Yesterday I had a meeting with an account who was involved in a huge development project on the Pacific Coast of Costa Rica. Anyway, to make a long story short, he asked me if I knew the guy who he had meant in Costa Rica. I shook my head, and my account proceeds to go to this guy’s website. The website was professionally done, looked legit etc etc.
Then my account took me to a another website where it showed this guy had twice been indicted on fraudulently securities in the US, and he was NOW selling real estate investment securities on his Costa Rica website.
When my account asked me if there was anything I could do about it? I responded, "Not Really!"
It is well-known that Costa Rica has attracted an increasing numbers of investors and people who want to retire and/or buy a vacation home/condo over the last few years. However, this has also sparked the increase in real estate and investment scams. It is said, that as many as 30% of all real estate deals may have some type of fraudulent dealings with them.
Most who do get scammed end up leaving with a very bad taste of Costa Rica. Or they think US legal system, hire an attorney, thinking of civil lawsuit and, get their money back. The next thing they know, its two years and thousands of dollars later and are in the same boat they started with.
Before one thinks about investing and/or buying one must realize two critical fundamentals of buying real estate in Costa Rica:
- Costa Rica Law is a complexity of the Rican legal system, which is based on Napoleonic law. In other words, unless blood is drawn, “No (physical) Harm, No Foul. ” So fleecing someone out of money is not that big of a deal as it would be with someone who empties a 9mm clip into some poor soul. So if you get burned, do not expect an army of DAs and Law Enforcement to arrest the person. Going through the courts in a civil matter cost time and money.
- There are NO governing laws for real estate agents as the US has, where one has to take a test to become a realtor, agent or broker. In Costa Rica, anyone can become one and you do not have to be a resident or citizen. No permits, schooling or business license required. And because of this, agents are a dime a dozen and all they need is property, regardless of who owns it.
Getting back – you fell in love with the country, found the perfect spot to build or buy your dream home, now, how can I protect myself? Well believe it or not, there are some simple steps.
Property Itself: Make sure the property does not look abandoned or not taken care of. These properties would be "attractive" for fraud as the owners are not checking their property situation.
Residency Card: You found an agent who looks to be not a Costa Rican and want to put a proposal on that dream home, asked the agent for their residency and/or citizenship card. Both will tell you how long the person has been living in Costa Rica. You may even ask for their Passport. If they have no card that means every 90 days they have to leave the country and then come back in after 72 hours. A Residency Card will pretty much tell you that person is here to stay in CR. The longer the residency, the more creditably that person has. If the person balks at showing his or her card, time to walk out the door.
Internet Search: Go to Google and type in the persons and business name; see if any claims have come up on them.
Get a Real Estate Attorney: Costa Rica has some great attorneys that understand the system. The US Embassy in San Jose has a list of bilingual attorneys and you can go to our Costa Rica attorney directory. A good attorney will do the due diligence to make sure the property has a clean title with no liens attached. A property with a very long clean history means they have belonging to the same person for decades. Properties were the titles have changed many times in the last few years are ones that raise red flags.
Use Caution: If the property is located in zones with high appreciation values be careful. Real estate in high dollars areas like in the Central Valley areas of Escazú and Santa Ana, to North Pacific coastal areas (Guanacaste like Tamarindo) and to Mid Pacific Coast, like Jaco are the perfect places for a conman to hype their victim on, how much money they can make on this "awesome" condo project that will start construction two years from now.
When all said and done, if you take your time, don't rush things, do your homework, you will be able to have your dream home and/or make money on your real estate investment.
EDITORS NOTE: The below "ongoing" comments that started in April, 2010, are mostly associated with the controversy of Hacienda Matapalo development project, which is located near Matapalo Beach between Puerto Quepos and Dominical.