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| Caribbean Property Magazine Home / October 2008 / 'Costa Rica: A Home Buyer’s Guide' | SEND THIS PAGE TO A FRIEND  |
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OCTOBER  2 0 0 8Issue 21
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| COSTA RICA: A HOME BUYER’S GUIDE by Tom Rosenberger In order to understand the housing purchase process in Costa Rica, you need to know what is required of you and everyone else you need to associate with to insure your real estate transaction is completed properly. In Costa Rica, things that can cause stress and end up costing you more money are not predictable problems a foreigner could have anticipated based on the knowledge they may have acquired elsewhere. The following guidelines will help you understand much of what you need to know and help you determine how much you can afford as well as to knowledgeably determine the things you should look for in Costa Rica. If you prepare your own list from the following options, you or your agent will be able to locate the most suitable residence in the least amount of time. Amenities The amenities you require in your new residence will determine the type and price of the housing you should be looking at. Consider the following: • Developed subdivision or free standing • City or rural area • View • Waterfront • Golf course • Country club • Nature preserve • Public water and sewer • Electricity • Telephone • Internet access and velocity • Cable TV • Swimming pool, spa • Tennis court • Kids play area • Deck • Gardens & Landscaping • Guest or employee housing • Separate garage or storage • Parking • Security walls and fencing • Schools • Office complex proximity • Shopping proximity • Kid's activities Building Materials and Installations The building products and installation procedures included in a dwelling are the first step to determine its value. Custom built, architecturally designed homes that are up to international standards have much more value than basic structures completed according to Latin building standards. In order to locate adequate housing that contains the exterior installations, architectural design and interior finishes you desire, consider the following: • Roofing • Windows • Doors • Siding • Interior finishes • Plaster • Paint • Cabinetry • Countertops • Floor coverings • Wall coverings • Decorating • Plumbing fixtures • Electrical installations • HVAC systems • Security systems • Appliances Remodeling Existing Housing If you are looking at older residences that currently may not be up to the standards you're accustomed to remodeling may be an option to consider. In order for you to make an intelligent decision and a reasonable offer, a construction inspector with local remodeling experience will need to inspect the property you have found, in order to estimate the costs to bring it up to the standards you require. Construction Size In order to determine the square footage or meters you will need, write down the dimensions of the rooms you require and calculate the total. Additional dimensions should be considered for handicapped accessibility. • Foyer • Living room • Dining room • Family room • Sunroom • TV room • Office • Dinette • Kitchen • Laundry room • Hobby room • Storage • Guest bath • Master bedroom • Master bath • Master closet • Bedroom • Closet • Bath • Bedroom • Closet • Bath • Bedroom • Closet • Bath • Garage • Carport • Employee bedroom • Employee bath Financing As soon as you have made the decision to purchase housing, you need to make certain that financing will be available if you need it. Before you contact a mortgage broker, familiarize yourself with the typical mortgage terms you will need to discuss with your broker. Mortgage Payments Principal: The repayment of the original amount borrowed on a monthly basis. Interest: The cost of borrowing the principal amount, repaid on a monthly basis. Taxes: Real Estate taxes paid to a local government agency. Homeowners Insurance: This is paid to protect your home and its contents Mortgage Insurance: Required by the lender to protect the mortgage company. Types of Mortgages Fixed: A fixed term (for example, 15 or 30 years) as well as a fixed interest rate. The interest rate and term are fixed at the start of the mortgage. The monthly amount for the payment of principal and interest will not change during the term of the mortgage. Adjustable: Often referred to as an ARM (Adjustable Rate Mortgage). The interest rate on your mortgage will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down with interest rate changes. Application Process If you are pre-approved for a mortgage, you will have a clear picture of how much you can borrow. This will simplify the process and save everyone a lot of time. Real Estate Agents In Costa Rica, real estate agents are not required to be licensed by a governing association as in other countries. You need to do your own homework to find agents that have proven experience in the area where you want to live. Ask for written disclosure of the broker's company policies pertaining to listing, deposit, escrow, commission and closing. AT THE CURRENT COSTS OF CONSTRUCTION PER SQUARE FOOT OR METER, YOU NEED TO MAKE SURE YOU ARE RECEIVING ALL THAT YOU ARE PAYING FOR. Housing Inspections In Costa Rica, square footage or meter measurements are usually taken from gutter to gutter, so most of the measurements advertised for housing are the total dimensions under roof, including the roof overhangs. In other countries, people are accustomed to the measurements of enclosed interior living areas that can be air-conditioned. At the current costs of construction per square foot or meter, you need to make sure you are receiving all that you are paying for. Moreover, there is much less attention paid to finish details by the local contractors and architects. The average Latino feels that many of the amenities foreigners include in their homes are extravagant and unnecessary. Therefore, amenities that foreigners take for granted, may not have been installed in the properties you are looking at. It's always wise to have a professional inspection completed for the property you want to purchase prior to closing, to insure the residence is up to the standards you expect. Additionally, with an inspection report, you will be able to easily organize your punch-out list, as you will know the current condition of the construction, including electrical, plumbing and mechanical details, actual living square footage, life expectancy of the roof as well as all defects. Find an inspector who is qualified to determine and estimate the costs to repair defects that currently exist in the dwelling. Furthermore, it would be wise to hire an inspector who speaks your language as well as Spanish. If your inspector has building and remodeling experience from North America, he will understand the type and quality of construction you are accustomed to. | ||
