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An alleged Ponzi scheme reveals the Wild West world of Costa Rican real estate.
“It appears that all the bad guys that were doing the scams in Florida and other parts of the United States during the big bubble have relocated to Costa Rica,” he said. Gear urges buyers to do their due diligence to avoid pitfalls.
Lungo said he and his colleagues hate seeing investors get conned, although he would not speak directly about the Paragon case. “It’s no good for the country, no good for us as realtors,” he said.
His association pushes for tighter regulation. In lieu of a legal license, he said, it offers realtor training and hands out licenses that say CRGAR, the association’s initials. “We have ethical standards and people can file ethical complaints and we can follow up on them and throw people out [of the association],” Lungo said.
The administration of President Laura Chinchilla wants to make raising the bar a national priority, said Justice Minister Hernando Paris. The Justice Ministry wrote a bill intended to professionalize and regulate the industry, which could be approved in the next legislative voting session starting December.
Prior to entering government, Paris was a litigation attorney who dealt with piles of property cases, he said. He knows the system needs to change.
Paris speaks frankly about the unregulated market. Costa Rica caught the eye of investors before it had set up the right investment safeguards that developed countries offer. “When investors from the United States came thinking we spoke the same language — that an escrow here is the same as there, that title insurance is the same, that [the Spanish word] ‘fideicomiso’ means a trust in the Anglo Saxon sense — the truth is, it’s not the same thing,” he said.
He wrote a bill that spells out each of these concepts. If approved, it would obligate realtors to belong to professional associations like CRGAR and the Costa Rican Chamber of Realtors, and would enforce stricter rules over property contracts and improve rights of investors to be informed of progress or possible conflict of interest in projects.
“We are looking to give legal security so that ... people can be confident they can invest in Costa Rica,” Paris said.