Attorney in Costa Rica

Buy Real Estate in Costa Rica

So you found the perfect commercial property for sale in Costa Rica, and need the services of a property attorney?  On a previous page, we covered the due diligence that should be performed by your real estate lawyer, when you buy property in Costa Rica.  He has checked that the property for sale you want is free from mortgages and encumbrances. This is all done in the Public Registry.  He has also studied if the property is up to date with taxes and the HOA fee, if applicable.  He has seen the cadastral plan and determined if there are legal impediments regarding the property. 

If you followed my advice, you also asked a topographer to look at the cadastral plan to make sure it matches the property for sale you’d like to buy in Costa Rica.  When you purchase real estate in Costa Rica, it’s also essential to ensure the topographer guarantees that there are no overlaps with other properties.    

Final checks a of due diligence by your property attorney:

Finally, due diligence requires that your real estate attorney looks into planning regulations, to make sure they allow what you would like to do with the property.  Some areas in Costa Rica, are agricultural, but some are commercial properties for sale. Clarity of intention is essential when you buy real estate in Costa Rica.  Do you wish to build a house on it?  Or is it intended for agriculture or preservation?  Are you buying luxury real estate in Costa Rica? It would be best if you conveyed this to your real estate lawyer so there are no regrets after the purchase, and even avoid unwanted litigation.

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Your real estate lawyer has also checked if the property owner is a corporation in Costa Rica.  A revision must be made to the company’s representation and articles of incorporation, amongst other things.  He has checked everything, and the corporation’s shareholders have consented to sell the property in Costa Rica.   

If it is in the name of a physical person that grants a power of attorney to sell, I perform an extra due diligence step.  I think special attention must be given, to the scenario in which the seller is represented by another person, via power of attorney.  I always make sure to see the original signature of the grantor in the Notary’s scripture.  As a property lawyer, I always call the owner personally to ensure he is granted a power of attorney.  There have been cases of fraud in which powers of attorney are forged.  As the Russians say, “trust but verify.”

Consult with the expert

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Do you wish to buy real estate in Costa Rica in front of the beach? The Maritime Zone:

Due diligence by your real estate lawyer, goes even further if you see beach property for sale in Costa Rica, which happens to be in the maritime zone, near the beaches. The maritime area is two hundred meters from the mid-tide line. By law, all beaches are public, so there is no private ownership. 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.

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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. 

However, a reasonable real estate lawyer is necessary if you wish to do it.  Also, there are many reputable real estate agents and agencies in Costa Rica.  Some of them help your Costa Rica property attorney with due diligence.  Assuming you are not acquiring a concession and the due diligence is done, you are in good hands to buy real estate in Costa Rica.  Contact me to be your property attorney to help you out and to be your notary public in Costa Rica, to draft all associated documents.  You should also contact me if you want a divorce, and have questions regarding properties in a concession.  

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