Anyone who lives in Costa Rica knows that we have more rainy months than dry months. Generally speaking winter begins towards the end of April and ends around the beginning of November. Every year the cycle varies slightly.

The country’s copious rainfall take as toll on most homes. According to the Costa Rica’s professional school of architects or Colegio de Ingenieros y de Arquitectos (CFIA) around 50 percent of the homes here need some type of repair. I know first hand about house repair. I have to spend a few hundred dollars every dry season to make some minor repairs on my home. Fortunately, the labor rates for home repair are much less than they are in the U.S. or other countries. I have a handyman who has worked for me for over ten years. His rates are very reasonable and his work is excellent. Besides having a good lawyer every baby boomer retirees who owns a home in Costa Rica should have a good handyman.

Here is some advice on preventative home maintenance and what to look for.

1. Every six months examine your homes floors and make sure there are no cracks and fissures.
2. Experts also recommend that you inspect the inside and outside walls of your home every six months.
3. You roof should be check at least once a year and before winter starts. Wind and strong winds can really do a number on the sheets of corrugated metal which cover most roofs in Costa Rica. Most leaks can be fixed by using silicon however if the roof is really rusted the metal sheets should replaced. If you can take a screw driver and it will perforate the metal sheets then you should replace them.
4. A lot of roof damage can be avoided by keeping your rain gutters in good condition to keep water from damaging your roof and ceilings.

Deal with local bureaucracy when purchasing a home or building.

Retirees or anyone else who plans to live in Costa Rica and purchase a property has to jump through a lot of hoops when dealing with the local bureaucracy.

Property taxes, building permits, and zoning are all handled by local municipalities. The country is divided up into 81 municipalities, each one representing a cantón (like a county) with a seat, a mayor, a council, and all the attendant elements of bureaucracy. Some municipalities are easier to work with than others. The municipality in your canton of choice is where you’ll do part of your due diligence, and it’s also where you’ll eventually apply for your building permits if you plan to construct anything.

For the purposes of due diligence, the first thing retirees or anyone else needs to check is whether previous owners have paid all their taxes. The easy way to do this (other than checking the National Registry for tax liens) is obtaining property tax receipts from the owner for last few years of taxes. These receipts have the double benefit of helping to confirm ownership. Your attorney can also look up property tax records at the Municipality, though it shouldn’t be necessary.

The municipality is also the place where you or your attorney would go to get information on uso de suelo, or land-use restrictions. How the property is zoned according to the municipality’s plan maestro (often translated “master plan” but more properly meaning “zoning plan”) will determine what you can and can’t build on it, or if you can convert a house into a hotel. Property zoned forest can be built on only with difficulty, while property zoned agricultural has density restrictions (though there are often plenty of loopholes). Each zoning plan is different, so restrictions must be approached on a case-by-case basis.

Only a handful of municipalities have comprehensive zoning plans, though some of them maintain a patchwork system of do’s and dont’s. The lack of thorough zoning restrictions has caused quite a serious logjam in some parts of the country, as developers with bulging pocket books have swamped back-water municipalities with projects previously unimagined. The central government recently took action in Guanacaste, issuing a four-year decree to restrict the heights of new buildings within five kilometers of the coast. New zoning plans would replace that decree, and a few municipalities – like Santa Cruz, home of development-heavy Tamarindo – are creeping their way toward finalizing zoning plans.

All that to say, you probably won’t encounter many restrictions in the municipality on what you can build. That cuts both ways, since neither can you be sure that your next-door neighbor won’t be allowed to build a soccer stadium or a brothel, but for the moment there’s not much you can do. One of the few things you can do is have your attorney or some other well-connected acquaintance ask around at the municipality about what kind of permits your future neighbors have been granted. Be careful, however, to take rumored projects with a grain of salt: Everyone is planning to build 20-story condominium developments in Costa Rica, but very few people have the financing and political clout to follow through. Until permits are approved, it’s just a pipe dream.

Utilities

Especially if you’re buying a piece of land for construction, you’ll also need to do some due diligence on utilities: Their availability, their quality, and their cost. In most cases, documentation provided by the seller is sufficient. However, in the event it is not available, you or your attorney must do this locally as well, though not at the Municipality.

