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Ownership
of Land in Costa Rica
Costa Rica laws and Constitution protect private ownership
of land and foreigners enjoy the same rights as citizens.
There are almost no restrictions to ownership of private
land, except that given or sold to Costa Rican citizens
as part of government programs, which can be freely
trade or acquired by foreigners only after the original
owner has held it for certain period of time. Neither
citizenship nor residence or even presence in the
country is required for land ownership.
Title
Registration
Costa Rica boasts of a safe form of title registration
to protect buyers from hidden claims. It is centered
in the Registro de la Propiedad (Property Registry),
where both title documents and survey plat for every
property are recorded. Any change in the status of
a title or any claim that might affect it must also
be noted on the title registry page, thus making it
easy to verify.
Those who want to buy land in Costa Rica should get
professional advise, which include a search of the
title in the Registry, so as to confirm there are
not liens on it, and to establish its proper ownership.
Once the deal is completed, you should also secure
documents from a lawyer to prove that the sale was
registered, for your own safety and to prevent to
somebody else.
Financing
Practically no local financing at economically feasible
rates is available for property purchases. This is
the result of high yields and rapid increase in property
value, due to a growing population and other factors.
However, this in turn makes up for the lack of leverage
in Costa Rica, as do the country's stability
and security, which makes its continued growth.
Zoning
Knowledgeable lawyers agree that zoning regulations
in Costa Rica are reasonable and logical, although
far less stringent that in countries such as United
States. A registered local engineer must sign all
building and subdivision plans and they also require
approval by the local municipality, the Ministry of
Health, and the government Housing Department.
Costa
Rica Taxes
The taxes paid on properties in Costa Rica are very
low. Yearly property taxes vary from 0.5% to 1.5%
of the declared value of the property. This declared
value is a common law practice in which a property's
value according to the government very low, almost
always lower than the sales practice. Closing Costs
Closing costs for a sale include a transfer land tax,
a stamp tax, and legal fees. Closing costs typically
run 5% to 6% of sales price and are usually split
50/50 between buyer and seller. The transfer and land
taxes are assessed based on the declared value, while
legal fees are charged based on SALES PRICE of the
property.
Currency
Law
Costa Rica has recently made a radical change, for
the better, in the currency law. While until recently
sales negotiated in dollars had to be written in colones,
it is now possible to have contract in dollars give
both buyer and seller a peace of mind previously unavailable.
There need be no worry with regard to serve devaluation
of the colon, for example, or other difficulties
introduced by having to translate back and forth between
dollars and colones. Another major effect is
the possibility of having mortgages in dollars. This
mortgages are still seller-leveraged more often than
not, but can be written by another attorney and guaranteed
by the property. Once sellers understand the implications
of being able to offer this type of mortgage, it will
likely become the most common type of financing, tempered
by the buyer's desire to keep his property taxed
lower, as a mortgage will automatically raise the
declared value of the property to the amount of the
mortgage.
Regulations
for Beachfront Property
When buying beachfront properties, one must be aware
of regulations Costa Rica's coastline is all
public. By law, the first 50 meters above the mean
high tide line are inalienable public, define by what
is known as the 50-meter line. No one can restrict
access or have a totally private beach. There are
some exceptions, but they include port areas, old
land grants, and some title prior to 1973.
On
80% to 85% of the coast, the next 150 meters are government
owned lease and also known as the maritime-terrestrial
zone (or just maritime zone). Restrictions on maritime
zone land for foreigners are that one must establish
five years residency to own more than 49% of the rights
to a lease. Two loopholes include holding the lease
with a corporation that is wholly owned by a foreigner,
or by having a Costa Rican hold 51% of the lease in
name only. Development of the maritime zone does not
discriminate against foreigners. A regulation plan
must exist for area where the land is or just for
the parcel itself.
If
one does not exist the developer must make one, then
have it approved by ICT (the Tourist Board), INVU
(the Urbanization Institute), and local municipality.
Such a regulation plan will call for "zoning
of land" includes public use areas, road, water,
electricity and more.
The
other 15% to 20% of the cost is land that is title
to the 50 meters line. That is to say that no maritime
zone exists and the landowner may develop without
inconvenience of filing a regulation plan. Tourist
development must, of course, be approved by ICT, but
almost anything else would require only building permits.
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