Bulk Sales: how to ensure your Deal is Valid 

Arias Law | For anyone considering acquiring part of a business unit or its assets, it is essential to understand the legal implications of the transaction before moving forward. Determining whether your transaction qualifies as a bulk sale (purchase of a commercial establishment) and securing proper legal advice may be the key to ensuring the validity of your transaction.

In accordance with Costa Rican law, a transaction is considered a bulk sale when it involves one or more of the following scenarios:

• The transfer of most of a business, or the joint transfer of two or more essential parts of its operations (referred to as "lots"), such as employees, or customer contracts.
• The transfer of the assets and/or debts of a company.

When a transfer is classified as a bulk sale, Costa Rican law mandates compliance with a specific statutory procedure. The parties must observe all required actions to ensure the validity of the transaction. The following requirements apply:

• The buyer must hold the purchase price as a legal depositary until the bulk sale procedure is completed or alternatively deposit the funds with a Costa Rican Notary Public or an Escrow Agent.
• The legal depositary must publish three consecutive notices in the Official Gazette ("La Gaceta") to notify the seller’s creditors of the upcoming transfer.
• Creditors must appear before the legal depositary within fifteen business days following the first publication, to validate their credit claims.
• Once the fifteen-day period has expired, the legal depositary will convene a meeting with the appearing creditors who will determine among themselves which debts are to be paid with the deposited funds. If any claim is disputed, the legal depositary must deposit the contested amount with the competent judicial authority.
• Upon completion of the procedure, the legal depositary will transfer to the seller any unclaimed balance. If no claims are filed, the full purchase price will be released to the seller once the fifteen-day period expires.

The Bulk Sale process must be documented through an agreement executed by the parties. However, if the asset purchase involves the transfer of vehicles or real estate, such assets must be conveyed through a public deed executed before a Costa Rican Notary Public and recorded with the Public Registry.

Failure to meet the requirements of a bulk sale may result in the absolute nullity of the transaction. Moreover, if these legal steps are not followed, creditors may still pursue the transferred assets, place liens on them, and ultimately auction them off—even if the sale is not formally declared invalid.

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