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I’ve picked up five properties from Grupo Mapache, a Costa Rican developer that has built more than 20,000 low-priced condos in the Guanacaste area. Although initially above-board, Mapache has been running into money problems the past couple of years and appears to now owe buyers millions of dollars invested in their projects.
As an example, last year, Grupo Mapache assessed buyers of its Costa Marina condos 20% for “start of construction payments” on all condos (despite not having requisite permits to begin construction). Nearly a year later and hung up in attempts to procure necessary authorization from the government’s environmental licensing authority, these projects are on hold for an indefinite period of time- and, indeed, may never be viable.
Nevertheless, Mapache has refused to return the 20% assessment charges to its investors. I, personally, have $371,000 tied up with Mapache Costa Marina and Cuajiniquil projects and have spoken with several others who are in a similar situation.
Considering the size of these projects, Grupo Mapache is making considerable interest on the money it is withholding from us – and buyers have been discussing individual and class action lawsuits against the company.
Those of us in this unenviable situation would like to get the word out to others who may be contemplating investments with this increasingly unethical developer.
THIS POSTING WAS EDITED SLIGHTLY BY MODERATOR – SCOTT OLIVER
Let me declare my interest in this debate: I bought two units from Mapache a few years ago and now rent them. They delivered what they promised to me. I have friends who happily live in the Mapache development in Coco.
so without making any comment I am including below a copy of an email news letter (dated May 17th)I received from Mapache the other week.“Important Owner News
Costa Marina Owners stock option
Due to the delays in obtaining the final approval from SETENA for the
environmental viability for the construction of the Costa Marina
Project, and as a way to provide the buyers with a guarantee on the
payments made on the units of this project, the developer has decided
to issue shares of the company in the same number of units to be built
in the project.The idea is to deliver each buyer with one share per unit bought, as
a guarantee that they will receive either the unit fully finished or
their money back in the case the developer, for any reason, gets to
the conclusion that the project is not viable and the project is
cancelled.The shares will be delivered only to those buyers who decide to
maintain the whole amount paid up to the present time on their units.
It has been decided by the developer to cover interests on the
construction start payment to those buyers that will receive the
shares in guarantee, from the moment the payment was made up to the
re-start of the construction process, at the prevailing U.S. prime
rate according to the variations that this rate has had over the time
period.These interests will be recognized to the buyers when they make the
next payment, according to the construction advance process, once the
construction is re-started.Once the units are fully finished and the buyers complete payment of
them, the units will be transferred to the buyers, who will return to
the developer the shares received as guarantee.A maximum time frame of 18 months has been established to wait for
the final approval from SETENA, and continue with the construction of
the project. After this period the developer will start a process to
sell the property where this project is being built and return to the
buyers the payments received from them. However, the developer may
determine to proceed this way before the 18 month period in the case
of getting access to real information evidencing that the project
somehow is not viable any more; and it may start sooner selling the
property to return payments received from buyers.Once the property is sold, the buyers will receive their money back,
along with the corresponding interests on the construction start
payment. Buyers will return to the developer the company shares when
they receive their money back. Any balance after returning payments
to buyers will be used by the developer to cover any expense on the
project.Since the shares are delivered as a guarantee, any re-sale of the
units or assignment of the shares must be handled through the
developer. Interest on the construction start payment will be
assigned to the last share keeper. Additionally, share keepers will
have no right or liabilities on the companys assets or liabilities.
Share keepers rights or liabilities are only those established in the
shares cession contract.If a buyer who accepted a share as guarantee wishes to request the
developer the returning of the payments made on the unit bought,
those payments might be returned once the developer finds a new buyer
for the unit in particular. The shares cession contract is being
reviewed by our lawyers at this moment and we expect to have it ready
soon.”Yes, I received this also. Grupo Mapache intimates that you will lose your “guarantee” to a refund unless you let them keep your “start of construction” money–even though such construction is not going forward in the foreseeable future. As a reward, you can get a “share” that is supposed to mean something more than the signed contract you already have with them. Meanwhile, they continue to hold your money indefinitely.
Leave aside the fact that Grupo Mapache should never have requested the 20% start of construction money (since it didn’t have the requisite building permits). As buyers, we are left holding contracts where we have paid Mapache for a specific result that they have not, and cannot, provide. It is unconscionable for them to place “conditions” on refunds, when it is they who failed to meet the terms of the contracts. Buyers could certainly return “start of construction” money to Mapache when it is clear that such construction actually will go forward; however, that should be our choice and we should have control over our money until that happens.
