Costa Rica real estate, investment and immigration information. Costa Rica laws and Constitution protect private ownership of land and foreigners enjoy the same rights as citizens. There are almost no restrictions to ownership of private land, except that given or sold to Costa Rican citizens as part of government programs, which can be freely trade or acquired by foreigners only after the original owner has held it for certain period of time. Neither citizenship nor residence or even presence in the country is required for land ownership.
Costa Rica boasts of a safe form of title registration to protect buyers from hidden claims. It is centered in the Registro de la Propiedad (Property Registry), where both title documents and survey palted for every property are recorded. Any change in the status of a title or any claim that might affect it must also be noted on the title registry page, thus making it easy to verify. USA title insurance companies are available for Title Insurance, which is always recommended.
Just as anywhere, you want to be sure that the property you see is the property you are getting. If there is a question at all, you should have a survey done. Likewise, you may want to have an engineer check buildings for defects.
Knowledgeable lawyers agree that zoning regulations in Costa Rica are reasonable and logical, although far less stringent that in countries such as United States. A registered local engineer must sign all building and subdivision plans and they also require approval by the local municipality, the Ministry of Health, and the government Housing Department.
The Ministry of Economy issues real estate licenses on recommendations from the Chamber of Real Estate Brokers, which is dedicated to raising standards of both competence and ethics.
The taxes paid on properties in Costa Rica are very low. Yearly property taxes vary from 0.5% to 1.5% of the declared value of the property. This declared value is a common law practice in which a property’s value according to the government is very low, almost always lower than the sales practice.
Closing costs for a sale include a transfer land tax, a stamp tax, and legal fees. Closing costs typically run 5% to 6% of sales price and are usually split 50/50 between buyer and seller. The transfer and land taxes are assessed based on the declared value, while legal fees are charged based on SALES PRICE of the property.
Regulations for Beachfront Property
When buying beachfront properties, one must be aware of regulations Costa Rica’s coastline is all public. By law, the first 50 meters above the mean high tide line are inalienable public, define by what is known as the 50-meter line. No one can restrict access or have a totally private beach. There are some exceptions, but they include port areas, old land grants, and some title prior to 1973.
On 80% to 85% of the coast, the next 150 meters are government owned lease and also known as the maritime-terrestrial zone (or just maritime zone). Restrictions on maritime zone land for foreigners are that one must establish five years residency to own more than 49% of the rights to a lease. Two loopholes include holding the lease with a corporation that is wholly owned by a foreigner, or by having a Costa Rican hold 51% of the lease in name only. Development of the maritime zone does not discriminate against foreigners. A regulation plan must exist for area where the land is or just for the parcel itself.
If one does not exist the developer must make one, then have it approved by ICT (the Tourist Board), INVU (the Urbanization Institute), and local municipality. Such a regulation plan will call for "zoning of land" includes public use areas, road, water, electricity and more.
The other 15% to 20% of the coast is land that is title to the 50 meters line. That is to say that no maritime zone exists and the landowner may develop without inconvenience of filing a regulation plan. Tourist development must, of course, be approved by ICT, but almost anything else would require only building permits.
Information obtained from the Costa Rican Investment and Trade Development Board. Always verify information for accuracy and be alert to changes in the law.
Warnings - Buyers Beware
Some factors, which will not show up in the Registry, do exist. One of these is squatters. Squatters have legal rights and legally ousting them takes judicial intervention. Without going into details of the law, suffice it to say that, under most circumstances, one does not want to purchase property with a squatter problem. The longer the squatters have been there, the harder it is to get rid of them and the process could take years. If the squatters have been in possession of the property for 10 years or more they have untitled ownership which can be titled by the Courts. Prior to the ten years, an owner can be compelled to reimburse squatters for any improvements they made to the property. Do not buy into a problem. Thoroughly inspect your property for squatters prior to purchase and be sure your lawyer includes an anti-squatter clause in the agreement of sale. Once you purchase a property, especially a large rural tract, it is advisable to "contract" a caretaker to guard against encroachments. This is not that expensive, especially if the caretaker's contract allows him to partially farm the property. It is important to have a written contract with the caretaker in order to prevent him from ever asserting squatters rights himself. For homes, lots, and urban land, squatters are less of a problem. However the property should be inspected regularly either by the owner or an agent if the owner is unavailable. Getting rid of squatters in easiest if action is taken within the first three months.
One other encumbrance, which can only be detected by a visual inspection of the property, is the case of unregistered leases. Leases can be registered but most are not, especially in the case of residential ones. Make sure your lawyer guards against unwanted tenants with an appropriate clause in the agreement of sale. Inspect the property as immediately prior to closing as possible.
Always consult with government officials when land is near a National Park or other possibly important wildlife preserve. There may be vague areas of law which allow the Costa Rica government to take your property for National Park purposes without adequate compensation.
Always consult with a reliable local attorney.