The Buying Process
Building
Contractors
When it comes to finding a contractor, your architect can be of service. The contractor and architect will need to work together so finding a contractor that your architect will work well with is ideal. Sometimes architects integrate downstream and have contractors that they are invested in. This is a fine option, but like the cable company says, when you bundle you sometimes get ripped off! Get quotes from several sources, but in the end, if the prices are comparable, take your architects advise.
When the construction crew shows up, it will be the foreman that communicates to the rest of the crew the results of the discussions between the client and the architect. Favor a foreman with experience above all. His crew will likely be made up of rough-neck illegal workers from Nicaragua that are brought in as cheap labor. They are typically difficult to deal with so an authoritative and veteran foreman is necessary.
The foreman will coordinate the logistics involved with the delivery of supplies and materials to the work site. To maintain accountability and reduce costs, you may choose to get involved with payment on each and every delivery. More commonly, people give their foreman a credit line to keep the process flowing and avoid micromanagement. Again, if your architect is hands on and has experience with this contractor, you should be fine. When working with the contractors, make sure you communicate with the foreman. This will ensure the best prices on the materials and improve accountability for him and his crew. It is customary to scrutinize the bills and invoices, this is not considered disrespectful in any way. Costa Rican professionals and service providers expect haggling and the foreman is no different.
Remember to make consistent site visits, have your architect make consistent visits and ask good questions to both the foreman and the architect. The building process will also include a couple visits from a local municipal agent. Establish a good rapport with them too. Typically in Costa Rica, they are lenient and turn the other cheek to most minor deviations from zoning laws and guidelines. Make sure that you are "cool" with the local surveyors and representatives that come on site.
The Buying Process
Building
Architect
A civil engineer is much like an architect as they aid in the design and building process. They will be responsible for learning about your wants and desires for the final product and communicating with the builders and contractors to make sure you get exactly what you are looking for. In the U.S. the building guidelines are often dictated by the preexisting building standards. In Costa Rica, the rules are much more liberal and there will be a lot of freedom in construction!
Finding a good civil engineer or architect is very import. The main difference between these two types of professionals is that the architect will have more of an artistic eye, while the civil engineer is trained in pragmatic design. To work in Costa Rican Real estate as either a civil engineer or an architect, one must be certified and licensed with affiliation to the Costa Rican Federated College of Engineers and Architects. Before choosing a civil engineer or architect you should ask to check his or her license to make sure they have one and that it is current. Being affiliated with the Association gives you, the client, recourse should there be a problem with your Civil Engineer or architect. If a claim is filed against them, the Association with act as a judge and mandate any concessions be made that are necessary. The Civil Engineer or architect can loose his or her license for an extended period of time and be forced to pay damages to their client if it is found that they have committed inequitable conduct.
Make sure that you get quotes from several civil engineers and architects before committing to one because they will often vary greatly in their proposed costs for the same project. Because they will be responsible for walking you through an expensive and dynamic process, unless you are fluent in Spanish, find one that is bilingual. Once you select your architect or engineer, make sure you have a thorough contract that explicitly details what is to be done and the full extent of their responsibility to you.
An architect may be the best route to go for some one who wants something that is truly unique and special. Fountains and cascading pools or exotic gardens and patios maybe something you want an architect to work on.
The Buying Process
Building
Land & Title
Before building it is extremely important to look into ownership and restrictions. Land with a title is the easiest scenario for those looking to build on their property. A piece of real estate registered and listed properly with the National Registry provided a simple and easy set of rules. Due to the fact that there are legal and municipal systems in place to validate ownership and property rights, these are the ideal types of properties to build and improve on.
Undeveloped agricultural and rural plots are often untitled lands. Beach concessions are also untitled. For an inexperienced Costa Rican real estate investor, untitled property investment is an arena to avoid. Untitled land cannot be registered at the National Registry which is the primary provider for real estate investment security for foreign buyers. It also serves as a guide showing us history of ownership and liens and encumbrances that may be involved with the land. The only way to validate ownership of untitled land legally is through a long and complex legal proceeding called informacion posesoria or proof of possession.
This type of legal action can be taking if you have been in sole physical possession for over ten years before presenting it to the National Registry for registration or has purchased the rights from a previous owner who was in possession for over ten years. For this proceeding to be effective, you must prove that this is the case through three or more neighbors who can sign off on the fact that you owned the property for this time period and can sign off on the boundaries of the real estate.
