Ruthie’s Project IV

Part I :: Part II :: Part III :: Part IV :: Part V So we set up a viewing of the lot that we seem to be homing in on. It is located up in Lagunas which is one of the more developed areas of Dominical Costa Rica. Lagunas is a large ridge that runs parallel to the ocean. You get to it by driving from the coast towards San Isidro just 5 or so minutes, and then turning and going up in altitude along this ridge. There are numerous houses up there and quite a number of permanent residents there.

When we get to the property, Michael shows us around. It is, in a word, perfect. There is a lovely view of to the north with lots of white water. You can see up to Manuel Antonio that juts out into the Pacific like a dock out on the horizon.

Ruthie is excited and proceeds to start designing her house on the lot. Michael is excited because he is going to be able to bypass the whole speculation cycle and get the house into contract before he has even broken ground. Just one problem, the lot needs to be segregated from the main property. Well, this really isn’t a problem, it just needed to be done. I have personally done quite a few deals where the lot wasn’t yet registered, or as in this case, hadn’t even been drawn yet.

I’m no expert in law but, it seems to me that legally speaking, 2 people can agree to anything. Now, in this case where the buyer can stand on a property and see what it is, and the seller is desirous of selling that property, there is a legal means whereby the two parties can achieve this objective. The buyer wants to tie up the seller so that they can’t take another and perhaps better offer in the future, and the seller wants to know definitively that the that buyer isn’t going anywhere. Such are numerous land purchase agreements in the Domincal Costa Rica area, especially since our land boom started here. It is interesting to note though that in a legal sense, the property does not exist yet. So the relationship is pretty much conceptual, although it is based upon existing dirt, or as we say, real estate.

Actually, it wasn’t these concerns that caused the eventual unravelling of this seemingly perfect deal. Neither of the parties involved in this deal had any problem with the fact that the property didn’t yet exist and the process was started with our well seasoned attorney here to contract to buy the soon-to-exist lot.

What did end up killing this deal was a concern that resulted from a recent law change. Actually, it may have been more of a decision on the part of Minae, the Costa Rican land use agency, to start applying the law, I’m not sure which. Again, I’m not an authority on law. But the new arrangement had to do with increasing the easements around an existing water source. Below the lot in question there is a creek, that in the past had been used as a water source. Since then, things have changed and for half of the year the creek doesn’t even have water in it, but the law was still being applied to it. This hurt Michael in his objective to segregate his lot, although I understand that he now has it worked out and is going forward with his speculation plans. It also pushed Ruthie out of her comfort zone so she pulled out and went back to the drawing board.

Deals are fragile here, as I guess they are anywhere. But in the effort to make sure that everything is in order: the roads, the water systems, the electrical, the easements and so on, we frequently are called on to do a considerable amount of legwork into Costa Rica’s registration system. In this case its too bad that things couldn’t be worked out since there was a great synergy between the parties.

But Ruthie remained undaunted and off we went to look at more houses, and we found one.

Stay tuned…

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