Realty in Costa Rica's advice and tips for living and buying Real Estate in Costa Rica
Part #2
TO DO THIS, SEPARATE THE LAND INTO ITS COMPONENT PARTS:
Land
Improvements
Services
Compare land with land, and land with buildings. Establish a value for each, then add the values to get a total. Compare the cost of new construction with old. Compare the value of existing services with the cost of adding new ones.
By appraising the various components of a property (or lack of) you equalize differences in properties.
It is your responsibility to make sure the property is in compliance with all national and municipal regulations. Condition and compliance guarantees can and should be written into the sales contract.
This doesn’t guarantee anything but it improves your position.
If you buy in a beach area be very, very cautious and be sure you’re on safe legal ground and will be in the future. Select your own lawyer and avoid any of them that are recommended by anyone who is involved in the property for sale.
It is a great idea to live inland and go to the beaches when the mood strikes and avoid the beach life as a steady diet.
Beach areas in Guanacaste have changed little in the last ten years and probably won’t change much in the near future. There isn’t much sustainable growth. There is still only limited service and shopping facilities.
A tranquil life-style at the beach can ultimately become stress filled unless you can handle boredom and long trips to the supermarket. Commuting is bad enough when the rewards justify it but will you be into driving for two hours for groceries and others supplies and services?
Enhanced property values for the majority are dependent on personal ease and comfort. Deprivation for short periods are OK, but it wears thin when we find that most of our leisure time is spent trying to survive.
Developers control land prices in beach areas and this is worrysome. Sales of new developments often stifle appreciation of older properties and new is selling at prices too close to what was paid for old. Your appreciation won’t materialize.
Obtain information about property at the Registro de Propiedades in the San Jose suburb of Zapote, close to downtown by car or taxi. You can also find the status and ownership of a piece of property and get any title documents and surveys you may need at this office. If the property is registered in the name of a corporation, the legal representatives must be verified, since they have power of attorney to make the sale. Information may also be obtained from the registry’s website at: www.registronacional.go.cr http://196.40.22.13/
DEVELOPMENT PROPERTY
Housing developers keep in mind that Costa Rican law allows you to dedicate only 60% to 70% of your land to be used for building lots. 20% to 25% will be used for roads and for parks.
Check with the municipality for all possible future happenings around the property. This is up to you and not your attorney checking the property against national things such as liens etc… landfills / sitting on top of gas mains / electric power lines above and below.
Have a soil test done to see how suitable for building the land is.
Ask the broker or seller for a copy of the title search. All real estate titles in Costa Rica are recorded at the public registry and the information of the titles is also available on internet.
Always make a purchase offer in writing stipulating all the terms you are willing to meet. Make sure that it was the seller, not the agent/broker, who signed it accepting or rejecting your offer. That offer will then be the body for the purchase contract
DEVELOPMENT ISSUES
Preliminary studies / Urban planning
Topography and Surveys
Environmental impact studies
Feasibility studies
Zoning issues
Work/building permits processing
Development contracts
Multidisciplinary engineering designs
Master plan preparation
Architectural design
Inspection and project management
SITE LIST
It is wise to buy a good 1:500,000 Costa Rica map for general reference.
Buy 1:500,000 cartographic maps of the areas you are interested in to locate possible properties. (You can get these at Lehman's and Universal bookstores or at the IGN/MOPT) Hire a bilingual real estate attorney
Find a bilingual, real estate broker
Take several trips, or even spend several months, in your projected location before making a final decision.
Check the official records carefully
Make sure the property isn’t included in a National Park, Reserve, or protected area
Request that sellers provide you with a recent property map
Make a close personal inspection of property
Note boundaries, location and condition of fences and/or property markers
Study the conditions and amenities of the property, topography, water drainage
Ask for information about your neighbors
Ask around the neighborhood about the site and if anything is planned around there
Check zoning laws and restrictions on land use
Take a lot of photos and video of the site
Get an inexpensive easy to use CAD program and play with designs
Try to live or camp on it for a few days and really check it out
Will it need any heavy retaining walls?
Will it need a lot of sculpturing and landscaping?
Will the access or driveway be complicated?
Is there water availability? (lines or wells)
Soil tests must be done to determine foundation and sewage system
Is there electricity availability
Will a transformer be mandated by the I.C.E.?
Is there telephone availability?
Is there Cable and high-speed internet availability?
Is access always available or will you need 4-wheel for the rainy season?
Before you buy look at the most recent electric bill.
PROPERTY QUESTIONS
Does the climate suit me?
Is it too hot or too wet?
What is the quality of the road?
How far is it from a major urban center?
How far is it from the population centers?
How far is it from a major highway?
Is it too far from the culture and convenience of the city?
Is it too isolated from friends and family?
Are there any present and future use restrictions?
Does it flood during part of the year?
