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10 top legal gringo mistakes

"The most common legal mistakes made by “gringos” in Costa Rica

Note to the 2018 edition of this article:

I wrote the original article, named “Ten top legal mistakes” back in February 2014 upon request from my good friend Scott Oliver who –then– was the owner of

To my surprise, it has been read more than one million times.

It has been almost 15 years and the circumstances have changed quite a lot after 2008 mortgage crisis. The flow of US citizens continue to arrive into Costa Rica, however, the scope of their travel has switched, if before the foreigners where coming for a vacation, they also had in mind the possibility of investing, and often, to look for a retirement heaven, nowadays, the investment scouting is mostly out of the picture

I am a tico, born in Costa Rica, from tico parents, grandparents, grand grand parents.

I have lived in San José, all my 40 years, but I have traveled extensively to the US, Chile, Argentina and several countries in Europe.

Apart from my native Spanish, I speak fluent English, and fairly understandable Italian.

I have been an attorney for 17 years, I have a Master’s degree in International Business Law, and almost all my clients have been US citizens.

You would say I have a very normal intellectual capacity, and I would agree to that, but even though, languages, travels, formal education and legal practice, have not helped me decipher why “gringos” make the mistakes they do in Costa Rica. And honestly, the answer is still beyond me. And you can say that I, as an attorney, live of such mistakes. No way! Trying to solve such disasters is anything but frustrating, and aggravating.

Just this week I had and old client of mine commit his worst legal mistake in Costa Rica, so far. He got into a legal contract to give a high commission to a local attorney-turned-into-a-mortgage- broker, in order to help him find a better deal for some substantial mortgages he needs for funding a new line of business. He negotiated and signed the contract without speaking a word to me, nor to his local manager. After a few weeks, the deal went sour, and my client, again without saying a word to anybody, called the deal off. He is now facing a six million plus dollars lawsuit, which can last 10 years, his properties are under the threat of being frozen by court, and his enemy has also –through not so honest tactics- stopped all his negotiations with local banks. He is so desperate that he is willing to pay a ridiculous amount of money to his counterpart to get rid of him. And now he asks for my opinion!!. Just one single phone call would have been enough to abort such a deal since day one.

I am a corporate lawyer and a litigator; I love to litigate, because for me it is like playing chess. But precisely because of all my experience in court I have come to take the following axiom as an absolute truth:

The law is an amazing preventive medicine, but it is a devastating curative medicine"

"So, let me help you, before you incur into legal mistakes in Costa Rica.

This is what I will do. My dear friend, Mr. Scott Oliver, gave me the opportunity to share my experience with members, in order to help you avoid troubles. To help Scott help you, I will give you a one-time free consultation, on any legal matter related to Costa Rica. But before calling me, or send me an e-mail, please read on to find the most common legal mistakes made by foreigners in Costa Rica. Maybe that can be enough for you not to fell in the trap. Follow me please:

1. Do not do anything you would not do in our own town.

A lot of foreigners seem to believe they can outsmart the system when they come to a less developed country. Or, it just may be the kind way most Costa Ricans behave with “gringos”, which turn them into wishful thinkers.

Always bear in mind that the legal system in Costa Rica is Napoleonic, not Common Law, thus things are handled very differently than in the US or Canada.

Because of that, the best place to begin your investment plan is in an attorney’s office, and not the “Del Rey” Hotel (typical “gringo” hideout)

2. Do not try the “do it yourself” method.

Some people, trying to save some dollars in legal fees, avoid the work of finding a good attorney to guide them through. Do not do that. Do your homework. Find an attorney you feel comfortable with, and stay with him for as long as he does a good work.

Once I had a client call me on the phone to tell me he had just bought a car, and that he has already done all the paperwork with the sellers’ attorney. Right there, while we were still speaking I checked the license plates –online–, only to find out the car had a debt against it, of almost half of its value. My client said he trusted the seller, “because he felt he was a good guy”. So much he felt that way that, when going back to his country, he left the car with the seller to be cared for while he was out. End of the story: my client paid this guy in full, the debt was never paid, the creditor foreclosed and the car was attached and later sold in a public auction…

One phone call was the only thing my client needed to avoid all this…

Do you want more? This same client, while all the troubles with the car were going on, still believing “his friend” was honest, made a business with him, and from abroad, sent

him a container with two used 520i BMW’s, some harvesting equipment and other equipment, to be sold in Costa Rica. Do I need to tell you what happened with the

"proceeds of the container? I don’t think so. But there is even more. While this crook was still around and telling my client that he will pay him, I strongly advised to press criminal charges right away. But no, my client “knew this guy was a good person” and that he will honor his word, so he didn’t want to press charges… not until a year or two after, when the thief was totally out of the picture.