Electricity: Depends on the canton. You will need to stop by the local headquarters of either the Instituto Costarricense de Electricidad (Costa Rican Electricity Institute, ICE) or whatever local company or co-op provides power on behalf of ICE in that area. Be sure to bring the proper documentation for the property (number of the finca, copy of the cadastre registration, etc.). You’ll be looking to confirm that the property has a power hook-up available, and if not, how much it would cost to install one.

Telephone: This will be with ICE, which, in addition to electricity, holds a monopoly on landline service. Only check this if you’re building in remote area. In most of the rest of the country, you would set this up while building or after moving in.

Internet: There are three places you can check for Internet availability: The local ICE office; Radiografía Costarricense S.A. (RACSA), a wholly-owed ICE subsidiary of ICE that provides different kinds of Internet service depending on the part of the country; and your local cable provider (either Cabletica or Amnet), which distributes high-speed RACSA connections. Basically you’ll be checking to see if Internet service is available, and if so what kind. Connection speeds are always a quite a bit slower than what the Costa Rican ISPs say they’re selling, so if your work depends on Internet access, be cautions.

Water: Again, where you go will depend on where your property is located. Acuaductos y Alcanterillados (Water and Sewer, AyA) runs much of the country’s water supply, but in rural areas, local organizations called ASADAS take over. You’ll want to check with whoever’s in charge to see if the property you’re looking at has water access. If it doesn’t, you would need to drill a well, which requires a concession from the Ministerio de Energia, Ambiente, y Telecomunicaciones (Ministry of Energy, Environment, and Telecommunications, MINAET).

In my last couple of articles about the steps in purchasing property I explained how to use the Registro Público or our local equivalent of the hall of records. However, not all your due diligence can be carried out in the National Registry. If you’re still interested in the property after the title search, your next step is to hire some professionals to do a more detailed assessment of various aspects of the property. This article will discuss three things you’ll will discuss three things you’ll need to do.

Property size and alignment: This is something you’d be wise to measure regardless of the property or what you find in the National Registry. It doesn’t cost much and will give you peace of mind. Basically, you’ll have to hire a surveyor to measure the property lines and establish both the size and the alignment. While this is something you’ll want to do regardless of the property (condominiums and gated communities excepted), it’s especially important if you’re looking at a large piece of farmland or a property that borders the maritime zone or a national park. Your attorney might be able to recommend a surveyor, or you can find several companies that provide such services in the resources section of this book.

Property value: This is tricky with large pieces of raw land or lots, and to a certain extent you’ll be on your own. Your best bet is to talk to other buyers in the area to get price points. However, when looking at a finished building – or even a building that’s still under construction – you can contract the services of a perito. Perito is the Spanish word for “expert witness,” but a better translation would be property appraiser. Basically, these are people (usually engineers registered with the CFIA) whose job is to assess the value of finished buildings and estimate the future value of unfinished ones. They take into account the value of the materials, the labor, and the furnishings, plus market factors and profit for the developer (if there is one involved). There are a handful of companies that offer this service, and they are hired by banks to assess property value before the bank will give out housing loans. They cost a few hundred dollars and will be able to sit down with you and explain, in detail, the pluses and minuses of the home you’re looking at. Keep in mind, however, that the perito’s word is merely one expert’s opinion, and should be weighed against other pricing factors.

Environmental impact: Costa Rica has famously strict environmental laws, and before you buy, you should do whatever you can to make sure your plans for a piece of property will not be hindered by those laws. If you’re looking at a lot or home within a gated community, ask the developer to give evidence that the appropriate environmental authorities have approved his site plan. If you’re purchasing an individual lot or raw farmland, you should consider hiring an environmental engineer to review the property and your plans for potentially environmental hang-ups. This could mean doing everything from giving the property a quick once-over to doing an entire environmental impact study. When purchasing property, many developers first buy a long-term option and complete the environmental review process before they close on the land.

As one final piece of advice, if you’re planning a development or a large estate, having an experienced attorney, civil engineer, or other real estate development professional available for consulting is a must at this stage. The larger and denser the project, the more things can go wrong. Get a good team and follow its advice.

