One of the phrases we hear most often from foreigners who have been defrauded in Costa Rica is: “why bother reporting it, nothing happens here.” That is exactly the belief that repeat offenders count on. This is the story of a case that proves otherwise.
A Swedish couple, with their three-year-old son, bought a lot to build their house and hired a local contractor to handle absolutely everything: coordinating architects and engineers, processing the construction permits, arranging the water and electricity meters, and executing the entire build. All of it concentrated in a single person. They signed a construction contract with payments in installments, disbursed as the work progressed.
At first, everything seemed to be going well. You could see the progress: a small guest house was built first, and then the main house began. But after the guest house, the pace changed drastically. Less material was showing up. The crew went from six workers down to just two. And the contractor started asking for more money, without the work moving forward at the same pace.
One night, the neighbor next door confirmed something our clients did not know: the construction site was drawing electricity from his meter, without authorization. The contractor had never filed any plans with the CFIA (Costa Rica’s engineers and architects board) or hired a responsible engineer for any part of the project, meaning the entire build was going up completely outside any professional or legal framework. When confronted, the contractor said it was “a misunderstanding.”
A week later, the workers stopped showing up. They had not been paid in four weeks, and they also had no CCSS coverage or the workers’ risk insurance policy that Costa Rican law requires of anyone employing workers on a construction site. The project came to a complete halt. Our clients had to process the water and electricity meters all over again, on their own. The loss at that point: USD $120,000 already paid to the contractor, with the actual progress of the work not accounting for even a fraction of that amount.
The first attempt: conciliation
As they should, our clients first tried to resolve it the most direct way: a conciliation process with the contractor, to see if he was willing to return the money. At first, he said yes. Then he simply stopped responding.
That is when they decided to take formal action, without yet knowing that this same contractor had already done exactly the same thing to five other foreign families in the area. None of them had reported it. Because of that, he had faced no consequences, and kept operating freely in the same area.
The legal strategy: civil and criminal, in parallel
We opened two separate proceedings, attacking the problem from different angles. First, a civil claim for breach of contract, seeking damages: the Civil Code establishes that every bilateral contract, and a construction contract is exactly that, carries an implicit right to demand either performance or termination of the contract, along with compensation for the damages the breach caused.
In bilateral contracts, the party who has fulfilled their obligations may demand forced performance of the contract or its termination, and in either case, payment for the damages caused by the other party’s breach.
Second, we filed a criminal complaint for fraud (estafa). The crime of fraud is established when a person, through deception or the concealment of true facts, induces another into error and thereby obtains an unlawful patrimonial benefit, causing them harm. Charging for construction milestones that were not actually being completed, while concealing that there was no responsible engineer and no approved plans, and while diverting the cost of electricity onto the neighbor to cut expenses without lowering what he was charging, fits that description exactly.
Once the contractor saw that both proceedings were moving forward in earnest, and that, unlike his previous victims, these clients were actually documenting and reporting everything, he changed his tune. He reached a settlement to pay USD $70,000 and agreed, as part of the deal, never to work in that area again or on any other construction project.
Why we’re telling this story
It is very common to hear that “there is no justice in Costa Rica,” and that idea does double harm to the foreign community: first, because it discourages victims from reporting, and second, because people acting in bad faith know it, and count on exactly that to repeat the same scheme over and over, with total impunity.
The reality is different: there is justice in Costa Rica, even though it moves at the pace of the Costa Rican system, which is not always as fast as what many foreigners are used to back home. But it does move. And every complaint that gets filed does not just seek redress for the person who filed it, it also closes the door on that person doing the same thing to someone else.
At Libre Verdad, we pursue civil and criminal proceedings in parallel for our clients when the situation calls for it, precisely to maximize both the chance of recovering what was lost and the chance of stopping the person who caused it. If you are in a similar situation and are not sure whether it is worth reporting, let’s talk. It is worth it.
Confidentiality Notice: This story is based on a real case handled by Libre Verdad. To protect the privacy of those involved and comply with our professional duty of confidentiality, the names, certain facts, and some identifying details have been changed. Any resemblance to identifiable individuals is solely for illustrative purposes.
Información general, no constituye asesoría legal. / General information, not legal advice.
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