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Costa Rica Relocation

 

CONSIDERING RELOCATION TO COSTA RICA?

REAL ESTATE BASICS

Counsel, Recommendations, Guidance, Information on Acquiring and Owning Real Estate in Costa Rica

This is by no means a comprehensive guide, but the basics are here. Once you find that perfect property, or even before you begin the search, you should be advised that:

- Foreigners can buy and own property in Costa Rica. More importantly,
foreigners have the same rights as Costa Ricans when it comes to owning property, although there are some exceptions.

- Beachfront property cannot generally be owned. No construction is
permitted within the first 50 meters of the mean high tide line, and there
are no exceptions to this ruling.

- If a property is not registered at the Public Registry (Registro
Publico) there is no legal owner and such property therefore cannot be
legally bought nor sold.

- Foreigners can own a corporation in Costa Rica. Owners of a
corporation cannot be held personally liable for actions relating to, of or
by the corporation and the assets of the corporation are protected
anonymously.

- Survey plans are not official documents of ownership of a property.
The Deed (Escritura) is the only legal proof of ownership of a property.

- Transfer of Ownership costs, which are the largest of the fees
related to buying and selling of real estate, are commonly shared between seller and buyer.

- Squatting does exist in Costa Rica, but can easily be prevented.

- There are no official guidelines for prices in Costa Rica, and the
market for real estate has been very volatile in recent years, with prices
escalating upward very rapidly. A property that you see marketed at one price, at one given month, if it is in a desirable area, will often be sold at a higher price a month or two later.

Property Types

This section outlines the property types that are generally for
sale in Costa Rica and the implications of each type of ownership for the
buyer.

1. Fee Simple:

The most common and comprehensive form of property ownership in Costa Rica is Fee Simple ownership. Fortunately for foreigners, the conditions for this type of ownership are the same as for Costa Rican nationals as they are for foreigners.

The concept of Fee Simple ownership is the same in Costa Rica as in the US
and Europe. Basically, Fee Simple ownership gives the owner of a 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 Rica laws.

Fee Simple also means that if the owner is obstructed from enjoying any of
his/her rights to the property, he/she has the right to have the property
restored to its original condition.

2. Concession in the Maritime Zone:

Beachfront property is formally known as concession property.

In Costa Rica, 95% of beachfront property is considered concession property and is governed by the Maritime Zone Law and other regulations including, but not limited to, special dispositions as stipulated by Municipalities and the ICT (Costa Rican Institute of Turismo). These legal dispositions set forth the conditions under which foreigners and locals residents can own and use concession property

A concession in Costa Rica is defined as the right to use and enjoy a
specific property located within the Maritime Zone, for pre-determined
period of time.

The State, through is respective Municipalities, grants this right and the
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 is above the level of the ocean.

This 200-meter zone, the maritime zone, is divided into two areas:

a) Public Area: The first 50 meters measured horizontally from the high
tide line, going inland. This zone is not available for private ownership of
any kind. No development is allowed within this zone.

Furthermore, this area is designated for the enjoyment of everyone in Costa
Rica and no private entity has the legal right to deny access or usage to
anyone to this beach zone. There are, then, no truly private beaches in the
Maritime Zone of Costa Rica.

b) Restricted/ Concession Areas: the next 150 meters, going inland, from
the water. This area is available for concessions to be granted by the local
Municipality. A concession is essentially a “lease” on the property granted
to lessee for a specific period of time. Normally, the concession period is
for 20 years. Appropriate permits from the local Municipality must be
obtained for specific usages.

Unlike Fee Simple property, there are ownership limitations and foreigners
do not have the same rights as citizens of Costa Rica as regards concession
property. The law states that foreigners cannot be majority owners of a
concession property. A foreigner can, however, enter into a formal
partnership with a Costa Rican citizen wherein the formal ownership of a
subject property is divided 49%/51% between the foreigner and the Costa
Rican, respectively. Then this legal partnership, such as a corporation, can
hold ownership of the concession property. One exception to this issue of
concession ownership is: if the foreigner has resided in Costa Rica for at
least five years, then that person may be granted majority ownership of a
concession.

Both foreigners and Costa Rican are required to purchase any Maritime Zone
property through the legal structure of a concession.

(Hot Tropics Real Estate can assist you in the creation of a corporation
wherein minority ownership for a foreigner can be legally established.)

