Costa Rica Real Estate Developers’ Responsibilities. Avoiding uncompleted projects.

Be careful when buying a condominium or home ‘under construction.’

When you are buying a building under construction in Costa Rica, be sure to check out the surroundings, and public areas (ranchos, pools, streets) that the developer has promised to build.

Many owners buy while a building is under construction because the cost is much lower. Nevertheless, these people run the risk of the developer not finishing the work or providing what he has promised, with resulting inconveniences and legal problems.

The buyer should make sure the developer delivers what was promised because sometimes projects are not finished as promised the finishings are not what was agreed on, or common areas are left unfinished, sometimes because of poor administration, other times because the cost of materials changed or the costs ran over budget.

For example, streets are meant to be a certain width but are made narrower or the activities rancho was not built at all because the developer ran out of money.

Legal recourses exist to force the developer to turn over what was promised, but in addition to facing long costly legal battles, there is still no guarantee that the developer will indeed do what he was supposed to.

If the company has run out of funds the job will not be done. The owners themselves will have to take on the job and this can be expensive.

What to Do? Buying at this stage of construction is a risk but you can protect yourself. When buying a condo, ask for the constitution which clearly indicates the size, characteristics and kind of finishings, etc., which the developer must deliver.

More than 70 percent of buyers rarely ask for this document or even read it, which causes problem based on lack of information.

It’s different when buying a house. According the Urban Planning Law one percent of the complex must be dedicated to common areas. The developer must then deposit a guarantee to the town hall to cover the possible non-fulfillment of this part of the contact.

But this is also no guarantee for the buyer. Many municipalities do not have the resources to investigate these procedures.

The best way to go about buying is to pay what the building is worth at the moment you buy it. In addition ask the developer “what guarantees do you to deliver what you have promised?”

In addition, you can ask for a contract in which you pay in stages as the building progresses. This contract should stipulate what you are buying, location, size and common areas. Be sure to investigate at the Public Registry to be sure that the property has no mortgages or liens.

The buyer can also partially mortgage the property and in the case of non-fulfillment, auction it and recuperate some of his investment.

The Developer: Perhaps the best guarantee to avoid these inconveniences is to do a thorough background check on the developer. Find out in every way possible everything you can about the company’s profile. Many companies are well known and have good reputations and do not want to lose their good refutations by not fulfilling contracts.

Advice to the Costa Rica Real Estate Buyer

1. Study and investigate the background of the construction company.
2. Never pay for more than what you are buying at the moment. To do this, hire an expert.
3. If you’re going to buy a condo or residence in construction, then make a contract to pay according to work stages.

With a condominium, always ask for and read the constitution rules. In this document, in addition to rights and responsibilities, common areas of the complex are described.

Investigate at the municipality level if the residence has all its permits up to date. For example, the distribution plan of the condominium must have been approved by the town hall.

Our thanks to Robert E. Lee and our friends at La Nación – Costa Rica’s largest Spanish circulation newspaper for their permission use this article.

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.