By way of executive decree number DE-35548 the Consumer Protection Law of Costa Rica was updated to include contracts for future sales of real estate property. Under the new law developers that wish to offer pre-construction sales contracts will have to demonstrate their financial capacity before the Ministry of Economy, Industry and Commerce (MEIC). Based upon those filings MEIC may impose performance bond guarantees.
The law provides and 8 day “cooling off” period by which a purchaser may rescind a contract without any liability if he notifies the developer within eight days of the execution of the contract.
Those developers that want to offer property such as condominiums, apartments, homes, etc with a delivery date in the future will now have the obligation to register with MEIC. To do so they will have to provide all their corporation information as well as that of the legal representatives. In addition they must present audited financial statements which must include a balance sheet. The financial report must disclose any financial obligations that are encumbering the property such as mortgages or promissory notes
The developer will have to provide information about the guaranty bond that they have to guarantee that the promises made will be delivered.
A copy of the contract that will be used with the consumer must also be provided to the MEIC for approval.
At one time Costa Rica was referred to as the “hottest real estate market in the world”. During that boom time there were very no regulations on the pre-sale of property in Costa Rica and many took advantage of that fact. Real estate promoters descended on Costa Rica. Many if not most had little development experience and simply took deposits and made promises to deliver in the future. In some of those cases those promises were left unfulfilled.
With this new Consumer Protection Law Costa Rica may be better prepared to protect consumers in the future.