Learn Your Lesson: Problems with buying real estate in Costa Rica

Have you had problems with buying real estate in Costa Rica?  Did you put money down on a property in Costa Rica?  And now the construction  is stalled or the lot is not being developed?   The developers are unable to perform on their promises?

The basic problem is that many of these developers used your down payments to finance his first phases of the development project which he has not built yet!  But has done "something with you money" And now he cannot borrow any more money -because the banks have frozen lending.  So the construction project or development is at a standstill.

The present world financial situation as caused "havoc".  So what do you do?

If you have a Costa Rica attorney in whom you put your trust, of course, you will sit down with him and go over you options. If you do not have one..get one.  Talk to Americans who live there and own property for references.

What we don't always take into consideration first--before embarking upon the purchase of property in Costa Rica is that the Costa Rican laws (and the way things work there) is very different from the USA, Canada, or other foreign countries.

So we cannot assume anything.

You may have been one of the lucky ones and your developer refunded your down payment.

Or you may have been an unlucky one and have found that your efforts to recover you money are in vain.

So what lesson do we learn from this?

First: do not put a down payment to purchase a property in another country  over the phone (sight unseen).

Second:  in Costa Rica obtain the services of a reputable competent attorney who speaks good English to  draw you a contract where you know what is going to happen in all phases of the deal.  Make sure if your money is held "in trust" that it will remain in the attorney's trust account and not paid out to any builder or developer until AFTER he has delivered the first phase (for which the money is going to pay for)

If something does not "seem right to you" then don't get into it.

Stewart Title operates in Costa Rica.. they claim to guarantee your title free, clear and good

(for a fee)  MAKE SURE you read everything in detail that you sign with Stewart Title.  And have you own attorney go over it all before you sign it.  Because Stewart T. is not cheap, and you must understand what  is exactly they guarantee to you.

You may say, well your article is too simplistic.  Anyone would know what you are saying.....But, believe me..I have seen many people get scammed.  Dont be one of them.

Establish yourself with a reputable English speaking attorney (get references from the American Community..someone who has lived there for a long time.)

"The Wise Man Built his House upon a Rock"  Have you ever heard your grandmother say that?

Common Sense Approach to Buying Real Estate in Costa Rica

Travel Costa Rica and thinking about buying property?  Yes, foreigners are allowed to own property in Costa Rica..usually in the name of a corporation which your Costa Rican attorney will form before you begin the purchasing process. Now: All land records are kept  at one place-a central title registry called Registro National, located in San Jose the capital city. You should have you attorney check the property at this National Registry before you get serious about making an offer, to make sure the person selling is the true owner of the property, and the property is free of liens.
All liens and attachments (to be legal) against a property must be registered at Public Registry.

Real Estate agents in Costa Rica are not required by law to be licensed and there is no such thing as "multiple listings" like we have in the US. Many people take up the title of Real Estate Agent without proper training so be careful; and check them out very well before giving them your trust. Also: Speculation is rampant in the prices of real estate..so take all the time you need to wisely judge the reasonable price to pay. You could start by asking others foreigners who have bought property in the your area.

Choose an attorney to represent you who is DIFFERENT from the one representing the seller.
Inquire around the North American community for an attorney who is fluent in the English language. Ask ahead of time about his fees. You do not want surprises, since these fees are generally higher than what we are accustomed to in the US or Canada for the same services.

Offer to purchase property with a written contract (never a verbal contract) which your chosen attorney will prepare for you.

Don't pay the first price asked. Don't act overly enthusiastic,... take your time. Costa Ricans expect you to negotiate.

Electrical and Potable water: Make sure the property has existing electrical lines that you can tap into. Getting the electrical company to run new electric poles, transformers, lines, etc to your newly purchased property can be a very very long process or you may never get them. Same is true with potable water. Check ALL this out first!

Corporations: The common practice is to purchase your property under the name of a corporation. Which you should form before you begin your quest to find your property. There are many very important advantages to doing this in Costa Rica, too many to list here. Plan to discuss these advantages with your attorney.

Squatters in Costa Rica It is best NOT to buy property in remote areas and leave it unattended (without someone living on it to watch and protect it) Squatters could occupy your property . This is a serious problem, which could make your life miserable. Squatters have rights in Costa Rica..

Costa Rica Real Estate Choose an Attorney Carefully

Buying Real estate in Costa Rica: Choosing an attorney

Very important! First he or she should speak English and speak it well. And get references..not one but several.

Ask up front for the fees.. what do they consist of and how much? Get this in writing before going ahead with the deal.

Does he or she have ample experience in real estate law?

Don't pay any attorney fees until the deal is closed!