What is the quality of the soil?
What is the topography like?
Is there anything that will make it difficult to resell?
ENVIRONMENTAL EVALUATION
In Costa Rica, as in most other regions, everyone can benefit from having an environmental evaluation done on your property, or one you are considering to purchase. Whether you do it for your own use or as part of a governmental requirement, this is a valuable tool for your project.
Prior to buying a specific portion of land it pays to have a basic evaluation carried out. This will reassure you of the value you are seeking and of how appropriate the land is for the intended use.
There is no “single stop” office for all the permits involved. Usually one must deal with several institutions. The Setena is the National Technical Environmental Secretariat, equivalent to the U.S. EPA, they must approve the development project and the environmental studies. The Minae is the ministry overseeing all environmental aspects such as timbering permits and water well permitting. AA is the department dealing with existing aqueducts and water distribution. The local municipality will have to approve the construction permits, road building and maintenance and much more. The ICE will usually be involved in providing the electricity required.
Many areas in the country lack any zoning or official planning, especially away from the coast. This is a mixed blessing. On the one hand it gives you greater freedom and allows you to be more creative with your land. On the other hand, the government or municipalities have generally not carried out any basic evaluation covering, at least partially, some of the aspects you certainly need to know.
This is the reason you as the developer or promoter must execute the evaluation or study since you are the one with more to gain and more at risk. Of course, the study may cover other aspects besides environmental ones if so desired.
AN EVALUATION WILL IDENTIFY ANY NEGATIVES:
Depending on the location and any past uses of the land there may have been some contaminating activities carried out on or near the property. This could affect the soil and groundwater sources beneath the property.
The land may have some limitations for the intended use. For example, due to pre-existing easement rights, zoning regulations, lack of an adequate water supply, overdrawn aquifer, saltwater intrusion, soil which is not conducive to septic leach fields.
The last few months in Costa Rica have seen a crackdown, after many years of leniency, on construction within the forbidden zone, (ZMT). The municipalities are actually evicting and tearing down those structures built on public property along both coasts.
The maritime zone law makes it illegal to own property or build within the 50 meter mark of the high tide line. It also requires a concession permit to exploit the next 150 meters.
There could also be geologic hazards such as nearby fault planes with evidence of recent movement or with landslide potential, or creeping soils and many more hazards. There could be soils which tend to expand when wet, affecting overlying structures.
Not that this is by any means commonplace, quite the contrary, but as an example: After the 1991 7.0 earthquake near the Caribbean port of Limon, some restaurants and hotels which used to be at the water’s edge, are now about 150 away from the high tide line. This segment of the continental crust was uplifted over 6 feet as a result of local faulting.
The subsoil could be vulnerable to the phenomenon of “liquefaction” whereby the ground loses all cohesion during an earthquake and acts just like a shaking plate full of sand and water, not much can stand on such a foundation.
Construction in many places in Costa Rica where a naturally harmonious design is desired with the environment needs to accentuate the strengths of the natural terrain. As a result it is essential to know precisely where is the best location to build by considering all the factors and variables which come into play.
This type of project seeks an attractive design, maximizing the terrain and landscaping, very different from simply leveling a tract for a huge warehouse or parking area.
Some sections of the property are best left undeveloped. The law states the distance one must leave as a buffer zone around creeks, springs, rivers and other bodies of water.
The evaluation can highlight the positives: The evaluation will help you to promote the property for the intended use. You might even discover hidden benefits such as a hot-spring or even potentially valuable minerals. You will be better able to maximize the property’s potential and avoid costly mistakes once you know what you have to work with.
It will help to know, for example that you can successfully grow certain crops or plants in this area rather than finding out years later that the climate or soil is not adequate for your original intent. Prior to any development, it will be useful to know whether the land will be able to enjoy basic services within a reasonable time-frame. You will also benefit from knowing of any plans to expand national parks and reserves in your direction, as well as any plans to zone or limit land use.
Depending on the type and density of trees, you may easily obtain permits to thin out the trees for construction or you might have to leave certain areas untouched.
Smartlink can help you get started on the right path and reach your goals in Costa Rica. A successful development in Costa Rica, like anywhere else in the world, requires proper planning, connections and the right professionals in every discipline to make it happen. Let our team help you do it the right way so you save valuable time and money and your project becomes a profitable reality.
Other aspects or services available to you can include, for example:
Making sure property is free and clear and has clearance for what you want
Research the property carefully to ensure it meets your criteria
Consideration of any potential future problems for the area
BUILDING A HOUSE IN COSTA RICA
Building a house in Costa Rica will be a great deal less expensive than building the same house in the United States.
In the United States mindless governmental requirements, the fees, requirements for licenses, building codes, building restrictions and bureaucratic roadblocks add 30% to 40% to the cost of construction. That’s thirty to forty percent of your hard earned capital that simply goes straight down the drain.
