“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.”
A well-known Costa Rican attorney stated by email when asked about this tactic: “In my opinion, the letter of right of first refusal shouldn’t be granted to any prospective buyer. In the past, these documents have given the possibility to unscrupulous people to pose as the owners of land, that is not theirs. To have a third party enter into a buy/sell agreement, without them having the legal capacity to do so. Several real estate frauds have been committed in this way in Costa Rica”.
LandThink, a website dedicated to educating real estate buyers and sellers alike, define a “right of first refusal,” or RFR, as a contract which give a legal right to a specific party. The holder can always renege on fulfilling the agreement. The documents can be vague or very specific, binding or not so. Many Costa Rican attorneys are not familiar with them because they are not used much in this country. Even in the United States, first right of refusal clauses should be circumspect and used with caution.
Costa Rica is still like the Wild, Wild West in many parts of the country, flippers try to bargain with little down – or nothing down—and balloon payments or empty promises. They do this to try and “flip” an asset and make a large profit.
Vultures and rats stalk the innocent, making use of Article 1049 of the Costa Rican Civil Code and property flipping. The rules are everything goes and the best trickster wins. Article 1049 is only one sentence long, and it states, “La venta es perfecta entre las partes desde que convienen en cosa y precio.” In English, the string of words translates to “The sale is fixed between parties upon agreement of thing and price.” The sentence means that it is possible to cheat a naive seller out of a property because of their lack of knowledge of the law.
There are ways to defend oneself from the unprincipled with the use of well-executed option documents prepared by a reliable and knowledgeable legal professional. They can protect good real estate deals.
One thing for sure, Costa Rica will not see the doom of years past for a very long time, if ever. Many people, Expats and Ticos alike, are wallowing in the idea this country will explode again and are waiting for the “gold rush” days. They forget the boom was created by many worldwide circumstances that altered markets, resulting in people having more money than usual. The property market in Costa Rica was abnormally affected by these events.
Even flippers, promoters, and crooks had something to do with the frenzy because they were promoting Costa Rica insanely all over the world. Many buyers came and bought all sorts of things for outrageous prices, only to be caught in the crash. Some sold-out cheap and left, others have held on, waiting for a better economy.
Many of the bad guys and gals left too, they tend to go where the picking and money is good. However, some stayed and are lingering around. The laws have not changed as much as the economy. Actually, the legal system has sent terrible messages to the crooks. They tend to get off easy from any wrongdoing. Many cases just expire in court and nothing happens to them at all.
This means legitimate buyers and sellers need to watch out for themselves. Homework, due diligence, patience, and competent counsel are the keys to success. If something looks too good to be true, tread lightly, it probably is not what it seems.