If this land is designated for public use or has natural reserve or protected land status, it cannot be registered under any circumstances. If the court cannot inspect the property, it cannot be registered. If these conditions are satisfied however, a bulletin is posted in the official government news sheet to serve as public notification that a claim to the property has been made.
If no counter claim is proposed, within the next three years, to the Registro, then the tentative land owner will win the case and the court orders a write to the National Registry and the land will be registered with the official owner. This does not clear any land use rights. Separate legal action must be taken to avoid being subject to further easements.
Costa Rica Real Estate FAQ Index Catalog
The Buying Process
Building
Civil Engineer
A civil engineer is much like an architect as they aid in the design and building process. They will be responsible for learning about your wants and desires for the final product and communicating with the builders and contractors to make sure you get exactly what you are looking for. In the U.S. the building guidelines are often dictated by the preexisting building standards. In Costa Rica, the rules are much more liberal and there will be a lot of freedom in construction!
Finding a good civil engineer or architect is very import. The main difference between these two types of professionals is that the architect will have more of an artistic eye, while the civil engineer is trained in pragmatic design. To work in Costa Rican Real estate as either a civil engineer or an architect, one must be certified and licensed with affiliation to the Costa Rican Federated College of Engineers and Architects. Before choosing a civil engineer or architect you should ask to check his or her license to make sure they have one and that it is current. Being affiliated with the Association gives you, the client, recourse should there be a problem with your Civil Engineer or architect. If a claim is filed against them, the Association with act as a judge and mandate any concessions be made that are necessary. The Civil Engineer or architect can loose his or her license for an extended period of time and be forced to pay damages to their client if it is found that they have committed inequitable conduct.
Make sure that you get quotes from several civil engineers and architects before committing to one because they will often vary greatly in their proposed costs for the same project. Because they will be responsible for walking you through an expensive and dynamic process, unless you are fluent in Spanish, find one that is bilingual. Once you select your architect or engineer, make sure you have a thorough contract that explicitly details what is to be done and the full extent of their responsibility to you.
Why Costa Rica Real Estate
- Stable government; Currency,Infrastructure,Values foreign investment, Protects foreign investment
- Investment security; excellent lending market, ROI, low tax rate, intrinsic value, insurable title/home
- Healthcare; high-quality, high tech, inexpensive, easy access, insurance
- Economic; stability, foreign investment, government, investment potential
- No ownership restrictions; valued by government, no restrictions, same rights as natives
- Proximity to the U.S.; 10 major North American cities with a 3-5 hour direct flight to Costa Rica
- Culture; high standard of living, friendliness to foreigners, education, low crime rate
- Nature; beaches, rainforest, protected lands and species, eco-tourism, diversity
The Buying process
- Finding a broker; certified, experience, track record, language, area knowledge
- Calculating value; comparative value, asking price, investment potential, true value, municipal
- Purchasing; incorporation, appraisals, home inspections, attorneys, contracts, survey map, registration, notary, taxes, titles, closing
- Financing; mortgages, documentation, banks, property protection, using retirement fund
- Types of properties; stand-alone house, apartments, gated communities, condominiums, timeshare
- Building; land & title, permits, size, utility of land, civil engineer, architect, construction, contractors
- Protecting the investment; insurance, making claims, property management
- Oceanfront real estate; defined, taxes, usage, foreign ownership
- Common & avoidable problems; liens & encumbrances, expropriation, environmental & squatters
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The Buying Process
Building
Construction
Building on your Costa Rican real estate involves a detailed order. The total cost of construction services alone can be up to 18% of the total cost of the actual construction. Negotiating and bargaining along the way is important with the architect or civil engineer involved in order to keep costs down. If you have the time and language skills, you can save money by serving as the administration for the project to reduce the need for professional involvement. Most importantly, before beginning the actual construction, have your attorney review the agreements and documentation that you and your architect create!
The first step in the construction process is an initial study. The initial study should cost about 0.5% of the total project cost. This is usually done to make sure that the developing of the plans matches what is going to be feasible in practice. This helps avoid needing to make changes further along in the process which can by extremely costly.
The next step is the draft design. The draft design is done between you and your architect or civil engineer at the pre-construction phase. This is the time when you communicate your expectations and desires for the project. Typically the cost will be between 1% and 2% of the cost of construction. After completing ad agreeing upon the draft design, the architect will compose a site plan and some preliminary drawings for your review. All architects have computer programs that enable a three dimensional view of the sketches. If the two dimensional versions do not bring the architects plans to life for you, it is important to ask that you see the 3D versions to avoid any differences between their plans and yours.