3. Do not rush the decision of hiring an attorney.

If you are thinking of investing in Costa Rica, like it or not, hiring a local attorney is a must for you. It does not matter if you are just buying a car or a home, or planning to set up a million-dollar business. You will need an attorney.

It is a fact that nobody like the idea of paying legal fees. But what I am speaking of here, is that idea of having the law work as a preventive medicine.

Consider, then, the legal fees as insurance prime, because in fact it will work as such. You will pay a fraction of what will cost to fix it later on if you don’t have an honest attorney to guide you.

How can you find a good attorney? Ask, investigate. There are too many attorneys in Costa Rica, and you will be recommended several of them. Have a clear idea of what it is what you are looking for. You can find a spread of attorneys, from the big law firms, with political connections and Washington-like fees, to solo practitioners. Would an attorney with a general practice will do for you, or do you need a specialist?

The US Consulate in San José, have a list of attorneys you can access over the internet. Make appointments, go to their offices talk to them, and evaluate your options.

Once you have narrowed on a few ones that you like, call the Bar Association and inquire if they are in good standing, or if there is any disciplinary process against them going on. Then once you have decided, ask the attorney to write down a contract for his services, with a clear indication of both parties’ obligations and the method that will be used to charge his fees.

4. Do not buy Real Estate following only the Real Estate Broker’s advice.

In Costa Rica, Real Estate Brokers are not licensed in the same way they are in United States. Some of them are real professionals, but a lot of them are just avid sales people. Either buying or selling Real Estate, must probably you will be faced with the need of one, but even if your broker is first class, have your attorney on board and have him supervise the process.

5. Do not blindly trust people of your same country, just because they have been here more time than you have.

I have seen that US citizens are conned by US people, Brits are conned by Brits, Canadians by Canadians and so forth. Be careful. There are a whole lot of weirdos in this country, some of them fleeing from FBI, Interpol, their ex-wives, or even from mental institutions.

I am not kidding. I worked –for a very few weeks however– for a New York guy. He had an impressive knowledge of the NYSE, and he really had some good connections "up

"there. But as smart and business literate as he was, he had also some pretty odd ideas, and switched back and forth from intelligent to coo-coo in matter of seconds. Well, he in fact was a former NYSE broker that burned himself out in such a way that was placed in a mental institution, from where he escaped. He was hiding in Costa Rica. And to put it more specifically: he chooses to hide in my own office; until I kicked him out, of course.

6. Do not, I repeat, do not marry the first “tica” (Costar Rican) you met.

Right now, am trying to help a guy –not much to do though– who married the first tica that was friendly to him.

After falling in love with Costa Rica, he moved $500,000 down. Bought a $380,000 home in a fancy area of Town and kept some cash to live.

Then he moved some more money down, bought another piece of Real Estate, and a mid- size Condo.

Later on, he also managed to buy a 5-story building downtown.

On the mean time, he had 3 kids with the lady, and took care of another son this woman had from a previous marriage.

By the time things went sour, the woman had managed to “mislead” the gringo into transferring to her name: the house, the lot, a $200,000 local CD, the $120,000 remainder of the NYSE investments, plus half of his $1,900 monthly US pension, that she now receives directly from the Consulate, plus a house she bought for a sister. Nowadays, she is also suing this smart fellow for alimony. He has been served of process and is under legal obligation to pay her $600 + per month; he can not abandon the country, and he is threatened every month with being put in jail if he does not pay, which has become a real cash problem for him. As I write, he has abandoned his condo, and is hiding away to avoid the constant visits local policemen pay him to “remember” he is back in his payments.

When I interviewed the guy, he said he signed all those legal documents, in Spanish (which he does not speak), because “he trusted his wife”. No comments please.

7. Old Mc Donald had a farm:

…And he lost it, because never took care of it. That is a common story in Costa Rica.

Again, our legal system is different. Real Estate legal regime is also different.

First Case: A US citizen came down to Costa Rica, many, many years ago loved the country, and went south to explore more of the “wild” part of this land. After scouting the place, he bought a big piece of land on a small island. Happy with his purchase, he went back to his hometown, where he lived happily for the next 15 years, until one day he remembered he had a nice piece of land in Costa Rica. Took a plane and came to check how his “Ponderosa” was doing. Do I have to tell you the rest of the story? The son of the guy he left in charge was now the owner of whatever was left, after he sold the rest of

it. Didn’t even worth the litigation, it was lost for good."

Second Case: Another US citizen, got in contact with Costa Rica trough a friend who used to work for the Standard Fruit Co. Came down several times, also fell in love with the place. After looking around for a while, he found a place he liked and bought a very nice couple of adjoining lots, in a high class residential area. Properties were registered, as joint tenants, to his wife and him. The couple went back to the States, gave the “administration” of the lots to a Trust Company in Cayman, who actually did nothing.

