10 Essential Terms For Your Costa Rica Construction Agreement

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Table of Contents

Building a new home in Costa Rica is an exciting endeavor, but ensuring that the process goes smoothly and that your investment is protected is essential. The first step is having a comprehensive residential construction agreement with your builder. We have some essential tips for your Costa Rica construction agreement. If you’re building a house in Costa Rica, be sure your construction contract includes these ten terms and conditions:

𝟏. 𝐃𝐞𝐭𝐚𝐢𝐥𝐞𝐝 𝐏𝐫𝐨𝐣𝐞𝐜𝐭 𝐒𝐜𝐨𝐩𝐞

Your Costa Rica contruction agreement should outline the project’s scope in detail, including the specific location/lot number, design plan version/date, materials to be used, and any other specifications. This will ensure that you and your builder are on the same page about what is expected and minimize the risk of misunderstandings or disputes later on.

𝟐. 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐓𝐞𝐫𝐦𝐬

Clearly define the payment schedule in the contract, specifying the currency used, amounts, and milestones (due dates) for each payment. This clarity enables effective budget planning and allows an opportunity for third-party construction phase, progress, and compliance inspections before you submit each payment.

𝟑. 𝐂𝐡𝐚𝐧𝐠𝐞 𝐎𝐫𝐝𝐞𝐫 𝐏𝐫𝐨𝐜𝐞𝐝𝐮𝐫𝐞𝐬  

Outline procedures for change orders to acknowledge the potential for changes during the construction process. This includes communication and approval protocols, fees and pricing formulas, and inspection and documentation procedures for any modifications to the project’s original scope.

𝟒. 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐂𝐨𝐯𝐞𝐫𝐚𝐠𝐞

Assurance coverage

Ensure your builder possesses the required Workers’ Compensation Insurance, covering medical expenses and downtime from work-related accidents. The contract should stipulate the insurance coverage requirements and mandate proof of insurance for all employees.

𝟓. 𝐏𝐞𝐫𝐦𝐢𝐭𝐬 𝐚𝐧𝐝 𝐈𝐧𝐬𝐩𝐞𝐜𝐭𝐢𝐨𝐧s

The contract should clearly define responsibilities for obtaining, maintaining, and paying permits throughout construction, as well as specify who is accountable for the legally mandated Bitácora (official Costa Rica construction log book) and corresponding inspections. By delineating these roles, the contract ensures compliance with regulations, minimizes confusion, and facilitates a smooth permit process.

𝟔. 𝐂𝐨𝐦𝐩𝐥𝐞𝐭𝐢𝐨𝐧 𝐓𝐢𝐦𝐞𝐥𝐢𝐧𝐞

Incorporating a project completion timeline into the contract, with highlighted key milestones and deadlines, is essential for ensuring project accountability and providing clarity on the expected timeline. This provision sets clear expectations, facilitates better coordination and resource allocation, motivates timely progress, enhances transparency and communication, and ultimately contributes to a smoother and more efficient construction process.

𝟕. 𝐀𝐜𝐜𝐞𝐬𝐬 𝐚𝐧𝐝 𝐀𝐜𝐜𝐞𝐩𝐭𝐚𝐧𝐜𝐞

Defining your right to access the property, conducting third-party inspections, employing an Owner’s Representative, and establishing protocols for accepting the completed work are crucial aspects of a construction contract. These provisions ensure transparency, accountability, and adherence to building plans and quality standards throughout the construction process.

By empowering you, as the project owner, to oversee progress, verify compliance, and formally accept the finished project or by having a Representative do so on your behalf, these measures safeguard your interests and promote a successful outcome for the construction project.

𝟖. 𝐖𝐚𝐫𝐫𝐚𝐧𝐭𝐲 𝐏𝐫𝐨𝐯𝐢𝐬𝐢𝐨𝐧𝐬

Establish clear terms regarding warranties and guarantees for your new home. The contract should include coverage details and duration for Structural Integrity (minimum 5-year warranty mandated), Workmanship and Cosmetics (minimum 1-year warranty mandated), Mechanical Systems warranty, Finishes, and Fixtures warranty, and Water Intrusion warranty. Additionally, provide information regarding manufacturer warranties for all major components.

𝟗. 𝐃𝐢𝐬𝐩𝐮𝐭𝐞 𝐑𝐞𝐬𝐨𝐥𝐮𝐭𝐢𝐨𝐧 𝐏𝐫𝐨𝐜𝐞𝐝𝐮𝐫𝐞𝐬

Include provisions for resolving disputes, emphasizing mediation or arbitration processes if conflicts arise during the project. These provisions can help avoid costly and time-consuming litigation, preserve relationships among parties involved, ensure faster resolution, provide flexibility and control over the process, and maintain confidentiality. Overall, it promotes a collaborative and efficient approach to conflict resolution, benefiting all parties involved in the construction project.

𝟏𝟎. 𝐓𝐞𝐫𝐦𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐂𝐥𝐚𝐮𝐬𝐞

Outline contract termination procedures for both parties, including any associated penalties, fees, or non-disclosed agreements (NDAs). This is crucial for clarity, transparency, and legal compliance, providing the project owner and contractor with a legal way out. It protects the interests of both parties, mitigates risks, and facilitates negotiation in the event of contract termination.

In Conclusion

Including these provisions in your construction contract will facilitate a smoother construction process and help you achieve your Costa Rica Dream Home. Ensure you choose a reputable builder willing to work with you to tailor the construction agreement to meet your needs and protect the interests of all parties involved.

For full-service guidance through construction design and execution, please get in touch with me through Costa Rica Dream Home Construction Consulting. My specialties lie in vetting and tailoring a construction team of designers, architects, and builders specific to your project and implementing North American standards in the design and execution during construction. I also oversee contracts accounting and conduct technical component testing and compliance inspections throughout the build. 

Ask me about my Construction Owners Representation Service for more information about how we can build your team and protect your interests before, during, and after your build.

-Christopher Drown

costa rica construction agreement

-Christopher Drown

๐Ÿ๐ŸŽ ๐„๐ฌ๐ฌ๐ž๐ง๐ญ๐ข๐š๐ฅ ๐“๐ž๐ซ๐ฆ๐ฌ F๐จ๐ซ ๐˜๐จ๐ฎ๐ซ ๐‚๐จ๐ฌ๐ญ๐š ๐‘๐ข๐œ๐š ๐‚๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐œ๐ญ๐ข๐จ๐ง ๐€๐ ๐ซ๐ž๐ž๐ฆ๐ž๐ง๐ญ

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