manager accounts, social handles, OTA listings, and review profiles. Confirm transferability, admin access, and the plan for banking switchovers on OTAs and the booking engine.
Closing mechanics that actually close. On closing day, the Notary reads the deed; parties execute; funds flow per escrow instructions; and the Notary submits the deed for recording. Transfer tax (1.5%) and registration stamps/fees are settled, and notarial fees (commonly ~1–2% by market practice) are paid according to the allocation in the SPA. Although customs vary on “who pays what,” clarity in the SPA avoids friction; model both sides’ cash flows so there are no surprises.
After-closing transfer of the business, not just the deed. A hotel’s continuity depends on disciplined post-closing handover:
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Municipality. Update the business license (patente) and property tax account; file the value declaration reflecting the new price so municipal rolls are current.
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CCSS, INS, Hacienda. Ensure employer registration details, legal representatives, and payroll statuses are updated with CCSS; maintain continuous workers’ compensation insurance with INS; and update tax registrations with the Ministry of Finance (Hacienda) for income tax and VAT where applicable. Capital gains reporting falls on the seller according to the chosen regime.
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Digital and distribution assets. Transfer the website domain/hosting and booking engine admin; hand over or re-platform OTA accounts (Airbnb, Vrbo, Booking, Expedia) to preserve listings and reviews; assign or grant admin on Google Business Profile, Facebook, Instagram, TripAdvisor, and Waze. Plan the banking and payout switchovers in lockstep so reservations and card settlements continue without interruption.
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Vendors and utilities. Novate or re-paper key vendor contracts (laundry, linen, waste, security, landscaping, POS, PMS, channel manager) and transfer electricity, water, telecom, and gas accounts. Execute a joint inventory count and a possession acta to memorialize delivery.
Price protection and performance incentives. Sophisticated parties use targeted escrows to align post-closing performance with payment. A 10% holdback is common in hotel deals to secure delivery of digital access, permits, utilities, inventory in agreed condition, and resolution of any short-interval “stub” liabilities. Define release conditions objectively (e.g., written confirmation of admin rights on specified systems; zero past-due balances on named utilities; CCSS/INS certificates current to closing; vendor statements cleared through a fixed date) and set a finite release window (often 30–90 days). In a share purchase, tailor warranties and survival periods to legacy risk; in an asset purchase, emphasize true-up mechanics for prepaid revenues, deposits, and payroll accruals.
Negotiating what really matters. Beyond headline price, three levers usually create or destroy value: (i) structure, which shifts tax and liability outcomes; (ii) capital plan, which buyers use to negotiate credits when inspections reveal deferred capex; and (iii) time, because operating performance is seasonal and cash conversion lags. A seller who arrives with current compliance, reconciled books, documented digital assets, and realistic capex disclosures tends to compress exclusivity and protect price. A buyer who scopes diligence to what drives underwriting—rather than every possible document—moves faster and reserves leverage for the issues that change valuation.
Ethics, people, and continuity. Hotels are human-intensive businesses. Even when the legal structure allows seamless continuity of employment, plan the communication cadence to staff; map who needs to know when, and align the message with labor-law obligations. Ensure the first payroll cycle post-closing runs flawlessly under the buyer’s administration; nothing erodes goodwill faster than payroll errors. Maintain guest-facing consistency during cutover: digital access, rate plans, and booking engine redirects should be invisible to the market.
A note on costs and taxes. Parties should assume and model: (1) the real-estate transfer tax at 1.5% of the higher of price or fiscal value; (2) registration stamps and minor fees; and (3) notarial/legal fees around 1–2% by practice. For the seller, capital gains typically are taxed at 15% on net gain, with a transitional 2.25% option for one pre-July-2019 asset. Buyers should also budget working capital and immediate compliance/insurance costs (CCSS/INS registrations, if a new employer entity is formed). These items are not mere footnotes; they are determinants of proceeds and effective yield.
Bottom line. Treat the transaction as the transfer of an operating platform. Confidentiality and clarity (NDA, LOI) set the tone; a precise SPA aligns legal form with operational reality; and diligence should look beyond paper to how the hotel actually earns its keep. Closing is not the finish line—continuity across licenses, labor, insurance, tax, utilities, vendors, and digital channels is what truly transfers the business. With that mindset—and with tight documentation, disciplined escrow design, and compliance hygiene—both sides can move from handshake to handover with speed and confidence in Costa Rica’s legal framework.