3. Properties in Condominium:

For most, the concept of condominiums is one of larger apartments or
townhouses.

In Costa Rica, however, there is a law called ”Condominium Law” that
provides certain benefits to developers of many different types of
properties, including single family residence projects, finished lot
projects, condos, etc. this set of laws allows a developer to restrict and
regulate certain aspects of the development.

Ownership of property “in condominium” is fee simple ownership, but usually
carries with it a few additional restrictions set forth by the developer.

It is advised that you require the sellers of a condominium property to give
you a copy of the by-laws to check for architectural guidelines, land use
restrictions, and other limitations that may be placed on your property.

Most often, developers use the condominium laws to allow them to build
private roads in a development and set architectural guidelines. Condominium
laws are designed to protect the integrity of a development and maintain the
“look and feel” of the project. In North America, the concept of
‘covenants’ is similar.

4. Untitled Property:

There are properties in Costa Rica that are not recorded at the Public
Registry of Properties. Families have held properties of this type for
generations and there are others that have simply never been occupied or
used by human beings. In either case, it is possible that someone could
claim that they “own” the property and may put it up for sale. They may even have survey plans, fence lines or other boundary markers that separate
“their” property from a neighbor’s property.

Regardless of the time that an inhabitant has lived on the property or to
what extent they have demonstrated ownership, unless that property is
registered at the Public Registry, there is no official, fully legal, owner.

It is recommended that buying untitled property in Costa Rica be avoided
because there is no absolute way to prove that the “owner” has the right to
transfer the property nor is there a way to legally define the limits of the
property.

5. Time Share:

This option allows an owner the right to use a property for certain weeks of
the year. In most cases the time-share ownership grants similar rights as
implied in the condominium regulation except that in the time-share it is
limited to certain weeks during the year.

 

For Legal information on purchasing property, go to our Legal Info Page.

Land prices in Costa Rica

Pricing land by the acre or hectare in Costa Rica varies. depending, of
course, on its purpose and location and is determined by potential number of
building sites, proximity to developed areas, existing infrastructure or
future development plans, views, topography and a very wide range of other
factors, such as the personal bias of the owner.

 

Construction:

Before you begin your building plans, there are some things you should be
aware of. Building regulations depend on location, type of property and land
use.

By law, all applications for construction permits must be filed by an
architect or civil engineer.

You do not need a construction permit to build a house of less than 70 m2 /
750 ft2. A small structure such as this falls under separate rulings and is
considered “social housing”.

Zoning Laws:

The rules in Costa Rica governing the development of ocean front property
along both coasts are strict and are adhered to. First, in accordance with
Costa Rican law, all beaches belong to all people, and everybody has a right
to use them. The first 50 meters (164ft) above the mean high tide line are
public land. No one can restrict access to a beach or claim a beach is
privately owned, the only exceptions being landholdings in port areas, or
old land grants or, rarely, because of some legal agreements made prior to
1973.

Secondly, along nearly 85% of the coastline, the 150 meters after the 50
first meters are referred to as the Maritime Zone and this strip of coastal
zone is controlled by the government. A foreigner must establish five years
of residency to in order to formally own more than 49% of a lease in this
zone. (See the earlier discussion of he Maritime Zone laws). Foreigners
can evade this law by assigning the lease to a corporation that is wholly
Costa Rican- owned or by assigning 51% of the land (on paper) to a Costa

Rican citizen (usually your own attorney). Take a careful review of the
zoning laws before you consider development in any of these areas.

If there is no zoning plan for land you want to develop, and a zoning plan,
or master plan, is going to be absolutely required before you can proceed,
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% of coastal land not in a
Maritime Zone, then you may develop the property without filing a regulating
or master plan. However, developments geared to the tourist industry must be approved by the ICT (tourist board).

Before making your building plans:

The first thing you might choose to prior to creating your building plans is
to make a close, personal inspection of the property, note the boundaries,
the location and condition of fences and/or property markers. If you think
that it is necessary, bring in an advisor to look things over, as well.

Depending on the location of the property, you might consider:

Study, (or have someone do it for you) the official records carefully,
checking for any possible restrictions regarding the ownership of the
property. These might take the form of: public road restrictions, water
easements, utilities restrictions or any other type of restriction.