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| Take your time when you're completing your final walk-through inspection. Try to be as calm as possible. Many buyers are busy dreaming about their furniture placement and neglect to take a good look to insure that important items, contracted to be completed prior to closing, have been installed properly. Take a copy of your sales contract, building specifications and final punch-list with you, so that you can review any items that should be included in your new residence. Construction Standards Quality standards are the normal building materials and installation methods that the majority of the people from the USA, Canada and Europe are accustomed to growing up with. YOU MAY NOT INITIALLY NOTICE THE LACK OF AMENITIES THAT YOU HAVE TAKEN FOR GRANTED YOUR WHOLE LIFE. If you have not spent much time in Latin America, you may not initially notice the lack of amenities that you have taken for granted your whole life. Many times after a foreigner has purchased a residence, and had the time to live in it for a while, they then realize the amenities that are missing. Such as; Completing the construction of quality housing depends on the efforts of hundreds of tradesmen and thousands of building materials all assembled at the right time in the right places. The building site may require extensive preparation and retention or the architectural design could be incompatible with the terrain. Climate is always a factor in Costa Rica. Being less than ten degrees north of the equator the ultraviolet rays of the sun are very intense and the tropical humidity certainly requires selection of appropriate building materials and their proprietary installation procedures. Additionally, it is important to correctly position housing on properties with exposure to the intense winds here during December until March. Appropriate building materials need to be selected to avoid noise and infiltration of dirt from the constant bashing of the wind against your dwelling. The Christmas Winds, (Vientos de Navidad) in the central valley, during December until March, as well as the Papagayo Winds (Los Papagayo's) in Guanacaste, during these same months, are intense and inconvenient if you're living in an area with direct exposure. Likewise, the quality of the labor as well as transport and storage of building materials can affect the cost and time to complete. All these factors affect the overall quality of the finished product that needs to be up to the standards the client is paying for. Experienced developers with proven track records of constructing quality housing are not immune to occasional product failures that can be caused by building component incompatibility or inexperienced labor. Any builder will tell you that mistakes happen even when educated professionals and experienced tradesmen are involved. Doing your homework before you buy will contribute to the overall success of your project. However, you must be realistic and realize that it is not possible to foresee, protect and insure you against all possible problems caused by human error and Mother Nature. IN COSTA RICA, THE THINGS THAT CAN CAUSE DELAYS AND END UP COSTING MORE MONEY ARE NOT PREDICTABLE PROBLEMS In Costa Rica, the things that can cause delays and end up costing more money are not predictable problems a foreigner could have anticipated based on the knowledge they may have acquired elsewhere. Here you must work with entrepreneurial instincts and an entirely different set of guidelines that are not taught in a school. This hands-on knowledge is acquired from understanding the language, culture and how the local subcontractors conduct business. It is also prudent to align yourself with an experienced builder who keeps up with the new more efficient construction materials and their proprietary installation techniques. Here are some of the problems I have discovered while constructing housing in Costa Rica during the past 15 years. Many problems are a result of the intense ultraviolet rays of the sun. Day in and day out this natural solar energy is prematurely wearing down the surfaces of many exterior installations. For instance; Other unforeseen problems with construction in Costa Rica are many times the result of inexperienced tradesmen using foreign building products that they are not familiar with. One of the biggest problems with these modern products is that they have specific installation procedures that the Latino tradesmen do not understand. If the manufacturers recommended installation procedures are not followed, the products fail and the guarantee is worthless. A knowledgeable builder who has experience with modern building materials and their proper installation techniques can properly train his Latino tradesmen to install these products according to the manufacturer's recommendations. Using the wrong materials and/or improper installation procedures, can result in very expensive repairs that usually have to be absorbed by the owner. Here are a few common problems to look out for; There are many excellent Latino architects and contractors here, who are capable of building up to international standards if given a sufficient budget and time. The problem is that the average construction