The final exit requires some advanced planning

By: Garland M. Baker B.

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Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Expats do not always get what they want in Costa Rica. Even in death.

Many want to be cremated. It is the most practical solution because a normal body is reduced to about six pounds of granular material that can easily be shipped home or scattered.

Recently, an expat died here in a small beach town. His U.S. family jumped on a plane for Costa Rica to have him cremated. This was his wish. He wanted his ashes spread over the ocean close to the town.

His Costa Rican family would have nothing to do with cremation. They are evangelistic Christians. They wanted a funeral. Initially, this caused a standoff. The local family won. The man was buried in a typical way as per the customs of the people close to him in Costa Rica. 

This scenario happens to many expats. They make a new life here through marriage, having new children and adopting. 

Notary dues frozen since 1998 Victims out in cold

By: Garland M. Baker B. 

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Why does the Costa Rican judicial system not do more to protect the rights of citizens and foreigners against fraudsters and swindlers? Especially, when it comes to property fraud.

A case in point is the Dirección Nacional de Notariado, the national notary directorate that is part of the Ministerio de Justicia y Paz. That translates to the ministry of justice and peace in English. The national registry is part of the same organization. It has not increased the legal dues to its membership since 1998.  Dues were enacted by Law 7764 to be accumulated into a fund, in part to protect innocent people from the wrongdoings of its members. Including, but not limited to, property fraud transactions.

Putting cash in land can be a great investment plan

By: Garland M. Baker B.

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Land banking gets a bad rap. It is defined as the practice of putting pieces of land together for future sale or development. However, scammers give the business a bad name because they make false promises to unsophisticated buyers who will ultimately be burned.

Criminals bank money in land, too, so they can launder it over time.

What's the best way to frustrate property pirates

By: Garland M. Baker B.

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Why do foreigners get hoodwinked and bamboozled out of their stuff in Costa Rica? Or, any place else in the world, for that matter.

Usually, because people tend to be too trusting. On the other, a lack of knowledge. Why do attorneys get a bad rap? Because knowledge is power. Some legal professionals use their know-how to steal. And then, how to weasel out of the crime.

When an expat comes to this country to buy a property for retirement or investment, they are faced with many dilemmas needing decisions. One on the top of the list is whether to use a company to hold the assets they purchase, or hold them in their personal name. There are positive tax implications for doing the latter, but most believe they are outweighed by security and liability concerns.

Thieves love properties held personally because when someone dies they get a dishonest notary to forge a signature and “voilà” the asset is transferred to someone else. Dead people cannot fight for their rights. Heirs have a hard time proving fraud in court.  Physical stock certificates of sociedad anónimas are easy to forge, too. This is probably the second most common way to steal property in this country.

There's a taxing couple of months in store for expats

By: Garland M. Baker B.

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The end of September brings fiscal tax year 2014 to a close. Oct.1 begins 2015. There are tax filings and payments just around the corner for almost everyone.

Tax dodgers are caught by not filing required tax forms. The country’s tax system is very reliant on the checks and balances built into the system. The tax department also analyses gross and net profit margins and changes in owners’ equity that does not match with taxes paid against profits to find companies that are not paying their taxes fairly.  Random audits are occurring more frequently, too, to catch cheaters. 

Here is a summary of what is on the horizon:

Some expats may have a really big problem

By: Garland M. Baker B.

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Some foreigners from the boom days are having to play a shell game today to substantiate ownership of properties they purchased during those times. The reason is that attorneys before September 28, 2012, loved putting real estate purchases in guaranteed trusts.

Most laypeople have no clue what a guarantee trust is and why it was used so much in the past, and why a property they purchase may be in one. In simple terms, they were used so lenders, especially developers, could circumvent using a mortgage to sell property on credit.

The sure tale sign a property is in a guarantee trust is to look up the folio real number of a property and see if the text EN CALIDAD DE FIDUCIARIO is next to the name. If it is, it is a trust.

Trusts can be a perfect vehicle for getting deals done. They can also be a good way to insure trustworthiness. However, they can be abused and be a vehicle to hoodwink expats out of their valuable property.

A little basic research can avoid real estate disaster

By: Garland M. Baker B.

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Buying real property in Costa Rica is a little different from buying it in other parts of the world. Learning how to do a little preliminary due diligence or, in simple terms, property homework, is good for everyone to know. This will help them stay clear of the bad and zero in on good opportunities in Costa Rica’s growing real estate market.

The term real property is generally defined as land, anything erected on, growing on, and everything of a permanent nature over or under it, including minerals, oil, and gases. 

