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General Laws of Owning Property in Costa
Rica
In matters of land and property
ownership,
foreigners and Costa Rican citizens
have
equal rights under the law (unless
the owner
bought the land as part of a
government program).
In these cases, the land can
be traded or
sold to foreigners only after
the original
owner has held it for certain
period of time.
Foreigners do not have to live
in Costa Rica
to own property here.
Registration of a Property
Costa Rican properties are registered
at
the Registro de la Propiedad
(Property Registry)
which keeps track of all the
title registrations.
It is a great resource for verifying
the
status of a title or claim associated
with
a property.
If you wish to buy land in Costa
Rica it
is wise to either hire a lawyer
or go yourself
to the Registro de la Propiedad
to search
the title and verify that there
are no liens
against the property or the property
owner(s).
Once you buy a property, you
need to make
sure the sale is properly registered
at the
Registro de la Propiedad, proof
that you
are the new legal owner.
There is no local financing for
property
purchased by foreigners.
Zoning
Building and subdivision plans
must be:
A. Signed by a registered local
engineer
B. Approved by the local Ministerio
de Salud
(Health Department)
C. Approved by the Instituto
de Vivienda
y Urbanismo (INVU) (Housing and
Urban Development
Department)
Real Estate Brokers
The Ministerio de Economia (Treasury
Department)
issues real estates licenses
on the recommendation
of the Chamber of Real Estate
Brokers.
Taxes
Property taxes vary from 0.5%
to 1.5% of
the declared value of the property.
However,
Costa Ricans are a calm and resourceful
people,
so they customarily undervalue
their properties
by at least 20% when they register
it.
The closing costs of a sale include
a transfer
land tax, a stamp tax, and legal
fees. Closing
costs run about 5% or 6% of the
sale price,
an expense divided evenly between
buyer and
seller. Transfer land tax and
stamp tax assessments
are based on the declared value.
Legal fees
are based on the selling price
of the property.
Transactions may be conducted
in U.S. dollars.
Costa Rican lawmakers have drawn
up very
strict rules governing the development
of
ocean front property along both
coasts.
First, according Costa Rican
law, the beaches
belong to everybody and everybody
has a right
to use them. The first 50 meters
(164 ft.)
above the mean high tide line
are public
land. No one can restrict access
to a beach
or claim a beach is privately
owned, exceptions
being landholdings in port areas,
old land
grants or by some agreements
made prior to
1973.
Second, along 80% to 85% of the
coastline,
the 150 meters (492 ft.) after
the 50 first
meters (164 ft.) are called the
Maritime
Zone and are controlled by the
government.
A foreigner must establish five
years of
residency to own more than 49%
of a lease
in this zone. Foreigners can
evade the law
by assigning the lease to a corporation
that
is wholly foreign owned or by
assigning 51%
of the ownership of the land
(on paper) to
a Costa Rican citizen. Take a
careful look
at the zoning laws before you
start development
in any of these areas.
If there is no zoning plan for
land you want
to develop, hold off on the celebration.
If nobody has gotten around to
making a zoning
plan, then it's up to you to
create one on
your own and submit it to ICT
(Tourist Board),
the INVU (Housing and Urban Development
Department),
and the local municipality for
approval.
The "zoning of land"
plan you submit
must address questions regarding
– among
other things – public use areas,
roads, water
and electricity.
If your development dream is
located on the
15% or 20% of the coast land
not in a Maritime
Zone, then you may develop the
property without
filing a regulating plan. However,
developments
geared to the tourist industry
must be approved
by ICT (Tourist Board), anything
else requires
building permits.
Squatters
The greatest potential danger for land ownership
in absentia and at times even when the landowner
resides on the property is the problem of
squatters. Before investing in large expanses
of land or even a cottage, or a quinta in
the countryside, knowledge of the legal procedures
along with due diligence is necessary to
maintain one's property rights. Written into
the Civil Code (hereafter referred to as
'CC') are numerous passages that deal with
the rights of possession that are reminiscent
of the earlier days of agricultural reforrn.
Such clauses tend to favor the small, poor
land-holder by upholding de facto "squatters
rights" (CC Titulo II, Capítulo II).
Technically, squatters can only attempt to
gain legal rights to a non-maritime property
by peacefully occupying non-cultivated, unimproved
agranian land over an extended period of
time. The difficulty of maintaining one's
rights over those of the squatters is due
to the nebulous nature of the law and what
legally passes as "non-cultivated"
or "unimproved" land. It can be
equally difficult to establish the duration
of the squatter occupation, which is a crucial
piece of evidence in the eviction process.
It is imperative to understand that, according
to the law, in case of doubt, "good
faith" is presumed on the side of the
squatters (CC Art. 284).
There are legal steps that can be taken to
rid one's land of squatters. Procedurally,
the eviction process is divided into three
phases. The first phase is the eviction of
squatters during the first three months of
occupation. Such early discovery is key,
as during this period one need not go to
court. Theoretically, one need only alert
the local police, who are then obliged to
evict the squatters. The catch is that it
can be extremely difficult to get the police
to carry out their duty, and if one is not
in the country, actual eviction is very difficult
to verify. Even though eviction within the
first three months is a rather straightforward
procedure, at least in principle, early recognition
can prove to be difficult if one is not residing
on the property.
The second phase is after the initial three
months of occupation but before one year.
If squatters are "allowed" to squat
on property for this duration of time, one
must go to the courts and start the process
of "administrative eviction" (Harris,
1995). The third phase is continued occupation
for more than one year. According to the
law, squatters have then achieved a "legal
assumption," and the owners must go
through an ordinary lawsuit process. Such
a process has been described by attomey Robert
Wells as "kind of like a root canal"
(Harris, 1995). In order for the court to
grant the property rights to squatters, they
must prove that they have been on the land
"uninterrupted," "non-challenged"
and "peacefully" for ten years.
Although there are no foolproof, preventive
measures for eliminating the problem of squatters
on land owned in absentia, there are a few
somewhat helpful steps that can be taken.
Firstly, the propety should not appear abandoned
and signs should be posted with the owner's
name. The most important, albeit expensive,
precaution is to hire a caretaker for the
property. Great pains should be taken to
secure a reliable caretaker, as well as another
individual who can monitor the caretaker;
it is not unconunon for a caretaker to squat
on the land that he is paid to protect. The
easiest way to avoid such a problem is to
register the caretaker as an employee, which
entails paying minimum wage and social security.
One should also demand signed receipts from
the caretaker as proof of payment.
A word of caution regarding squatters: the
notion that squatters are simple campesinos
is unfortunately not always correct. There
have been numerous reports of armed, dangerous
and organized squatters -- predominantly
in the southern regions of Golfito and Pavones,
and one such group killed an American landowner
in 1997. There have been other reports of
a armed squatters using intimidation and
violence with caretakers and landowners in
order to gain control of the land. Obviously,
extreme caution should be exercised when
purchasing land in Costa Rica to avoid areas
with known organized squatters. The bottom
line with purchasing land for future development
or as a summer getaway is that, while it
may be less expensive than other developed
resort areas, it may not be the bargain it
appears, as caretaker and attomey costs may
accumulate very quickly.
Check out the guide to buying
For more real estate information and articles,
be sure to check out the following
sites!
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