CR BIZ
Buyer Beware of the HOA Deal Breaker or Paradise Protector?
Y
ou have finally found your dream place in Costa Rica. You love the location and the development. It is well built and beautiful, with a view to die for. So let’s do it!
Before you pull the trigger, there is one more thing you need to dig into a bit deeper, and by a bit deeper, I mean truly research. That is the Homeowners Association (HOA), in many respects synonymous with “condominium.” The applicable law in Costa Rica is Ley Reguladora de la Propiedad en Condominio, (Regulatory Law of Land in Condominium). It covers developments with common areas – known as “condominiums” — and it governs many, if not most, legally registered HOAs. In fact, it includes many housing developments that do not even have “condos” in them. Double-edged sword Thus, knowing the details of your HOA is critical. The regulatory condominium law referred to above
By Randy Toltz
is a double-edged sword. It was put in place to recognize and govern the power of HOAs, and it also spells out regulations on how HOAs must operate. Though the regulatory law is designed to protect the homeowners, if not properly written and managed, it can leave them in impossible situations, and drastically affect their future property values. So one of the first things you need to do when you find your dream property is get all of the HOA documentation, including bylaws, meeting minutes and financial statements. Ask your realtor to provide copies. Have your attorney review this documentation carefully. If possible, I recommend also trying to speak with a few of the other owners and find out if there are issues or situations that you need to be aware of. What can go wrong?
REAL ESTATE 101
To give you an idea of how badly things can go, I know of one tyrannical condo administrator who randomly imposed a fine of $500 — without any warnings — on an owner’s guest for parking a golf cart in the wrong spot. When it was challenged, the administrator started legal discussions on foreclosure. This was for a one-time offense, with no notice. It illustrates how the law, if misused, can actually grant that degree of power to the HOA administrator. 118
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