Allan Garro, of Garro Law, says this is not true in Costa Rica. “Real property does not include the rights to everything under the land or above it for that matter,” said Garro. The government administrates all resources including water for the public interest, he said.  To use resources, paperwork needs to be filed with the appropriate agencies to obtain a concession to exploit minerals, water and other resources. Many trees and animals are also protected and cannot be cut or killed without permission. And, these are only some cautions.

When buying real property in this country, deep due diligence is necessary and qualified professionals should do it.  Title insurance is not the same here as it is in other parts of the world. However, attorneys are not needed to get started. Here are some basics:

Training course showcases properties internationally (CIPS)

By: Garland M. Baker B.

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Costa Rican real estate got a boost last week when 17 real estate professionals representing the United States, England, Canada, Korea, Brazil, and Costa Rica attended a week-long event in Tamarindo.

This was a training event sponsored by the Costa Rica Global Association of Realtors. The program also included tours of available property to give visitors an idea of availability and price range.

Such special gatherings help put the country back on the map and in the minds of those who sell property to buyers in the United States and other parts of the world. “I had no idea Costa Rica was such a powerful destination. I’m coming back, and soon,” one broker from Austin, Texas, said.

Free online sites CAN teach old dogs new tricks

By: Garland M. Baker B.

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Aging expats do not need to be sticks in the mud when confronted with modern information and technologies. Neither do youngsters. Some already know the secret and come to Costa Rica to play and study. Today, there is no excuse not to learn what one wants or needs to know. And much of it is 100 percent free with no strings attached.

The Internet has made the world a much smaller place, but it has also widened opportunities for most to expand their universe.  The possibilities are almost endless for those with inquisitive minds.

Many community colleges and universities now offer online education for adults, paid and free. To get credit to earn a diploma, one usually needs to pay. This said, there are many resources available to get grants and loans to pay for adult education. 

A good death is one that is planned ahead of time

By: Garland M. Baker B.

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There is a wild misunderstanding in Costa Rica about dying without a will. Most people believe if they do not have one, the government will take everything.  This is not true. Here is a closer look.

What does happen is crooks steal the real property in some cases.  Money sits in the bank without disbursement. And, personal property disappears quickly. The rule is first come, first served.  One well-known painter came to Costa Rica in 1971 and died in 2003. His entire portfolio was lost to theft by family members. They had no clue as to its true value and squandered it away.

Another man who died early this year put all his money for safekeeping in his girlfriend’s bank account.  When he died, the money went poof and was gone. Most expats have nightmarish stories regarding this matter.

Here's another option to do banking in Costa Rica

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Expats and foreigners have an alternative to banks for their financial needs in Costa Rica: Financieras.  They are good, solid options too, offering substantially higher returns on deposits and other investments than banks. Two-year certificates of deposit return as much as 5 percent in U.S. dollars. They are also more friendly, eager to answer questions and solve customer needs. Much more so than banks, most of which are bureaucratic monsters. 

They are very secure choices because they are monitored closely by the Superintendencia General de Entidades Financieras, the governmental organization in Costa Rica that supervises the stability of the country’s financial system. 

The top picks are financieras Cafsa, Desyfin, Comeca, G&T Continental and Multivalores. Desyfin and Comeca have Websites in English. Cafsa and Desyfin offer Internet Online Banking.

Mediation clause might be a lifesaver in contract

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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People with legal problems in Costa Rica should try mediation to resolve their issues. Arbitration and the courts are expensive and slow. Most contracts today include arbitration clauses by default, and they are signed without giving much thought to the process. Expats should not get locked in without doing some homework.

Here are the important points to consider before signing a contract with a section on arbitration: 

Here's a secret trick to beat that yearly corporate tax

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

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Want to save some money? Expats using sociedad anónimas and S.R.L.s. to hold assets in Costa Rica can save tax dollars by converting them into a sociedad civil that pays no tax.  A sociedad civil means a “civil society” in English. Yes, this is a secret to beat Law 9024 and the annual corporate tax.

Can Costa Rica make a turnaround for its expats

By: Garland M. Baker B.

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People with legal problems in Costa Rica should try mediation to resolve their issues. Arbitration and the courts are expensive and slow. Most contracts today include arbitration clauses by default, and they are signed without giving much thought to the process. Do not get locked in without doing some homework.

Here are the important points to consider before signing a contract with a section on arbitration: 

Foreigners face barriers to open a bank account

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Expats are having a very hard time understanding the new rules and regulations set forth by national and private banks in Costa Rica. They were outlined in detail on March 31.  They do not understand why they cannot open a bank account if they are on a tourist visa but own property or have other investments in the country.

