Real Estate in Costa Rica and Consumers Rights

The number of real estate projects in Costa Rica increases daily. Residential urbanizations, tourist complexes, condo-hotels, and large projects of condominiums are just a few examples of such phenomenon. As a matter of fact, those companies that promote this kind of expansion have found a very interesting market niche: the selling of properties (lots, houses, villas or apartments), which bears a series of additional benefits, like controlled access, security, common recreational areas, swimming pools, tennis and golf courts; in brief, a number of goods and services that become handy when acquiring a property.

This type of projects are aimed to a very special market: those foreigners who want to invest in this country by purchasing a piece of land or a house that will not only contribute to his recreation, but will also produce added values, and even become a source of income. Undoubtedly, the acquisition of these complexes may be more onerous, but deal with several benefits which will hardly be present in the case of common property. These advantages provide this kind of property with a special appeal.

Nevertheless, it is not always as good as it seems. Many times, buyers have been involved in awkward situations: they have acquired one or several properties within a complex or developing urbanization, which was not finished or finished deficiently and in many cases, not even in compliance with the law. In this way, the investor has a property, but not the complex, not was offered to him, not what he really intended to purchase. How frustrating!

What can be done in such case? Can the developer-vendor be forced to return the money?

Can one demand the fulfillment of the contract? Was the original dealing more than the purchase of a piece of land, house or villa?

Since the promulgation of the “Ley de Promoción de la Competencia y Defensa Efectiva del Consumidor” (law that promotes the effective defense of consumer rights), in 1995, these and many other questions have been answered. That frustrated consumer has begun to see a light at the end of the tunnel.

This law creates the “Comisión Nacional del Consumidor”, CNC (National Consumer’s Commission), entity of maximum decentralization of the “Ministerio de Economía, Industria y Comercio” (Department of Economy, Industry and Commerce). This is an Administrative Tribunal formed by three proprietor members and three substitute members, which have knowledge of and solve the conflicts that raise between vendors and consumers, as a result of the consumption relationship they sustain. In this way, when a consumer is unsatisfied because the conditions established in the contract have not been fulfilled, the guarantee has not been carried out, he has not been given clear and veracious information, he has been the object of dubious publicity and, in general, his consumer rights have been affected, he can use such instance to defend those rights through a process that is far more agile than the one followed in the Courts of Justice.

The real estate consumer is not excluded from this possibility. As a matter of fact, when a property is acquired in a vendor-consumer relationship, the latter is affected and can come before the CNC. However, not everyone is qualified to do so, not anytime he wants or for any reason. Therefore, the requirements established by the law must be met. Probably, the most important element to consider before approaching this organization is to determine who the vendor is. The defendant must be a regular real estate dealer. This is the reason why we have approached the issue of urbanizations, condominiums and complexes, in general. In this way, a non-regular dealer is not considered by the CNC as a vendor and therefore, cannot be sued.

Probably, the most important element to consider before approaching this organization is to determine who the vendor is. The defendant must be a regular real estate dealer. This is the reason why we have approached the issue of urbanizations, condominiums and complexes, in general. In this way, a non-regular dealer is not considered by the CNC as a vendor and therefore, cannot be sued.

Similarly, the plaintiff must be considered. Is he a consumer? Both, the CNC’s jurisprudence and the “Procuraduría General de la Republica’s” (Republic´s General Attoneys) criteria have established that the good or service obtained cannot be included within the buyer’s line of production; it must be a final consumption. Hence, if for example, the buyer is commonly devoted to the purchase of properties for their development or simply to fix them for a later sale, this buyer is not considered a final consumer and is not authorized to address the CNC. So, that who acquires the property as an end product for his own use can be denounced.

The term to press a charge is the third element to take into account. The consumer has two months to interpose the accusation from the moment in which the deeds that motivate the charge are known. If it is done outside this term, the action is considered overdue and the consumer will only be able to go before the Courts of Justice. Unfortunately, this is the most common mistake made by affected consumers.

Finally, a series of formal and evidential requirements must be fulfilled: defendant’s and plaintiff’s name and IDs and the addresses where to locate them, the reason behind the accusation, which deed must be typified in the law and turn in all the documents or witnesses that could support his version.

The process before the CNC is known as an administrative procedure, which should, according to the law, last two months plus an extension of two additional months. However, these have lasted longer, but less than in the Courts of Justice. Their strong verdicts must be followed and can be executed by the Courts themselves in case they are disobeyed. In the same way, the offender can be accused through the penal way under the charge of disobedience to an Authority.

Nowadays, the real estate consumer is much more protected. Not only does he have the right to approach the Courts, but as mentioned before, is allowed to approach the CNC as well. For this reason, he must know about his rights, those conferred to him by the Law and use them wisely.