Zoning contributes additional problems. In North America zoning has more or less destroyed the quality of traditional American life. What it adds to construction costs is difficult to determine, but the figure is astronomical. Costa Rica has had zoning laws since 1974, but they have never been enforced, but that may soon change.
Labor costs in the United States add another 25% to 35% to the cost of construction. The average electrician or plumber on a construction site in the United States make at least $40 an hour. Even a laborer makes $15 to $18 an hour, six times what the average Costa Rican makes. Overall construction costs in the U.S. are between $100 to $250 per square foot, and more. In Costa Rica, depending on location, materials and the size of the home you want, you generally pay between $350 to $650 a square meter or $35 to $65 a square foot.
Unless you have a lot of patience, flexibility, a lot of courage, and the time to spend six, eight months, maybe a year of your life watching closely after your construction, you may want to think twice about undertaking such a project. You could be flirting with disaster. It sounds easier than it really is.
In all honesty, after spending the last forty years in the construction industry in the United States, I would never even consider being the general contractor on my own home in Costa Rica.
Be sure to talk with foreigners who have built homes to see what obstacles they encountered.
Unless you're very lucky, you will not find contractors that are capable of working up to North American or European standards. Most local builders have the bad habit of missing deadlines, running over budget, producing shabby work, and who will refuse to take responsibility for their mistakes. Good contractors do exist, so check around. Look for an experienced construction firm that can assist you with permits as well as building. Interview several companies, and ask a lot of questions.
Costly delays, unreliable labor, fussy building inspectors, different laws and building codes, and many other unforeseen problems can and will happen. Always remember to keep “Murphy’s Law” in mind.
Building demands great patience and a lot of courage. It will help if you have an engineer working for you who knows how to slice through the red tape and slip between the gaps in the building laws. Always be prepared for heartache, longer times to completion, and more money.
Contract with a reputable contractor, someone that people you know have used with good results, for the complete cost of the finished construction. Ask to see his other work.
Let the materials and labor be his problem. This may be a little more expensive, but is probably worth it in the long run.
Spend as much time as you can on the site. Get involved in the building process. This is as near as you'll get to guarantee that your house doesn't break the bonds of its blue print and become a huge, money-eating monster, devouring your bank account, your credit rating and what remains of your sanity.
To keep better control, dole out the cash to the contractor. Give him what he needs to buy materials. Pay him a bit at a time as the job progresses so the workers will be inspired to do quality work and to finish on time.
Construction costs in Costa Rica vary greatly from the Central Valley to the coastal beaches, primarily due to transportation costs and a lack of sub-contractors and suppliers on the coast. If you are planning to build your home at the beach, plan for higher construction costs. The differential between central valley and coastal construction costs would typically range from 25% to 50%.
Get three estimates in writing. Not just the construction price, but itemized materials list and cost, with labor and machinery involved.
You will need some Tico friends you can trust to check prices and run general interference for you. Like it or not, prices do inflate when you are a stranger here (A foreign accent equals higher prices). Beware.
Check prices, buy the materials yourself and count everything when it arrives before signing the receipt. Try to store it in an out of sight place that is safe and dry.
Things have a way of disappearing no matter where you are in the world, and here is no exception. Do not leave anything unattended. Paying someone to watch your site is one option but there is no substitute for simply being there. It is your money and no one else has as much interest in preserving it as you do.
Watch where everything goes. Ask questions if things seem to be getting wasted.
Get receipts for labor signed by the contractor only, not anyone else. If not, you can not hold him responsible for any problems later.
Contracts here must be signed in front of an attorney. If they are not, they’re not worth the paper they are written on.
A vital step overlooked by people building their home is to keep detailed records of ideas, meetings, discussions, phone conversations or anything else that may be related to your new home. This is what I call “The Construction Bible”. The records in themselves do not need to be complicated or formal. Just simple notebooks. But the information does need to be detailed and specific. Record dates, names, locations, product information and guarantees, discounts, taxes and all other information. If you keep good records of things you will be the winner in everything ranging from small disagreements to a large lawsuit.
When discussions involve prices and delivery times make notes of everything. If possible, make your notes in the presence of the people you are talking to. You will be surprised at how far more inclined they are to be factual and accurate with their statements if they see you are recording their quotes or recommendations. Refer to it constantly and it will serve as an invaluable source of information when settling disputes.
Keep a “photographic bible” too, using stills and videos. Tie this in with your Construction Bible.
A final word and suggestion:
This is one of the most beautiful countries on the face of the earth. We feel that the placement of the home, a naturally harmonious design, and the environmental needs to accentuate the strengths of the natural terrain is essential to keeping Costa Rica what it is.
When designing hour home, please consider all the factors and variables which come into play, and design and build a wonderful place for yourself that will keep Costa Rica a tropical jewel.