It is the fault of the Banco Central de Costa Rica. They issued a communication to all Costa Rican banks on March 27, 2012, stating the only people with valid acceptable documents can make interbank transactions via SINPE. The Banco Central is the central bank of the country. The organization who is responsible for controlling inflation, printing and managing money, and maintaining the stability of the Costa Rican currency. 

Opening or keeping bank account now a paper chase

By: Garland M. Baker B.

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An expat went to his bank on Friday to open a new bank account. He said to the customer service representative, “I would like to close a bank account for one company I have had for 10 years and open a new one for a new company.” The agent look at him perplexed and said, “Why in the world do you want to do that.”

The man explained one business is stopping operations and was legally closed with the tax department, and that he started a new company to keep the operations separate. As they should be under the tax law. The bank employee said, “Do you have any idea all the paperwork you need. It would be easier to use the old account and not close it.”

The diligent expat had previously requested a form with all the requirements and showed the representative his folder.  He also explained he was a long time loyal customer and there had never been a problem with his account.  The agent said, “It does not matter how long you have been a customer with our bank, everything is different now. I will go talk to my boss to see if I can open the account.” After a long wait, the person finally came back and said, “We will open your new account, but you still need additional information.”

The crux of the story is the bank employee was correct. The red tape and requirements to open a new bank account for a company are a bad dream. Here they are on this abridged short list.

Registro in court for blocking company resignations

By: Garland M. Baker B.

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One Costa Rican woman is fighting a win-lose scenario against the state.  She had a rude awakening in 2012 when she tried to resign her position as secretary of a local company as allowed by Transitorio IV of Ley 9024.  The Registro Nacional said she could not quit because the company owed money to the Caja Costarricense de Seguro Social, known to most as the Caja.  

She immediately filed suit in the Tribunal Contencioso Administrativo, the administrative law court, for relief, arguing the transitorio gave her the right to leave her office as secretary. There were no exceptions outlined in Law 9024.

Tax agency throws another expensive curve ball

By: Garland M. Baker B.

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This year the tax department, known officially as Dirección General de Tributación, and loosely as Tributación Directa, had a surprise for many expats and Ticos alike. The government institution changed inactive companies that pay the lower company tax assessment created by Law 9024 to active without any warning. 

Active companies pay twice as much as inactive ones, a matter of some $200.  This has outraged the affected. One expat in La Garita is downright furious. He said in a telephone interview, “My company has been inactive for 10 years. It has never had an activity. What gives the tax authority the right to double my taxes without reason or notification?”

Attorney Allan Garro of Garro Law is mad, too. His expat and Tico clients have called him outraged and wanting answers. He had none to give them, so he sent staffers to the tax department and Registro Nacional to ask questions. They got to the bottom of the problem, and the result is a shock. 

Short time remains to avoid ugly corporate tax trap

By: Garland M. Baker B.

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Here is an opportunity for a last chance to resign from companies before the Registro Nacional starts collection of taxes due under Law 9024.

One attorney estimated 275,000 out of the 575,000 estimated mercantile companies registered in Costa Rica are defunct. They are part of an estimated 420,277 companies currently behind on the tax, as reported by the Banco de Costa Rica.

Those flippers are back on the trail of the unwary

By: Garland M. Baker B.

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“Good news,” said a property owning expat in Guanacaste. “It’s been a while since I have seen or heard from the Flippers”. The Flippers are people who do not have any money, but they want to tie up your property while they try to sell it.  He continued on to say, “It must be a sign that the economy is picking up, so it’s great to have them back.”

This may be another good sign the real estate market is turning around.  However, there were so many crumbums with unlimited tricks up their sleeves during the property boom; it would be prudent for sellers to watch out now. They could be lingering around, waiting for new prey as the market improves.  Almost everyone has heard of “caveat emptor,” Latin for “let the buyer beware.” But, how about, “Caveat venditor”? The phrase is also Latin, meaning, “let the seller beware.”

Do not fall for the old caper that goes like this when trying to sell your property to an unknown buyer: “Can you give me a First Right of Refusal Letter? You can still try to sell your property. But, before you collect any money or sign an option, you must give me the first right of refusal.”

New Windows operating system 8.1 can be tamed

By: Garland M. Baker B.

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A new year usually brings new challenges.  One, expats are trying to avoid is upgrading to Microsoft’s new operating system Windows 8.1.  The company is trying to cram it down everyone’s throats after the release of Windows 8 was such a disaster.  

In September 2013, Windows 8 finally jumped past Apple's OS X with 7.4 percent market share.  Windows 7 still had 45.63 percent and XP not far behind with 33.66 percent.

However, old computers die or slow down to a point, upgrading is inevitable.  Most new Windows-based machines only come with the new system.