Twenty years went by, the wife passed away. The Trust Company hired me to take care of the probate process. I did, and when I filed the documents to finally transfer the late’s wife rights to her husband, we found out there was a lawsuit in court against them, from a local “businessmen” (his business is to squatter land off “gringos”).

We have been fighting in court for the past 5 years, and we have just won the case in the lower court. We still have some 3 good years of appealing procedures to end this mess.

What to do? Simple, if you are ready to buy land in Costa Rica, you have to take care of it. And I mean physically, you have to have the actual and real possession of the land, otherwise it can be a mess to recover it.

8. South of the border…

Not everybody here wears a big Mexican “sombrero”, and big dirty moustaches; and not all the ladies are named “Juanita Bonita”.

South of the Río Grande, you will find: México, Belize, Guatemala, Honduras, Salvador, Nicaragua, Costa Rica, Panamá, Colombia, Venezuela, Ecuador, Perú, Paraguay, Uruguay, Bolivia, Argentina, Chile and Brazil. All of them are different countries, with different history, different people, and different laws.

Just past week a client from up north called to ask about a conversation we had past year. He had some money here, being managed by one of the best brokerage houses. Past year he got the brilliant idea of sending a fax to the broker, asking him to purchase, on the Costa Rican Stock Market, some $20,000 in shares of a Mexican Pineapple Corporation. Upon receiving the fax, the broker, immediately answered, letting him know, very kindly, that Mexican and Costa Rican Stock Markets are different, and that such a request was not executable. He never received the fax. You know why? Because he does not have a fax number of his own, so, he sends his note from a public faxing service in his country. Of course, when the broker replied to that number, sure enough, the communication ended up in a waist basket… But that is not the end of it: without the smallest hint of whose fault was it, my client got angry and upset, because, he said, those shares went up 40% since he ordered the purchase…

9. Easy comes easy goes.

I will not even waste your time on this matter. If it is too good to be true, then yes, it is too good to be true.

Nobody on this earth can give you 45% over your investment, not legally at least."

Do not do anything you would not do in your own country.

Even more, there is risk even with legitimate well known and established private banks.

Right now, I am trying to help a client who deposited a large amount of money in CDs, in one local bank. The bank had some cash flow problems, it was intervened by Bank authorities, and now he learns, his investment was not with the local Bank but with the “off shore” Bank… which is at the verge of a bankruptcy because most of its funds are frozen at the local Bank. They are promising to pay 40 to 50 % of his investment in the next 90 days, and for the rest of it, well… maybe in 2 years, under an administration plan that they are implementing.

10.- Do you really want to live in Costa Rica, well then, ¡live IN Costa Rica!

It was the year 335 B.C. Alexander the Great faced one of his greatest battles. When his army reached the Phoenician coasts, he realized their enemies outnumbered them by 3 to 1.

Do you know how he managed to win the battle? Quite simple indeed, he ordered his ships to be burnt. While the ships were on fire and sinking on the ocean, he spoke to his army and told them the only way to go back home was on their enemy’s ships. It was that or else…

Well, if you really want to become a resident in Costa Rica, I am afraid you will have to burn your ships.

I had a couple of clients some years ago: They had dreamt of living in Costa Rica for more than 20 years. All that while, they visited the country as tourists again and again. They have their home in the States filled with Costa Rican decoration, and constantly speak to their friends of their love for this Country.

Finally, when they thought the time was right, they sold everything they had in the States, moved down, bought a brand-new home on a hill, overlooking the valley. Everything seem so right!

Yeah! Perfect, until they got bored. Yes, bored! Then, sold everything they had in Costa Rica –at a great loss of course– and went back home.

I had been working really hard to process their residency permits before the Immigration Department, and I had finally handled to convince the authorities to grant them resident status. Well that very day I called to give them the great news, they told me they were packing…

What was the reason for it all? Well, they moved to Costa Rica, physically, but never did it mentally or emotionally. For all the year –or so– they were here, they never made one new friend; they read the same newspaper they use to read in the States; they watch the same Cable TV programs and newscasts; eat the same food (except for the “guaro” “red-

eye liquor” shots on the weekends). Never even try to learn Spanish (you know that drill “we are too old for that”). They knew everything that was happening “back home”, but

had to phone me (even on weekends) every time they needed to understand what was going on in their neighborhood.

So, if you are really thinking of moving to Costa Rica, think twice before calling the movers. Plan your legal strategy before you move, and be aware you are to leave home to make Costa Rica your home.

Do you have the stamina to burn your ships once you land on this “Rich Coast”?"

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