In case you have purchased a larger property with important natural features
on it, make sure that the property is not included in a national park or
reserve. Search for national park restrictions in the Ministerio de Recursos
Naturales, Energia y Minas (Energy, Natural Resource and Mine Department)
and in the Servicio Nacional de Parques (National Park Service). Also, check
with the Direccion General Forestal (Forestry Department) to make sure you
can actually use the property in the way that you want, without breaking
any forestry or preserve land laws.

Study the conditions and amenities of the property; such as topography,
electricity, water drainage, telephone services, etc.

Check the property records at the Ministerio de Obras Publicas y Transportes
(Roads and Transportation Department) to make sure the county isn’t planning to blast a freeway through the living room of your future new home.

Review local Municipality and Forestry Department plans for any possible
land usage restrictions.

Hiring an Architect or Civil Engineer:

All applications for construction permits must be filed by an architect or
civil engineer who is a member of the Costa Rican Association of Engineers
and Architects (Colegio Federado de Ingenieros y Arquitectos). These
professionals will review your plans to ensure that the building meets
seismic, electrical and other standards.

To give you an idea of what this will cost, following are the minimum rates
mandated by the “colegios” or professional associations of the Costa Rican
Association of Engineers and Architects:

· Preliminary study of construction plans and permits,: 0.5% of project
cost. (Such a study may or may not be required, depending on the project.)

· Pre-project design: 1% to 1.5% of the price the project is estimated
to cost.

· If the architect meets with you to discuss your needs, and provides
you with drafts of site planning, reviews construction plans and technical
specifications of the project: 4.0% of project cost.

Once you have arrived at an agreed-upon layout and design of the property,
the architect will draw up the plans. These will usually include a site
plan, distribution plan, elevation and transversal and longitude
perspectives, roof design and drainage, design of footings and support
beams, structural plans, electrical design, mechanical and sanitary system
design, interior finishing and construction.

The architect will usually provide you with a list of materials necessary
for the project, and will prepare a construction budget.

You should plan on 0.5% of project cost for general budgeting; 1.0% for
itemized budgeting.

Control and Execution:

Construction and project supervision. Regulations require one of three types
of supervision:

1. Inspection: The engineer or architect visits the site at least once a
week, inspects the project to make sure that the plan is being followed by
the general contractor, informs you of the quality of materials, etc. Cost:
3% of total construction costs.

2. Supervision: Engineer or architect visits your site daily and is more
directly involved with the construction and communicates regularly with the
foreman. Cost: 5% of total construction costs.

3. Management: Engineer or architect steps in to manage and direct the
project. Cost: 12% of total construction costs.

Before signing any of these contracts make absolutely sure that you have a
through understanding of its contents.

Obtaining a Building Permit:

The laws stipulate that you must get a construction permit to build a house
of more than 70 sq./m. (750sq./ft)

You or your architect must file for permits at the ‘Oficina Receptora de
Permisos de Construccion’ (Permit Reception Office). The plans will be
studied by representatives from the MOPT (Roads and Transportation
Department), INVU (Housing and Urban Development Department), ICE
(Electricity Department), AYA (Water Department), SNE (National Electrical
Services), CFIA (Costa Rican Architect and Engineer Association), the Health
Department and the local municipality where the property is located.

You will need the following:

1. Four copies of the construction plans

2. Four copies of the property cadastre plan (plano catastrado)

3. Two copies of the property deeds

4. One copy of the architect or engineer’s consulting contract (Contrato
de Consultoria).

5. Approval from the water department regarding availability of water

6. One copy of your electrical design plan approved by SNE.

Condominium, commercial construction or urbanization projects may or may not require additional permits.

In addition to the permits listed above, you will need a construction permit
from the local Municipality where your property is located. Each
Municipality is responsible for creating and enforcing building codes for
construction projects in its area.

The total project, depending on size, materials, location, generally (and
these are, of course, only approximations) takes up to at least:

Property research, first draft 6 weeks

Construction plans 6 weeks

Building permits 9 weeks

Construction 33 weeks

Total: 55 weeks

 

Building a house in Costa Rica in the year 2005 is going to cost
approximately $500 to $950 per sq. meter ($50 to $95 per sq./f.) depending on the type of structure, quality of work, materials, especially finishing materials and cabinetry, and location.

Here are a few construction tips:

· You cannot built a house within 15 meters of a river.

