People always ask us about other real estate developments in Costa Rica. My typical answer is that {name of development} is one of many developments that has yet to get anything done. or one of many that gets just enough done to sell it, never completing what was promised There have been many real estate developments like them, some who made pre-development sales, paid the principles salaries large enough to use all the money and then claimed bankruptcy without ever having even attempted to complete the project. Many are brilliant marketers, staging webinars, press releases and conference calls. Some will use hype like "Costa Rica's most successful real estate project", the "fastest selling project" or the "best real estate development in Costa Rica" or something similar.
In fairness, some developers may have had intentions of completing the project at the onset only to find out how hard it is to navigate through the bueracracy of development in Costa Rica. Remeber this is a country where over 25% of the country is contained in national parks, preserves or protected land. Getting permits for development is tough. It takes the patience of a saint and more time than you can imagine.
A common way around this hurdle is to subdivide the property under farm "finca' title. Finca title is literally “farm title” not really designed for use as residential property. This is a loophole that some developers have used to avoid having to meet municipal standards. As a matter of record, nearly every development in Costa Rica that has lots sized bigger than an acre (and up) are providing finca title. The Costa Rican government has been encouraging developers to develop in urbanization title, which pretty much requires lots smaller than 1 acre.
Finca means “farm” in Spanish. With Finca title you are legally supposed to be a farmer, the property is considered (being passed off as) a farm, for agricultural purposes. Developers have been getting away with developments in Finca title and it is fine if you (and everyone around you in the development) gets their house built before enforcement of that type of title takes place. Zoning on finca title is restrictive and could become an issue whereas title in true urbanization developments (like we do) although requiring smaller lots, are designed and titled for residential use. In Finca title, you only need to survey it and you can sell it as titled property. Many of these projects are sold as predevelopment projects in Costa Rica.
When a developer does true urbanization title (referred to as "urbanization" or "en condominio" development in Costa Rica but with nothing to do with condominiums) the developer can’t even segregate the lots and title them without the roads, water and electric having been signed off by the utilities, the municipality, etc. Here at Pacific Lots of Costa Rica, we offer "urbanization title:" Now in our 22nd year in Costa Rica, we have completed 19 phases of development and built hundreds of homes.
If you want to see a great example of what the risk is with companies like (insert newcomer development name here), click on Paragon properties scam Costa Rica and you will see the mother of all developments that were never completed. Paragon sold over 2000 lots, declared bankruptcy and left everyone without any water, electric, etc. They put in enough roads and did enough surveying to title over 2000 “finca’s”, sold a bunch and closed shop. Below is a picture of the gate they built, which was about all they ever completed. There is now a class action suit against the company but they don't seem to have any money at this point, having drawn it all out as salaries for the principles.
In my 20 years watching Costa Rican development, I have seen three or four expat developments that have actually done what they set out to do. In reviewing any development, be wary of any development with nothing but "artists renditions" of the development, the homes, the people, the clubhouse, the pool, etc. If they don't have anything done, they shouldn't be trying to make it look like they have. Many of their websites make you think the development is completely done, complete with houses, people, pools, bars, etc. Only buy what you see....
Unfortunately, many foreigners who purchase real estate, autos, other products
and services are defrauded here in Costa Rica. I too, a nine year resident of Costa
Rica, have been a victim of fraud, but I am one of the few lucky ones who was able
to successful win my claims in the legal system here.
One has to be objective. There are many honest ticos, Costa Ricans, but there
are also many ticos and foreign residents who will take advantage of a foreigner, and
defraud their clients of serious amounts of money, sometimes their entire life´s savings.
The victims of these frauds, in many cases have the odds seriously stacked against them.
The perpertrators of these frauds are very intelligent. They are well aware that their clients.
in many cases, have little knowlege of the language, customs and most importantly, the
legal system. They also know that they can make arrangements, in many cases, with
victim´s attorney to make the victims claim go away. It is a double pay day for many
attorneys. It is not uncommon for a dishonest attorney to receive legal fees from the victim
and a second fee from the defandant so that the claim is put in limbo.
Speaking from my experience, I have had very, very difficult experiences with many of
the attorneys I have been involved with. Chorizo, bribery, is commonplace in many, but
not all, situations here in Costa Rica. On the other hand, the judiciary system, is far less
corrupt due to the fact that all judges are subject to strict review. If judges engage
illegal decisions, and if you are lucky enough to have an attorney to follow only your interests
completely, you have an excellent chance of success in a financial remedy. The judicial
review board is very strict. A judge that hands down illegal decisions, if pursued, loses
his job.
One of the problems here is that almost no lawyers work on a contingency basis. Not all,
but may lawyers here want to extract their fees for the most amount of money in the least
amount of time. This is totally contrary to the interests of the plaintiff.
I have had the very good fortune or luck to have been able to work with attorneys who were able,
not only to get back my investments, but damages well in excess of the amounts for which I
had been defrauded. They worked with me, and are working with me strictly on a contingency
basis. You pay nothing. You only pay a percentage of your claim when they win your claim.
I would be happy to offer whatever input I have to help anyone who has been defrauded here in.
Costa Rica.
Joseph Sacchetti
San Jose, Costa Rica
cgconversion@gmail.com
2223 8081