How To Develop A Costa Rica Condo Project
Here’s a great idea…let’s go buy a nice piece of farm land with a fabulous ocean view, build and sell some condos…and make a pile of money!
Good idea?
Yes!
Easy to do?
No!
Put aside the difficult and challenging issues of infrastructure development, construction, financing and marketing. These key elements of a successful development project are discussed elsewhere on our website: http://catalinacove.net/info/costa-rica-land.htm
The initial focus of any successful project in Costa Rica should be placed on site selection. There are many sub elements that are involved in this task for example, proximity to desirable geographic features (ocean, lake, river, volcano, etc.), proximity to an international airport, availability of basic infrastructure such as roads, water, power, grocery stores and restaurants.
However, one of the most important concepts that can make or break a condominium project in Costa Rica and is perhaps the least understood, has to do with the presence or absence of a particular type of road.
Specifically, the presence or absence of a “calle publica” or public road. Under Costa Rica law, land can only be subdivided and developed (all or in part) into a condominium project if the original parcel of land touches a public road.
Ouch!
This means that should you purchase a parcel of land that is accessed only through an agricultural road (serve dumbre) you will not be able to subdivide the land into condominium lots or otherwise develop a condominium project. In fact, the smallest subdivision of land allowed in this instance is 5,000 m2 of 1.24 acres.
Quite frankly, Costa Rica is behind in promulgating laws to regulate condominium type developments. It wasn’t until the “Ley Reguladora de Propiedad en Condominio” was passed in late 1999 that Costa Rica had
a law regulating condominium development.
Costa Rica is struggling somewhat with this concept, at least in my view as a foreigner coming from the U.S. where this is a very well defined form of real estate ownership. The primary issue in my opinion is their attempt to regulate land use zoning, subdivision infrastructure requirements and condominium association management regulations all within the framework of a single law.
Notwithstanding this less than ideal approach, the Costa Rican law is workable and is working.
Following the site selection aspect of a condominium project, the remaining steps are similar to those expected anywhere else in the world. Architectural plan development, infrastructure planning (power, water, roads, and waste management) and a variety of environmental and building permit processes.
Are you serious about developing a successful condominium project in Costa Rica?
The best advice I can offer is to work with an experienced and knowledgeable Costa Rican real estate attorney. In our experience, there is none better than the law firm of Montejo and Associates with offices in San Jose and Guanacaste. Visit their website for further information:
Montejo Law Associates: www.montejolaw.com
Author Kevin C. Myers is the Broker of Catalina
Cove Real Estate, located in Flamingo-Brasilito and is part of the Grupo Do It management team, developers of Catalina Cove. He is the best-selling author of the real estate investment book, Buy It, Fix It, Sell It: Profit! published by Dearborn Financial (Chicago) available in bookstores everywhere. For more information, visit the following website: http://www.realestate-profits.com