· In most locations, your have to leave space for a front yard and a
sidewalk.

· Housing developers should keep in mind that Costa Rican law allows
you to dedicate only 60 to 70% of your land to be used for building lots.
20% to 25% will be used for roads and 5% to 20% for parks.

· If you have a nice view from your property, and there is a chance
that a future building or home will block that view, and if you can afford
to do so, purchase the land around your property and in front of it.

· Contractors get a discount on materials. It is always a temptation to
build with the stuff that gives them the best markup. Check up on them. Make
sure they’re using the materials that you have agreed upon.

· Along both coasts, the first 200 meters above mean high tide is ownedby the government. No building is permitted within the first 50 meters above
mean high tide, regardless.

· The area 50 meters to 200 meters above mean high tide may be leased
from the local municipality with the approval of the Instituto de Turismo (
Costa Rican Tourist Board)

The ICT (Costa Rican Tourist Board) discourages the building of anything
over three stories high in beach areas.

 

Immigration:

Foreigners are allowed to live in Costa Rica as permanent or temporary
residents.

However, the majority of people that have bought property in Costa Rica
spend only part of the year in there. They obtain a 90-day visa which
permits foreigners to stay in Costa Rica for a 3-month period. After the 90
days one is required to leave the country for at least 72 hours before a new
90-day visa can be issued.

This 72-hours spent outside of Costa Rica can be legally accomplished by
simply visiting, as an example, Panama or Nicaragua for 3 nights and than
returning to Costa Rica.

If the time has come wherein you want to have a more permanent solution for spending time in Costa Rica, you can apply for residency.

Permanent residents: are divided into the following categories:

· Retiree (Pensionados)

· Rentist (Rentistas)

· Investors

· Foreigners whose children, spouse, parents, or single brothers are
Costa Rican citizens

· Immigrants

Temporary residents: are divided into the following categories

· Scientists, professionals, professors, or technicians hired by local
corporations or institutions.

· Businessman or directors of local or foreign corporations.

· Students

· Priests

Most commonly applied for are the status of ‘Pensionados’, ‘Rentistas’
and Inversionistas’, the categories of which include their spouses and
children under 18 as dependents. A child between 18 and 25 can be a
dependent if he/she is enrolled in a university (proof of enrollment is
required).

To apply for one of these three types of residency:

· ‘Pensionado’ – Retiree with a guaranteed lifetime pension.

1. Applicant must prove a monthly income of $600 ($7.200 per year) from
a qualified retirement plan or pension source.

2. Applicant must reside in Costa Rica at least 4 months per year.

3. Applicant must exchange his income into local currency with a local
bank.

4. Applicant is not allowed to receive any local salary or income other
than his pension.

· ‘Rentista’ – Resident with interest and or Dividend Income.

1. Applicant must prove a five year monthly income of $1000, ($12.000 per year) from an investment or dividends from a foreign pension or national bank.

2. Applicant must reside in Costa Rica at least 4 months per year

3. Applicant must exchange his income into local currency with a local
bank.

4. Applicant is not allowed to receive any salary or income other than
his rent.

· ‘Inversionistas’ – Investor

1. $50.000 investment with an approved organization in a field such as
tourism or an export business.

2. $100.000 investment in a reforestation project.

3. $200.000 investment in an area of business.

4. Applicant is required to reside in Costa Rica 6 months per year.

The permanent residency petition has to be requested at the Costa Rican
General Consulate in the petitioner’s country. This procedure has two basic
phases: the first one, is to evaluate if the applicant qualifies in any of
the above categories, and the second one consists in the preparation of the
documents requested by Consulate and the authorities of the petitioner’s
country. It should be remembered that the rules and regulations governing
these categories do change from time to time. One should always check with
one’s immigration lawyer for the most recent regulations.

These, then, are some of the basics that one should know when considering
living a life in Costa Rica. And the estimates as to the length and
difficulties of the learning curve that one goes through when creating an
idealized life here vary somewhere between a year and three years. But,
finally, all such estimates are meaningless. Its really up to you.

Harvey Haber Hot Tropics real estate agent

Harvey Haber






Fill out our Costa Rica Real Estate Information Request or:

Email inquiries to: harveyn@hot-tropics.com

Phone Costa Rica, call: 011 (506) 2288 3615

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