Legal Newsletter

 

If you are considering buying a property in Costa Rica you should have in mind some considerations regarding the legal aspects before. The acquisition of real estate is one of the most significant investments a person makes during his lifetime. The normal stress and pressure involving the purchase of an asset may increase by some factors as language barriers and unfamiliarity with local laws and procedures.

In Costa Rica foreigners have the same rights to own properties, as do citizens. Many countries have restrictions on foreign ownership of real estate but it is not the case of Costa Rica.

Here, all titled properties are registered in National Register (Registro Nacional). If a property is not registered, it is untitled and you should have special carefulness because you will not know the liens, encumbrances or ownership of the property.

In the case of titled properties almost all the liens, encumbrances and impediments are registered in Registro Nacional. It is also important to be sure that the property you see is the property you are getting so you must have a copy of the chart. Once you have decided to buy certain property it is very important to get a good legal advice. A diligence lawyer should check out all this matters before getting any option or elaborate the deed.

 

 

Regarding Beach Front Property the law concerning “zona marítima terrestre” or shore line zone, states that the first fifty meters above the high tide is public property and nothing can be build on it. The next hundred and fifty meters can be leased for private use by the government. All leasing is done trough the respective municipality and the construction in this zone is permitted. Leases of land within the maritime zone are settled renewable for five to twenty years. The lease is registered in a special Concession Registry in the Public Register and a yearly fee must be paid to the municipality. It is important also to check for possible liens and restrictions before purchasing this kind of property.

Condominium property is registered in a special section of the National Register and just as in the case of any type of property must be title searched for encumbrances or liens. The buyer should become thoroughly familiar with the condominium regulations, most of which are in included in the transfer deed. Specific regulations of a condo might include restrictions to own a dog, have a business, etc.

Before the closing you have to know that in Costa Rica not all the lawyers are public notaries, so if you choose a lawyer who is also notary you will save time and money. At the closing time various documents must be presented in addition to the transfer deed. These documents include proof that territorial and municipal taxes and public services fees have been paid to date. The transfer deed must be prepared by your notary. And usually the fees and transfer taxes are split fifty/fifty between seller and buyer. If there is a mortgage or a trust involved the purchaser should pay the notary fees and costs of this contracts.

Hope that this information helps you in the purchase or your property in Costa Rica. This article is not intended to be very exhaustive and we stand ready to answer any further doubt you may have.

 

The Title Guaranty, from old data in other countries, is a growing figure in Costa Rica.

The Title Guaranty or Title Insurance is a protection from unforeseen problems concerning the title of the property.

In Costa Rica, there is a monopoly of the insurance services, the only entity that is allowed by law to sell insurances is Instituto Nacional de Seguros (INS) or National Insurance Institute. That is why the title guaranty has been criticized for some defenders of that Institute. But in fact, there are big differences between insurance and the title guaranty.

In the title guaranty there is a sole payment (at the beginning) and the property is covered only by errors or problems with the transmission chain of it, not for construction problems or a lawsuit established against the owner for any civil liability.

Here are some of the benefits for the owner:

 

1. Eliminates the risk of loosing the property due to title defects.
   
2. Immediate financial recourse in the event of title defect.
   
3. Customized guaranty suited to local market.
   
4. Standardized process delivered in a timely fashion.
   
5. Facilitates credit with financial institutions.
   
6. Facilitates re-sales.

 

The title guaranty companies give the purchaser, in case of a legal problem regarding the property because of the tile, two options: a) The payment of the costs of a legal representation to defend the property in court; or b) Payment of the value of the property.

The title guarantee first start through a law firm, a complete historical study of the land, starting from the moment of creation or registration of it in the National Registry (or at least ten years ago). If the study, called Title Opinion, indicates that there is no problem with the transmission chain of the title property the company will agree to guaranty the real estate with out problems.

The fees for the Title Guaranty vary depending on the company, some of them have a flat fee up to the first USD $800,000.00, but the regular price is around the 0,5% of the value of the property.

There’s a recent and usual practice in the real estate developers to offer the public the properties and projects including the title guaranty. This is very helpful in the selling process of the units, because the investors feel more secure with their investments, knowing that there is no chance of loosing the property because of the title, and if a problem arises, they will be covered by the guaranty company.

This kind of service could be acquired through a law firm or directly in the offices of the companies, in both cases, there is no variation in the costs.

Do not hesitate to contact our company if you have any doubts or apprehensions regarding the title guaranty. We are specialist in real estate law in Costa Rica.

 

Concession property is more commonly known as beachfront property. In Costa Rica, 95% of beachfront property is considered concession property by the Government and is ruled by the Law of the Maritime Zone and other specific regulations including special dispositions stated by municipalities and the ICT (Costa Rican Institute of Tourism) and MINAE (Ministry of Environmental and Energy). These legal dispositions set the conditions under which foreigners and local residents can own concession property.
A concession in Costa Rica is defined as the right to use and enjoy a specific property located on the maritime zone for a pre-determined period of time. The Estate through the respective municipality grants this right. This period is renewable, but in the conditions of the contract that the owner sings with the municipality says that in any time the Government is authorized to revert the concession.
The first 200 meters measured from the high tide line of the sea defines the boundary of the maritime zone. This zone also includes islands, pinnacles of rock, mangroves and any small natural formation that overcome the level of the ocean. This 200 meter zone is divided into two areas:

a. Public Area: The first 50 meters measured horizontally from the high tide line. This zone is not available for ownership of any kind. No kind of development is allowed except for constructions approved by governmental entities.
b. Restricted Area: The next 150 meters. This area is available for Concessions to be granted. A concession is in essence a “lease” on the property granted to the lessee for a specific period of time. Normally the concession period is granted for 20 years. An owner of a concession may build on that concession, subdivide the concession and perform other acts to the property. However, appropriate permits from the local municipality must be obtained.

It exist special regulations in order to construct in some pubic areas, like Golfo de Papagayo and in other special cases like marinas. Before buying a property in the maritime zone is better being sure that the property has already a maritime concession given by the respective municipality where the land is located.

 

The only case in which they are limitations is regarding properties located in the maritime zone, where the law establishes that foreigners cannot be concessionaires and the only possibility is through a partnership (corporations) with Costa Ricans been owners of maximum 49% of the shares in a determined corporation or for foreigners residing in Costa Rica for at least five years. Ownership on the maritime zone is limited for Costa Ricans, since on these areas concessions are the only possibility.
If you have any doubt or apprehension regarding beach front properties regulations do not hesitate to contact us any time.