Beautiful Costa Rica is now a dream location for many US buyers who wish to retire here.  Unfortunately for many these dreams become nightmares.   The country is all the rage amongst many investors interested in setting up tax effective structures, the proceeds of which allow them to buy well-priced property with a view to retirement there in the future.  Costa Rica is one of the leading jurisdictions for US expatriates to settle down in but unfortunately too many of them are there because they were caught out in the US committing some sort of tax scam or fraud, making many settlers here rather corrupt, on par with Belize, Antigua and Nevis. 

But, as they say, “What goes around comes around” – if they aren’t careful, these chancers fall victim to a nasty scam themselves:

They legitimately form a Costa Rica company with bearer shares and deposit a stack of money in an offshore bank.  They then use this company to buy a spectacular piece of Costa Rica real estate at a bargain price and keep it with a view to returning to retire here in a few years and live happily ever after.

The one catch is that they assume that Costa Rica has the same possession laws as back home, which typically require 10 years or more to establish formal rights.  Costa Rica’s laws allow squatters immediate rights making it impossible to move them off the property without paying them vast bribes to agree to leave.

A Simple Scam

•    The property salesman gets a bunch of wealthy Gringos to come to Costa Rica and sells them some beautiful (vacant) properties for the highest price possible
•    As soon as they leave back for the US, he moves in some squatters
•    When the Gringos return, they can’t use their property as it has been possessed by “legal” squatters
•    The salesman shows concern and notifies them that there is nothing he or the courts can do to get them off the property
•    The salesman offers to help by purchasing the land back at say, 10% of the original value, which the Gringos accept because the land is completely worthless with squatters on it
•    The salesman promptly moves the squatters off the land, leaving it vacant to repeat the process
•    The economically distressed local economy and the salesmen are greatly boosted by this transaction and the Gringos return to the US with their tails between their legs

Although this scam has been around for some time, it has a habit of fading from peoples’ memories when it fails to hit the headlines, then it returns with a vengeance with the next bout of incidents.  Undoubtedly Costa Rica will provide many investors with a highly lucrative opportunity, but beware, be shrewd and above all don’t fall victim to this old scam…