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Construction: How does it work here?

 In years past, I would show Americans and Europeans homes available in town, and while there were a very few homes built to North American standards, there were even fewer offered back onto the market. What were offered were to the local taste, which is cramped and "plain vanilla" but more affordable.

Several intrepid souls embarked on construction in those years, and more than half became very frustrated doing so. That was because the architects were used to designing for the local market, of course, and the contractors were used to building for the local market. Of course, seismic standards had been instated for many years, due to necessity. But foreign homebuilders found a huge resistance in both designers and builders to the standards they wanted to achieve.

Foreigners wanted heavily insulated Nomex wiring, marretted connections, ground-fault interruptors, vertical grounded outlets, and shielded wiring routes. None of this was even known here, and Marretts, or wire nuts, have only been introduced here in the last few years. Computer owners still have to specially ground a circuit for their valuable computer.

They wanted hot water. They wanted traps below sinks. Septic tank venting.  Window screens. Power-troweled garage floors. None of these were common

In addition, many materials taken for granted by foreigners were not available.

But..

Happily, this is no longer the situation, and both architects and builders, as well as suppliers, are learning not to resist but to learn, because foreigners are becoming  a new market segment in Atenas and the entire country. One foreigner after another is completing a home as happily as mowing the lawn. We have done a lot of adapting here, and now we have been adapted to as well.

The Procedures

First step is to think carefully about the size of home you can afford here (expect costs to be in the range of $400 to $600 per m2). Design is very important, and since many are coming here to retire, consider planning your home on one floor; you may not be so spry on the stairs in 10 years. If you plan for 3 bedrooms minimum, and 2 baths, you will enhance the value for any eventual resale.

Wide overhangs are wise, since the walls, and hence the house, stay cooler. Plan for screened ventilation for attics or crawlspaces.

Next, draw a floor plan to visualize the functionality of your home and its critical use areas.

Now, if you already have a lot, you will still need to get a constancia, or evidence, of water supply from the Municipality, the water institute AyA, or in case of a well, with MINAE, the natural resources ministry.

It's time to select an architect, and he must be affiliated  with the Costa Rican college of architects. Architects are allowed by the college and Presidential decree to charge as much as 10.5% of the value of the home. They elaborate a breakdown of the percentages to apply to individual stages such as planning, design, permitting, materials list, oversight, etc. But in fact is is common for architects to offer a package  percentage for these services.  There are many set taxes covered in the concept of this fee, and so there is a limit as to how far it can lower. Generic plans are not yet used, a plan must be drawn for each new home.

Permitting for homes over 90 m2 must be taken out in both the Municipality and the national housing authority, INVU. Plans may be subject to review by a new environmental authority, SETENA. Architects are usually charged with permitting responsibility.

Permits acquired, the owner will be required to provide proof of a worker's compensation insurance taken out with INS, the government insurance company, said policy premium a percentage of the total labor cost of the home. Labor cost will be calculated as 30% of the total  cost of the house, established with the municipality. Premium on this policy is currently 4.66%, coverage for the entire term of construction.

Contractors

Contracting a home builder here has its distinctions, as well. Most contractors haven't the capital base to bring a house, say, to lockup stage, triggering an inspection and a release of mortgage funds from the bank or owner. Likewise, there is no program for bonding of the contractor.

As noted before, the onus of responsibility for INS workers compensation insurance lies with the owner.

For these reasons and others many owner homebuilders choose to be their own prime contractor, making a notarized contract with a builder subcontractor for labor only, who will have funds released to him at set stages as construction progresses, and the owner will then proceed to supply materials as needed.

Some owners make an agreement for the building materials as well, allowing the subcontractor to negotiate a per m2 labor and materials contract. In a time of volatile materials prices, such as now, this is probably not advisable with any but the most solvent San Jose construction companies.

Some owners undertake to buy materials and pay foreman and crew on an hourly basis, accepting the role of employer and paymaster, maintaining the planilla  or payroll records for each employee, and paying social security at the CCSS, or "Caja" each month. Wages are commonly disbursed each Friday in cash, but for security many employers make direct deposits to employees' bank accounts.  Signed receipts for cash payments are recommended, especially in the case of non-recurring payments such as vacation time and aguinaldo, when applicable. Any lawyer can review for you your current obligations under Costa Rican labor law: in the case you write a labor contract with a prime contractor, your labor contract must stipulate his acceptance, and verification of payment, of his own obligations, since ultimate responsibility usually rests with the builder, yourself.

Materials

Building Supply companies will often allow credit in materials purchases, and the buyer may designate a certain employee to sign for supplies. Usually credit will not be extended the full 30 days customary in North America, but only 15 days, when current invoices become due. Cash will often attract substantial discounts, especially on certain products.

There can be incredible variances in prices for the same product among various suppliers, and so it pays well to shop around. Don't be afraid to verify what you think you heard over the phone, because three and six sound almost identical in Spanish, and so do sixty and seventy. Don't be afraid to get a factura proforma for any price or list of prices. This is a computer-generated limited-time quote, with time limits usually specified, that can be faxed or emailed.

In procedures, architects, contractors, and building supplies, be sure to talk to friends and acquaintances, to learn who and what are the best resources and tactics available at any time. I must stress emphatically that lead times for all undertakings here in Costa Rica will be longer than you would imagine, and it pays to plan as far ahead as possible.

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 Larry@atenasrealty.com

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9-17-07