It has been a few weeks since I wrote the second part of this series on due diligence when purchasing a home. Here is Part 3:

To briefly review Part 2 , after you have done an Online Search for a property by finca number on the Registro Nacional’s (National registry or Hall of Records) Web site www.registronacional.go.cr and checked the following:

Naturaleza (This section simply describes the property and its use), Linderos (This section describes what the property borders), Mide or property measurements (given in square meters and written out in words rather than numerals), Antecedentes de la finca (This, in a nutshell, is the history of the property), Valor fiscal (The registered value of the property), Propietario (The name of the property owner), Anotaciones (Technically, annotations to alert the viewer to the existence of an ongoing process) and Gravámenes (Liens).

Then If everything goes well with the online search and you still want the property, your attorney’s next step will be to drop by the National Registry. Every property in the country is registered in two places in the National Registry: The registry, which is a written description of the property, its history, and its ownership; and the cadastre, which includes a map of the property, its limits, and how it fits together with neighboring properties.

In the registry, your attorney will be researching the property’s ownership history. He or she will be making sure that there are no unresolved claims or property line disputes. Possession claims are a problem that pops up quite a bit, especially in rural land that hasn’t been in great demand until recently. Essentially, this is land that is perhaps owned by someone by possession, but the person has never formally registered ownership. This is not uncommon, as lawyers are expensive for humble farmers, and until now it hasn’t really been necessary. This is just one reason why your lawyer will have to research the entire history of the property, not just recent ownership, and the recent owners may have acquired the land illegally, voiding their titles.

Your lawyer will also be looking up the background of any court cases associated with the property, as well as checking to see if the property has any history with special regimens, like IDA, the maritime zone, or the national park system.

In the cadastre, the first thing you attorney will do is check the size of the property as registered there with the size in the registry. Since the two systems have evolved independent of one another, some discrepancies are practically inevitable, but any large differences should raise a red flag. Your attorney will also check property lines and how they compare with the property lines of the properties registered around this one. Much of the land in Costa Rica that people today are buying for residential developments and home has in the past never been anything but farmland. Hence, it never needed precise property lines, and much of the property found in the National Registry overlaps substantially. Large overlaps discovered by your attorney could mean a lengthy court battle, while smaller overlaps can often be negotiated with neighbors.

The end goal of this part of the process is to figure out exactly what it is the seller is trying to sell you. How big is it in the registry? Will there be disputes with neighbors? Are there already disputes that have yet to be resolved? What are the chances that a lawsuit from 10 years ago comes back to haunt you? Take this part of due diligence seriously and it will make your life a lot easier in the future.
One final note: If the property is owned by a corporation, your lawyer will need to look into that corporation’s makeup and ownership at the National Registry. Specifically, he or she will be looking into whether the person you are negotiating with has the authority to sell the property. Try to avoid buying the property through buying shares of the corporation that owns it. Especially with older corporations, you have no way of guaranteeing that forgotten debts or obligations won’t come back to haunt you after the transfer.

The most basic – and essential – part of any property due diligence is the title search. The goals of a title search are to establish the seller’s legal right to sell the property; and to find out if the property has any legal entanglements, like mortgages or rights-of-way. Remember, however, that Costa Rica operates under a Napoleonic system of law, not a common law system. So whereas title searches in common law places like the United States and Canada can be complicated – involving banks, credit companies, local government, state government, and everything in between – all the information you’ll need for a title search in Costa Rica can be found in the Registro Nacional, or National Registry.

Even so, title searches are complicated, especially when dealing with farmland that hasn’t changed hands in decades. The title search starts online, on the National Registry’s Web site (www. registronacional.go.cr). Anyone can review the status of any property in the country simply by entering the finca, or property, number (as explained in the previous chapter). If there are no obvious deal breakers found in that initial search, your lawyer will then visit the National Registry to dig into the stacks and stacks of documents there that trace the property’s history back to the early part of the 20th century. If the property is held by a sociedad anónima, or corporation – which is fairly common – your lawyer will also need to get documents that establish the property seller’s ownership or authority to dispose of the corporation’s assets. All of these are, of course, areas in which your attorney should take the reins.

An overview of the process and what your attorney or you should be looking for will be published in the next article.