worker and the supervisors who perform the hands on work here are accustomed to building using traditional local methods. Modern construction materials and their proprietary installation methods are not understood by the vast majority of the local professionals and tradesmen who install the building materials here. In order to achieve quality standards the local tradesmen need to be trained and supervised constantly by an experienced builder who understands their culture and language. The following are some of the local customs that are different from those you may have grew up with back home. Bathrooms Many times when you go into a Latino bathroom, you will see a wastebasket filled with used toilet paper. • As a result of inadequate black water drain tubes, the toilet doesn't flush everything down the drain and when it does flush, you can smell the sewage odor because they do not install tubes that vent the sanitary drainage system. • In most cases, they drain the grey water from sinks and showers into the black water tube for the toilet. Because they don't vent the system, the sewage odor escapes from the shower drain, which is usually just a hole in the floor without a U trap. • The showerhead is connected to a cold-water metal pipe protruding from the wall and a hot water heater consists of a device called a "suicide shower" which attaches to the metal pipe and has wires entering the wall to an electrical outlet above the shower pipe. • The lavatory sink with one cold-water faucet is very small and usually attached to the wall with a couple of screws and no base cabinet. Kitchens • Not enough electrical outlets. You will find only 1 or 2 electrical plugs in a kitchen and they will have 2 outlets with no grounding outlet, so you can't plug your three pronged appliances into the plug. • You will find the kitchen sink is one small bowl that is not deep enough to submerge a half way decent size pot into and the bottom is not flat so glasses fall over when you set them in the sink. • Sink faucet is short, and combined with the sink that is not deep, it is difficult to get a pitcher or saucepan under the faucet to fill it up. Only one of the control valves opens water because they do not install hot water tubing. • Smaller cabinets and counters. The depth of theirs is usually six inches smaller so you have less storage and countertop space, which minimizes the available area to put the appliances you are accustomed to using. • Lighting consists of one ceiling fixture with one bulb in the center of the room, which makes it difficult to see what you're doing on the countertops, and in the sink. Laundry Rooms • Big concrete sink for washing rags and clothes with drain tube sticking out of the wall without a U trap to prevent the sewage odor from escaping. • Cold-water tube sticking out of the wall with a hose valve like for a garden hose. • 110 volt, basic electrical plug because they typically don't have electric washing machines or clothes dryers. Most local contractors and architects did not grow up with guaranteed products or work and the above amenities that you take for granted, are not things they are accustomed to having or installing. It is wise to seek experienced professionals for any project you are considering in Costa Rica. A smart investor looks for someone they can communicate with in their native language and preferable a person who was raised in a developed country and has construction experience. A professional with these skills will understand the type and quality of construction you are accustomed to and expect. Legal Aspects Plan your legal strategy before you invest here. Make sure you fully understand and accept everything you will need to conduct business in Costa Rica. Do not do anything you wouldn't do in your hometown. Many foreigners seem to believe they can outsmart the system when they come to a less developed country. The legal system in Costa Rica is Napoleonic, not Common Law, so legal matters here are different from North American and European laws Always hire your own attorney and never use the seller's attorney. Some folks, who are trying to save money, avoid the work of finding a qualified attorney to represent their best interests. There are many attorneys in Costa Rica and several of them will be recommended to you by others. You can find a wide range of attorneys; those who work at big law firms, with USA type hourly fees, to solo practitioners. Once you've made your decision, call the Costa Rican Bar Association and inquire if the attorney you like is in good standing. Finally, ask the attorney to provide a document that describes all the services to be provided and the method that will be used to charge and pay the legal fees. The Closing This is your final opportunity to make certain that everything related to the purchase of your new residence is correct. You should have an experienced lawyer and a detailed property inspection report to properly complete your purchase. This way you will know that the property you are acquiring is in acceptable legal and physical condition and there won't be any expensive surprises after the closing. If need be, your lawyer can escrow sufficient funds at closing to cover any expenses for repair or replacement of missing or defective items. In closing, regardless of your previous experience, when you purchase property here, you should always hire your own legal advisor and construction inspector, who have proven experience in Costa Rica. Author : Tom Rosenberger. With more than 25 years homebuilding experience 15 of which have been in Costa Rica, construction consultant Tom Rosenberger knows the ins and outs of building and remodeling a home in Costa Rica.
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The temperature is 70-80 degrees, there is little humidity and you can see for miles with beautiful mountain views. You are minutes away from an 18 hole eco golf course and country club that is part of the development and 30 minutes away from a private beach club available to lot owners for their use. |
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