Property Due Diligence: Part Two.
Beach front Real Estate.
As your property attorney, I will perform further due diligence if the property you desire is for sale at the beach. The maritime area is two hundred meters from the mid-tide line. By law, all beaches are public, so there is no private ownership in these areas. Costa Rican law establishes that the first fifty meters from the mid-tide line are a public zone. You can’t buy real estate in Costa Rica in this area. However, from where the restricted area ends and up to another one hundred fifty meters inland, the law establishes that this is a restricted zone. Technically, you can’t purchase a property in Costa Rica in this area, but this is relative.
The local governments of Costa Rica, or “municipalities,” grant concessions to use and enjoy the land in these areas for a determined time frame. So even though you can’t buy it, you can surely acquire the concession from the Municipality itself or the person to whom the concession was granted. Concessions vary from municipality but are usually given for twenty years and may be renewed constantly.
Your real estate lawyer recommends: be careful with State concessions:
This means that when you want to buy property in Costa Rica that’s in this area, you must be very clear. You are not there to buy real estate but to enjoy a State Concession. Every municipality has a Municipal Regulations Plan that establishes the zoning of each concession lot. If the municipality grants the privilege to build houses, you have every right to build one. As part of due diligence, it’s essential to investigate zoning when purchasing a property in Costa Rica, especially in the restricted zone. Even though zoning might allow building, obtaining the necessary permits is still required before proceeding. The person entitled to the concession must also pay a benefit to the municipality, which substitutes the territorial tax. All of this must be checked by your property lawyer.
A concession is not private property in Costa Rica:
Since a concession is not private property, you can´t transfer, sell, compromise, or mortgage it, nor any rights derived from it, without authorization from the Municipality and the Costa Rican Tourism Institute. There is no mediation nor arbitration with the State. You must also know that no concessions can be granted to foreigners who have not resided in the country for at least five years, to corporations constituted by foreigners, or to corporations whose shareholders correspond to foreigners, in at least 50%. There are, however, many ways around this.
You may ask yourself, what happens if you build a house in a restricted area, and the Municipality decides not to renew the concession? The municipality can deny the concession renewal for public interest reasons, convenience, contract breach by the entitled person, or if the property ends up in the public zone. If the concession is extinguished for reasons not to blame on the person to whom the benefit is granted, then the state must pay for the just price of the uplifts, similar to an appropriation. Avoid a headache and buy real estate in Costa Rica that is not in the maritime zone.
Property due diligence is over. Time to purchase the property.
There are many reputable real estate agents and agencies in Costa Rica. Some of them help your Costa Rica property attorney with due diligence. Once the property due diligence is over, the property transfer will occur. As you will see, this is where the notary public’s role comes into play.
Dr. Christopher Pirie.
Property attorney at law in Costa Rica.