What to Know About Owning Beachfront In Costa Rica

I would like to share with you some of the main legal aspects pertaining Owning Beachfront properties in Costa Rica.

 In 1973 Costa Rica passed legislation that regulated the ownership, sale and purchase of properties located on the Shoreline. The Shoreline is legally defined as a strip of land measuring two hundred meters wide, starting from the line set by the lowest tide and moving inward two hundred meters. Of those two hundred meters, the first fifty have been declared to be of public domain and therefore cannot be owned by any physical or legal person. Access to that fifty-meter strip is free, since it is meant to be for public use. The administration of the remaining strip measuring one hundred and fifty meters wide, also known as the “Restricted Area”, has been awarded to the local Municipalities, who may grant concessions for its use. These regulations are governed by the “Shoreline Zone Act” (in Spanish: “Ley de Zona Marítimo Terrestre”), which establishes several conditions and regulations instated for the use of concessions granted in the maritime-terrestrial zone. Some of these conditions and regulations are described below.
 
v Limitations to Possessing Concessions
 
The Shoreline Zone Act establishes that the following persons and entities cannot be granted concessions in the Shoreline Zone: i- foreigners who have not resided in the country for at least five years; ii- corporations with bearer shares; iii- corporations registered or established abroad; iv- corporations and entities constituted by foreigners; and, v- corporations in which more than fifty percent of the capital stock is owned by foreigners. New legislation is currently being discussed in the Costa Rican Congress to eliminate the prohibitions restricting the concession of shoreline areas to foreigners.
 
v Procedure to Register a Concession
 
The procedure to be followed for a land grant or concession consists mainly of submitting a request before the local Municipality. The request will be reviewed and the land will be inspected, and if approved, the local Municipality will issue a notice that must be published in the official newspaper, providing an opportunity for interested parties to manifest the concerns, complaints or opposition regarding usage rights that may have existed previously. Once this procedure concludes, the Municipality will be able to pass a resolution approving the concession and authorizing the drafting of a contract with the selected beneficiary and such document must also be approved and signed by the Costa Rican Tourism Board. After this contract has been signed, a Public Notary must notarize the contract and file it before the Concession Registry of the Costa Rican Public Registry, to guarantee that the grant will be protected from potential future claims by third parties.
  
 
v Term of the Concession
 
Concessions are granted for terms ranging from five to thirty years, but they may be extended for equal time spans if the beneficiary of the concession has complied with the Municipality’s requirements and established concession fees have been paid on the required dates.
 
v Payment of Concession Rights
 
At the moment in which the concession is granted, the Municipality will establish an annual cannon (recurring tax obligation) that the beneficiary must pay in order to enjoy the rights granted to him by the Municipality. The concession cannon has been established between 1% and 3% for Condo-Hotel and Hotel zoning and 4% for residential zoning. The amounts are calculated based on the appraisal that is done by the Tax Administration and it can be up dated each 5 years. The value appraised is not based on the market value.
   
We utilize some of the best legal teams in Costa Rica to help our buyes undstand  the realities of buying beachfront properties.

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