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Real Estate FAQ | How to safely buy from a real estate developer

Real Estate FAQ | How to safely buy from a real estate developerA repeating real estate FAQ is how you can safely buy from a real estate developer in Costa Rica. Often buyers of property in Costa Rica do not know how to protect their money. It is not so easy to make sure the promises by real estate developers will be fulfilled.

Most real estate developers in Costa Rica sell a property before they build. They even sell before there is even a hole in the ground. And, they don’t even own the property to be developed.  They only promise their clients that they will develop and build.

It’s really incredible that property buyers are not protected and need to learn how to safely buy from a real estate developer. But it is what it is and until the government doesn’t oblige to a safer way of doing business, I don’t see any changes soon.

As a property buyer, you have no protection against scams, fraud, non-delivery, or late delivery of your real estate purchase, when you buy from a real estate developer. Unless you protect yourself!

You can have complete control over your purchase. Let me show you how you can safely buy from a real estate developer in Costa Rica.

Due diligence

We have made it easy for you to see if the real estate development where you plan to buy is a good and solid operation. Use this free tool before you take any final decisions.

Attorney

Hire your own attorney, even though the developer tells you the legal fees are included in the deal. Request a discount on those legal fees. You have the right of your own attorney and not use theirs.

Document approval

Don’t sign anything until your lawyer has approved the documents. Ask your attorney to suggest changes that suit you, the buyer.

Bylaws

Ask a copy of the bylaws before you sign any documents. There might be issues in the bylaws that you don’t like. Make them part of your closing documents.

Parking

Ask how many parking spots come with the unit you are buying. Are they part of the common areas or do they have their own title? Are you allowed to use the guest parking for a 3rd car that you own? Ask your attorney to check for you. Never buy a condo with less than 2 parking spots, you will never sell your condo again if you do.

Proof of ownership

Insist on seeing proof of ownership of the property that will be developed. It is possible that the property is owned in a trust. Consult your attorney to check the title first.

Construction permits

Request proof of Setena approval, municipal and CFIA building permits of the project. Ask your lawyer to check these documents.

Payments

Don’t give a real estate developer any money unless your lawyer has approved those payments.

Escrow

When you make payments, insist your payments go into escrow. There are many escrow companies. Insist that money in escrow will not be paid to the developer until your unit is finalized and delivered. Ask your attorney to assist in this. If your attorney doesn’t know how escrow functions, hire one who does.

Home inspection

Request a home inspection before closing. Do not close until all the issues that require attention are repaired and taken care of.

Common areas

Leave a percentage of the purchase price in escrow until the whole project, including common areas, is finished and delivered.

Condo fees

Do not pay any condo fees until the real estate developers have delivered more than 50% of the units to the buyers.

In essence, you can safely buy from a real estate developer if you protect your own interests before the purchase. Once you have signed any documents, it is too late, there is no return. For a safe real estate purchase or sale, contact us now.


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While we’re at it, I DO want to remind our readers that we appreciate any referrals you can send us. Finally, please remember the American-European real estate Group’s agents when you refer a real estate agent. Because we DO appreciate your business.

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Ivo Henfling

Ivo Henfling started the American European Real Estate Network Costa Rica in 1996 and has grown it into the largest Costa Rica MLS with thousands of up to date property listings for sale and for rent. Ivo has written hundreds of articles about real estate and living in Costa Rica for The Tico Times and other online informational sites.

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