Costa Rica Real Estate Beach Property

Buying Real Estate in Costa Rica

Costa Rica, a country known worldwide for it's beautiful rainforests, its virgin beaches and coastline, and for its friendly and peaceful population, is also a very attractive market for Real Estate investment. When investing in Real Estate it is very important that one must be legally advised at all times. Specifically, when you are thinking about purchasing beachfront property in this lovely place you must take into account that there is a very important regulation concerning all coastal land, which is called the Maritime Zone Law or (Ley de Zona Maritima Terrestre).

The Maritime Zone Law, which was created in 1977, is a law which secures that all beachfront property in Costa Rica is public and that no one may be able to own beaches exclusively. (The exception is a small percentage of the beachfront that is titled through old land grants and those titled before 1973.) Anyone who has visited Costa Rica has probably noticed that you can freely enjoy any beach in the country as long as there is access to reach it.

Regulations for Beachfront Property

As stated above, all beachfront property in Costa Rica is public by default. This is clearly explained in article 9 of the Maritime Zone Law which states: "The Maritime Zone encompasses two hundred meters of beachfrontage which is owned by the Costa Rican government. The 200 meters regulated by the Maritime Law extends all over the Pacific and Atlantic coasts of the republic and any of its nature, terrains, and rocks that are exposed at low tide." This zone also includes islands, pinnacles of rock, mangroves, estuaries, and any other natural formation that overcomes the sea level.

The next article in the Maritime Zone Law is very important as well since it explains how this Maritime Zone is defined. Article 10 states: "The Maritime Zone is composed of 2 sections: The Public Zone which is the first 50 meters of tideland and the areas exposed during the low tide, and the Restricted Zone which is the next 150 meters inland after the Public Zone." So the first 200 meters or the "Maritime Zone" is in the following 2 categories:

- The first 50 meters which are inalienable public property

- The next 150 meters which are granted for leasing by the Municipalities (the local governing body) to private individuals or to corporations.

So, the first 50 meters above the high tide mark are public and it is prohibited to restrict access to or own this area. There are some rare exceptions, which include port areas, old land grants, and some properties titled before 1973. The next 150 meters can be leased or "concessioned" in exchange for an annual fee. The person who is granted the concession does not and will not own the property but will be able to use the property in accordance with the regulations of the city, which are specified in the "Regulatory Plan" (Plano Regulador) of each particular area.

Regulatory Plans or Plano Regulador

It is very important to make sure that a Regulatory Plan exists in the area in which you are thinking to invest. If there is no plan, then a prospective investor may try to have one made for the property that they are interested in. This requires approval by the ICT (Costa Rican Tourism Board), INVU (the Urbanization Institute), and the local municipality (local government). When there is a regulatory plan, it regulates the zoning and possible usages of the land and also includes public areas, roads, waterlines, and electrical lines.

So, the holder of a concession has to not only pay an annual fee but also comply with the zoning restrictions set forth in the Regulatory Plan. These plans establish what areas will are designated for residential, commercial, hotel or condominium, as well as areas that are subject to environmental protection. If someone wishes to build something that is not permitted in the Regulatory Plan, an application for modification must be submitted to the local municipality for review.

Concessions

The leases or concessions consist primarily of a permit granted to a person or a corporation that gives them the right to use and enjoy a specific property located within the maritime zone for a pre-determined period of time. These concessions are generally leased for a period of up to 20 years, and they are automatically renewable. If the Municipality wishes to cancel a concession, which is a rarity, they must justify reasons to do so. If the grantee of the concession wishes to contest the arguments presented by the municipality, they have the rights to take the decision to the courts and challenge the municipalities case. Municipalities are also required to pay the holder of a concession the current market value for improvements made to the property if that Municipality chooses not to renew the concession.

The holder of a concession has the right to build on that property, subdivide the property and perform other acts to the property, however, appropriate permits must be obtained from the municipality to do so.

General Requirements for Requesting a Concession

Concession holders must meet one of the following criteria:

- Be a legal resident of Costa Rica with a minimum of 5 years residing in the country

- A Costa Rican Citizen

- Or part of a Costa Rican Corporation with at least 51% Costa Rican ownership

New Concessions

The concession application must be filed in the municipality which holds the jurisdiction to approve it. Then the local authorities must perform a valuation of the property that will establish the annual fee to be charged for the particular concession. Afterwards, the city council votes and approves a "resolution project" that needs to be signed by the mayor of the town in order to get the Concession Agreement formally granted.

Another requirement is to present a "Tourism Declaration" from the Costa Rican Institute of Tourism (ICT)- the governments institution concerning tourism affairs, for approval. The Local Department of Agriculture (IDA) must also approve it in certain cases. Finally, it is sent to registration before a Notary Public in the General Registry of Concessions.

Concession Limitations

According to the Maritime Zone Law, the only limitation existing for concession granting is the restriction for foreigners to be solely concessionaires unless they have a 5 year legal residency in Costa Rica. This can be easily solved through the figure of Corporations, since foreigners that don't have the 5 year resident status can be granted concessions through the use of these companies. The way to do it is to hold the majority of the shares of the corporation without exceeding 49% of the shares. The remainder of the shares are then signed over to the real owner of the corporation, the Costa Rican citizens remain in their position in the corporation in name only, without power. This is to comply with the rule that states that a corporation that holds a concession must be 51% owned by Costa Rican citizens. Local lawyers set up these types of corporations everyday. It is a safe, legal way for foreigners to gain access to properties in the Maritime Zone in Costa Rica.

We here at Rich Coast Realty are dedicated to safe and legal business practices and we work with qualified lawyers who assure that your property investment is safe and worry free. If you have any questions about legalities of Costa Rican property don't hesitate to contact us.

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