Mapache indicates it is having its lawyers review this and I suggest they look closely–because the courts would almost certainly require Mapache to refund all payments whether a buyer owns a “share” or not.
Mapache requested the 20% payment for start of construction without having the required building permits and without having the Condominium legally registered. They advertised they were selling “Condos” when in fact they were selling the project as “shared ownership”. Basically the mother land was divided into “x” amount of lots and each owner receives a share or derecho. This is not a condominium and therefore there are no rules or regulations that all owners must abide to, no Home Owner’s Association (HOA) that rules over the condominium and no real guarantee as to who owns each lot or share. I have heard that some owners have even opened up commercial activities in these “Condos” as there are no clear rules or regulations in place. In order for the project to be a legal Condominium project all owners would have to agree to such process, put all shares into a trust and then have the project legally registered as a Condominium for each owner to receive their “finca filial” number with their respective title, establish the rules and regulations for the conodiminium and apoint an administration and a Home Owner’s Association. This is going to be a long, expensive and virtually impossible process. If I had bought property in this project, I would try establishing a group of residents to get together and hire a good law firm like Facio & Canas or Pacheco Coto to bring a lawsuit against Mapache for fraud.
This is why you do not buy real estate from “shady developers” and why you always use a lawyer to purchase Costa Rica real estate.
Alvaro…I know of a developer in Jaco that is building a similar development…you buy a “floor plan” and pay x 100,000’s and you have ownership…but when you come for a visit it just might be that “your unit” is being used by someone else and you are simply asked to us one of the other “same floor plan” unit for your stay. What do you really own?
Terry From TexasTerrycook, first of all we need to distinguish shared ownership from timeshare or fractional ownership. Shared ownership is when a developer buys a piece of land, he divides the mother land into “x” amount of lots (residential lots, condos or homes) and then sells each unit as a share or derecho. The Folio Real number or property number of a shared ownership property will be something like this: 1-123456-001. The last 3 digits 001 are the key numbers to look out for. When a propety is not a shared ownership property this last 3 digits are usually 000. The 001 means that you own share # 1 of “x” amount sold. The problem with this system is that it is unclear who really owns which lot in the property until a judge decides it. This might be risky if you already built your house on a lot or did custom repairs or works on your new condo or house. A time share is a vacation license for 25 years that usually sells for $5K to $75K. This license may be inherited, sold and shared but no property is transfered so it is not titled. You may buy fixed weeks, floating weeks or points, but usually unless the contract states it you will get a different unit each time you visit. An example of legitimate timeshare projects in Costa Rica are Villas Sol Playa Hermosa, Fiesta Puntarenas and Nacazcol. A fractional ownership is usually more expensive ($100K to $1.5 M), you have more time to use your property (1 month to 6 months) and it’s titled. You receive a specific unit to be used on a specific date every year. This can also be inherited, transfered and sold as well. Four Seasons is selling fractional and there are others that have just started but this is rare in Costa Rica. In your case, I think that you have a shared ownership which is not a condominium and you may be having the same situation as in Mapache. I’m not an expert in the subject so my advise is to read your purchase contract thoroughly and contact a lawyer. I have heard that a lot of projects in Jaco and Tamarindo are of this type. Shared ownership is not always bad, but why take the risk when you can buy a Condominium property?
I think Terry is referring to a project in Jaco that is like a Condo/Hotel and it is compulsive that you rent out your unit x amount of months a year. You get a a set number of weeks to use it, either 4 or 8 or something like that. The rest of the time it is in the rental pool and they keep 35% of the rent collected as a management fee when rented.
Alvaro, Thanks for the info I am sure it will help others. I am sorry if you thought that I was involved with this deal. I was simply trying to point out that this questionable form of ownership exists in other parts of the country and to Read the Contract. I have been a Realtor and owner of Century 21 Cook & Associates for 30 years. I do not claim to know much about C.R. Real Estate but I have long agreed with Scott that you should do nothing with out a Good trusted Real Estate lawyer.. I also know about time shares as I just got done selling mine in Mexico. I never thought that would happen :}.
At any rate that is what this site is for, good discussion of Real Estate, and other C.R. topics. This is great for those of us who are thinking of moving to C.R.
Thanks so much
Terry From Texas
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