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Learning the Ropes:
Introduction
The acquisition of real estate is one of the most significant investments a person makes during his or her lifetime. There are several issues involved that must be dealt with diligence, care and patience in order to avoid a negative consequence during this endeavor like the loss of money or real estate. Language barriers, unfamiliarity with local laws and procedures are two of the most important reasons why you should get proper and trustworthy counsel during your real estate transaction. In addition to this it is important to consider escrow and title services in order to minimize risk and unwanted situations regarding your property or your money. Being a foreigner you need somebody trustworthy and honest up close to your investment that protects your interests.
There are several issues you should be familiar with when investing in Real Estate in Costa Rica in order to understand the process and avoid getting hurt. You should always ask your attorney, realtor or seller about these and get clear answers:
Titled Property: The most comprehensive form of property ownership in Costa Rica is titled property. Fortunately for foreigners, the conditions for this type of ownership are the same for Costa Rican nationals as they are for foreigners. The concept of titled property is very similar to the concept of fee simple title in the US. Basically, titled property gives the owner of that property the absolute right to materially own the property, use it, enjoy it sell it, lease it, improve it, etc., subject only to conditions outlined in the Costa Rican Laws. Buyers who purchase fee simple title have the most rights under to law to enjoy and use the property as they see fit.
Concessions in the Maritime Zone: Concession property is more commonly known as beachfront property. In Costa Rica, 95% of beachfront property is considered concession property and is governed by the Maritime Zone Law and other specific regulations including but not limited to special dispositions stated by municipalities and the ICT (Costa Rican Institute of Tourism). These legal dispositions set forth 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. The first 200 meters measured horizontally from the high tide line defines the boundary of the maritime zone. This zone also includes islands, pinnacles of rock, mangroves, estuaries, small islands and any small natural formation that overcome the level of the ocean. This 200 meter zone is divided into two areas:
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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.
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Restricted/Concession 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.
Property under Condominium Regime: When US citizens think of Condominiums, they normally think of large apartments or townhouses. In Costa Rica, there is a specific law that in combination with other legal dispositions regulates al conditions required in order to set up a condominium. Each Condominium developments has its own bylaw containing all of the restrictions, limitations and privileges that can be enjoyed by individuals who purchase a property is such development.” Ownership of property “in condominium” is fee simple ownership but specifically restricted to secure the interest of the condominium community set initially by the Developer and later by the Home Owners Association. It is advised that you require the owner of the property to give you a copy of the by-laws to check for architectural guidelines, land use and others.
The Sale/Purchase Process
Structuring your transaction
Costs Associated with your investment
Protecting your real estate investment
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