Real Estate Regulations

General Information

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:

• Signed by a registered local engineer
• Approved by the local Ministerio de Salud (Health Department)
• 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 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.

Ocean Front Properties

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.

Coastal Building Regulations:

The Maritime Zone runs for more than 1,500 km. (932 mi.) along both coasts. More than one third of this (590 km. (367 mi.) is open to legal development. The rest is invested in mangrove swamps, National Parks, mouth of rivers and other protected areas.

Most of this land is already developed, most of it illegally. Only a small fraction is still open to development. For instance, the local municipality of Santa Cruz, Guanacaste has leased to developers 40% of the 50% of the land allotted to it in the Maritime Zone.

According to the law, land can be acquired only through temporary 5-20 year concessions, and must be developed according to a detailed regulatory plan consisting of a zoning plan, showing what is going to be built and where, and a construction implementation framework, showing in detail how all this is going to be handled. The regulatory plans must be approved by A. The local municipality; B. The Costa Rican Tourist Board, and C. The Housing and Urban Development Department (INVU).

Currently, only three hundred building concessions are recorded in the Registro Publico, and only two hundred of these are current and in accordance with the law. However, there are fifteen THOUSAND hotel and tourist developments along Costa Rica's coasts, which received government approval but, for mysterious reasons, were able to bypass planning controls required by law.

Most coastal lands under concession are leased at very low prices. Most beaches are not regulated. Only a few have even been surveyed. It has been a common practice, through bribery or influence, to take beach land illegally. The land is then sold to foreign investors who believe they are taking legal title to the property.