Condominium Laws in Costa Rica. A legal overview.
Condominiums have become a popular choice among homeowners, investors, and expats in Costa Rica. They offer a range of modern amenities, foster community living, and provide accessible property management options. Governed by the Ley Reguladora de la Propiedad en Condominio (Law No. 7933), condominium ownership in Costa Rica comes with unique advantages such as clear ownership rights and shared responsibilities. Understanding this legal framework is crucial for anyone considering buying or investing in a Costa Rican condominium. And it is a smart idea. There is a lot of demand for apartments for rent in Costa Rica. Purchasing a condo apartment or townhouse is a solid investment.
Legal Structure and Condominium Law:
Costa Rica’s Condominium Law was established to regulate the distinct ownership of private and common areas within a shared property, making condominium ownership straightforward and secure. Law No. 7933 applies to both residential and commercial developments, encompassing vertical condos (such as high-rise buildings) and horizontal condominiums (like townhouse-style properties). The law allows developers and owners to build or convert real estate into condominiums. This, in turn, facilitates diverse real estate opportunities such as apartments for rent in Costa Rica.
Horizontal Property Law: Costa Rican condominiums fall under the Horizontal Property Law (Ley de Propiedad en Condominio). This law regulates property ownership in a horizontal division, which allows for separate ownership of units within a shared property.
Condominium Regime: A property must be registered under a condominium regime with the Public Registry to be legally recognized as such. This regime divides private and common areas, defining each owner’s rights and responsibilities.
Common vs. Private Areas of the Costa Rican Condominium:
- Private Areas: Individual owners hold the exclusive rights to their units or apartments.
- Common Areas: Common spaces (like pools, gyms, gardens, or lobbies) are co-owned by all unit owners, who share maintenance costs and responsibilities.
Maintenance Fees and HOA (Homeowners Association):
1. Maintenance Fees: These cover the upkeep of common areas and amenities. Each owner typically pays a monthly fee based on their unit’s percentage share of the condominium’s total area.
2. HOA: Homeowners Association meetings manage the administration of the condo, setting rules, and handling budgeting for maintenance, security, and other shared services. The HOA also has the authority to enforce fines or penalties for violations of the condominium’s bylaws.
3. Bylaws: These outline rules for common areas, decision-making, maintenance, and other matters. Prospective buyers should review bylaws to ensure they align with personal preferences and requirements.
4. Homeowners Association (HOA) Manager: Every condominium has an HOA manager responsible for maintenance, financial management, and rule enforcement.
Property Rights and Ownership
1. Full Ownership: Condominium unit owners have full ownership of their units and a proportional share of the common areas.
2. Titles and Registration: Each unit within a condo project has a separate title registered with the National Registry, making it easier for owners to sell, transfer, or mortgage their properties.
3. Foreign Ownership: There are no restrictions on foreign ownership of condominiums or apartments for rent in Costa Rica, making them appealing to international buyers and investors.
Benefits of Investing in Condominiums in Costa Rica:
1. Amenities and Security: Many condos offer security services, as well as amenities such as pools, gyms, and gardens.
2. Convenience for Expats and Investors: Condominiums are low-maintenance, providing convenience for foreigners who may not reside full-time in Costa Rica.
3. Investment Potential: Costa Rica’s tourism and real estate markets make condominiums appealing as rental properties, with some complexes explicitly designed for short-term rentals.
Rental Regulations and Restrictions:
• Rental Options: Condo units can be rented out, often governed by rules set by the HOA. Short-term apartments for rent in Costa Rica, like Airbnb, are typical in tourist areas but may face restrictions in residential condominiums.
• Eviction Process: If tenants violate HOA regulations or rental terms, owners can initiate an eviction, which must follow Costa Rican legal procedures.
Purchase process:
• Before buying property in Costa Rica, such as an apartment or townhouse in a condominium, it’s crucial to conduct thorough due diligence. This includes verifying the condominium’s registration, title, and existing liens or encumbrances. Reviewing legal documents, assessing the condominium association’s financial health, and identifying ongoing legal issues are also essential. Evaluating the condominium’s budget ensures that HOA fees adequately cover maintenance and operations and helps anticipate potential special assessments.
• Property Transfer: Transactions are typically completed with a notary public who handles the transfer and registration process in the National Registry.
Benefits of Condominium Ownership in Costa Rica:
1. Security is a significant advantage of condominium ownership. With secure access, monitored entry, and often on-site security services, condominiums offer a level of safety that can provide peace of mind to residents, making it an ideal choice for those who value their security.
2. Condo ownership also comes with the added benefit of shared amenities like pools, gyms, and social areas. These amenities not only enhance the living experience but also add value to the property, making it a worthwhile investment.
3. Condominium living is ideal for those who prefer a low-maintenance lifestyle. The Homeowners Association (HOA) handles most maintenance tasks, from landscaping to building upkeep, making it particularly attractive for expats and part-time residents who want to enjoy their property without the hassle of maintenance.
4. Condominiums in Costa Rica, especially those in tourist areas, offer significant investment potential. Condominium ownership can be a lucrative venture for short-term or long-term rentals.
Responsibilities of Condominium Owners:
While condominium ownership in Costa Rica offers distinct benefits, it also comes with shared responsibilities. According to Law No. 7933, owners must contribute to shared expenses for the upkeep of common areas. Additionally, they must abide by the regulations outlined in the condominium’s bylaws, which the HOA establishes. Failure to pay HOA fees or fines can result in legal consequences, such as a lien on the property.
Taxation and Fees:
Property Taxes: Owners must pay annual property taxes (around 0.25% of the property’s registered value) and municipal fees.
Luxury Home Tax: Properties valued above a certain threshold are subject to an additional luxury home tax.
It´s essential to ascertain if taxes or HOA fees are owed before purchasing property in a condominium.
Selling or Transferring Condominium Units:
The sale or transfer of condominium units in Costa Rica must comply with specific requirements. Before a sale, the seller must obtain a certificate from the HOA verifying that all fees are paid up to date. If outstanding fees exist, the buyer assumes joint liability. This safeguard protects the HOA from unpaid fees while allowing property transactions to proceed smoothly.
Special provision for Foreign Ownership:
Costa Rica places no restrictions on foreign ownership of condominiums, making it an attractive option for international buyers. Foreigners enjoy the same property rights as locals and can own units directly or through a corporation. This flexibility allows non-residents to invest confidently in Costa Rica’s real estate market.
Dissolution and Termination of the Condominium:
Under the Condominium Law, property owners may vote to terminate the condominium regime. However, dissolution requires unanimous consent among all owners, and certain conditions must be met to protect the rights of third parties. Once dissolved, properties revert to individual ownership and must be re-registered as such.
Final Considerations:
Costa Rica’s Condominium Law provides a clear, organized framework for owning, managing, and living in condominiums. It balances individual ownership rights with community responsibilities, making condominium living attractive and secure for local and international buyers. As the condominium market in Costa Rica continues to grow, understanding the legal framework helps prospective owners make informed decisions, ensuring that their investment is sound and protected.
For personalized legal guidance on condominium ownership or to navigate Costa Rica’s real estate laws, please get in touch with us at Pirie Legal.
Dr. Christopher Pirie Gil
Attorney at Law – CPG LEGAL.
