How Private Lenders Are Protected in Costa Rica: What GAP Checks Before You Lend
Every GAP loan is built so the lender is protected before a single dollar moves. Private lenders in Costa Rica who lend through GAP hold a first-degree mortgage registered in the National Registry, on a property worth far more than the loan, with the title checked and the borrower’s exit named in advance. This page walks through the protections GAP puts in place on every file. For the full loan rules, and exactly what happens under Costa Rican law if a borrower stops paying, see What happens if a borrower doesn’t pay? How your loan is protected in Costa Rica.
1. The property is worth far more than the loan
Your loan has a real guarantee: the property. GAP values each property against comparable sales and presents its valuation to you with the loan-to-value. GAP prefers loans of about 30% of the property’s value, and 50% is the maximum it considers. At 30%, the property is worth more than three times the loan, and that gap is what keeps a lender well covered whatever happens.
2. Your mortgage is first in line
Every GAP loan is secured by a first-position mortgage on titled Costa Rica real estate. GAP never arranges second-position loans, and any existing mortgage is paid off at or before closing. A first-ranking mortgage is paid before anything registered after it, so your claim on the property comes first.
3. GAP’s lawyers do the paperwork
Before a lender is introduced to a deal, GAP has already reviewed the property, the title, the documents and the closing. That includes the National Registry study, a search for any liens or annotations, and, when a company owns the property, a check that the company is in good standing and that its signatory has authority. GAP’s lawyers then draw up the mortgage deed and register it in your favour. You can see what borrowers provide in the documents borrowers need.
4. Every loan has a named exit
Each opportunity comes with the borrower’s exit plan: the sale, refinancing or income that will repay the loan, with a date attached. GAP presents it alongside the property details, its valuation and the loan-to-value, so you know from the start how the loan is meant to end.
5. If a borrower ever stops paying
A registered mortgage is an enforceable title under the Código Procesal Civil (Law 9342), so the lender goes straight to enforcement in court. The property is sold at a court-run auction; the legal costs, which as a rule the borrower is ordered to pay, are paid first, then the lender’s interest and capital, and any remainder goes back to the borrower. If nobody bids after three auctions, the court awards the property to the lender. GAP and its lawyers handle the enforcement if it is ever needed. The step-by-step version is in GAP’s loan rules.
6. Plan your capital
A GAP loan runs for 6 to 36 months, with interest paid monthly, and the capital comes back when the loan is repaid. Many lenders spread their money across several loans with different maturity dates, so part of their capital frees up at regular intervals, and keep a separate cash reserve for day-to-day needs. A loan is not a savings account, and planning the dates up front keeps it working the way you want.
7. You can always name the property behind your money
With GAP, every dollar you lend is tied to a specific, registered property that you can look up. That is the clearest way to tell a real secured loan from an offer where no identifiable asset exists at all.
Two worries you can set aside
Your property title. Costa Rica records ownership in the National Registry, and its Constitution protects private property: under article 45, property can only be taken for a legally proven public interest, with compensation paid in advance.
Currency. GAP loans are made in US dollars, so the colón exchange rate does not change what you are owed.
Frequently asked questions
How is my loan protected?
By a first-degree mortgage registered in the National Registry, on a property worth far more than the loan.
What does GAP check before I see a loan?
The property and its value, the title and any liens, the owner, the documents, the closing and the borrower’s exit plan.
What happens if the borrower stops paying?
The lender enforces the mortgage in court. The property is auctioned, the lender is paid before any remainder goes back to the borrower, and if nobody bids after three auctions the court awards the property to the lender.
Who handles the enforcement if it is ever needed?
GAP and its lawyers.
Why spread capital across several loans?
So that your loans mature at different times and part of your capital comes back to you at regular intervals.
WhatsApp us at +506 4001 6413 to get started, call or email info@gap.cr.
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Article by Glenn Tellier (Founder of CRIE and Grupo Gap)
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