The technical specifications and the final construction plans cost roughly 4% to 5% of the total cost of construction. Your architect will present to you a final version of the plan that will be communicated with the construction team for the entire building process. This is the last chance to make corrections to the plans in a cost effective manner so make sure that you are completely satisfied with the plan.
Upon your approval, the plans will be sent to the Costa Rican Association of Engineers and Architects for their approval. The final construction plans must include: a distribution plan, a site plan, roof design, gutter design, elevation, interior fittings, mechanical layout, sanitary plan, finishings, electrical layout, structural plans, footing design, support beam design, longitude perspectives and a transversal.
Once the Association approves the design, you and the architect should create a budget. The cost of creating a budget with itemized expenses for materials, services and labor is roughly 1% of the total construction cost. At this point construction can begin.
When construction is ready to commence, setting up a supervision plan is crucial. This allows mistakes and miscommunication to be caught early and fixed without too much time or money lost. Setting up an inspection plan where your architect or engineer makes a site visit a couple of times a week to ensure that the general contractor is on schedule and following the plan is the bare minimum supervision. These visits should also be used to verify that the correct materials are being used and the invoice is within the expected budget. This costs between 3% and 4% to do.
For larger projects it may be ideal to have your engineer or architect perform technical supervision in which they are on site daily and are more hands on in each step of construction to ensure success. Typically this costs up to 6% to perform.
The best way to guarantee a project that results in your complete satisfaction is to have your architect serve as the administrator for the project. When setting this up, it must be in writing that they are completely responsible for the successful completion of the project. Adding this kind of accountability is ideal, but it usually costs twice as much as technical supervision.
The Buying Process
Building
Permits
In order to build on your property, you must secure a building permit from the local municipal authority. They will have an application with some state mandated general information. All of these applications will require that you know what basic services your plot has access to: water, telephone, electricity and drainage. You will need to understand the restrictions on your land. Is there potential for expropriation due to national park, protected lands, future government sanctioned building or maritime zoning?
The Permit Office or Oficina Receptora de Permisos de Construccion at the Registro Nacional is where you go to apply for the building permit. Your application must be cleared by several government agencies: The Ministry of Public Work, The Costa Rica Institute for Energy, The Costa Rica Water Authority, The National Institute for Housing and Urbanization, The Ministry of Health, The Federated Association of Engineers and Architects and the National Electricity Service. Before you submit the application you must be able to present:
- A copy of the electrical plan that has been pre-approved by the National Electricity Service
- Verification of approval from the water authority regarding water availability
- A copy of your consulting agreement with the architect or the engineer
- Four copies of the building plans
- Four copies of the survey plan
- Four copies of the permit checklist
Once this has been accomplished you can apply for permission with the local municipal authority. They will have an inspector visit the building site periodically to oversee the building process as they are legally responsible for ensuring that the construction is consistent with the building code for your local municipality.
Working with a lawyer that you have established a relationship may be a good idea. The law in Costa Rica, much like in the U.S., is highly specialized and your real estate acquisition lawyer may not be suited to help you navigate these steps. Your architect typically has many industry connections and can help you manage all of the steps and rules involved at the municipal offices and in the application process.
The Buying Process
Building
Size
The application process changes based on size. Most importantly, different municipalities have different restrictions and guidelines for the maximum height of a residential structure and the amount of the total property that can be utilized for building.
If you are building an addition or structure that is smaller than seventy square meters, then you do not need to present the additional application supplements laid out in the permits section.
For the most part, the rules on size are very liberal. Heating costs are not relevant due to the climate. In the mountains, air conditioning is not a factor either. Costa Rican real estate has very few restrictions for size of stand-alone homes. There may be additional restrictions if you own property in a gated-community or another type of developmental association.
The Buying Process
Building
Utility of Land
When buying a plot of land, it is important to factor in the utility of the land. You must match your vision for the land and structure with the potential to meet your goals. Do you have the ability to get cable, internet, air conditioning or drinkable well water? Are you within the area that the main municipal services can be taken advantage of? Will the land support an in ground pool or a future addition?
You may need to have a salinity study performed by a registered geologist to make certain that well water can be reached that does not commingle with the salt-water table. You may need to pay extra to make sure you can reach your property from the main road. The land may not support an in ground pool, so you should have a surveyor inspect the plot.
