Buying and owning property in Costa Rica, or any foreign country can be a confusing and intimidating process. How can I make a safe and efficient transaction? Can I just leave everything up to the lawyer? What are my rights as a foreigner? Can squatters invade my land? These and many other questions will be answered in the information provided in this guide. Costa Rica does have a system, although not perfect… it works fairly well. Thousands of foreigners have safely invested here. You can be one of them. Unfortunately, many foreigners become so enchanted with the country and it’s people that they fail to exercise good judgment and common sense, or another familiar scenario... making decisions on what "they thought they understood to be the rules". In Costa Rica, you will find similarities to stateside rules but many aspects of the system are different. Take the time to learn the basics! Also, as a buyer, being somewhat knowledgeable during the process will cut down on wasted time looking at properties that don’t fit your needs or properties that are unsuitable for one reason or another. The information provided here will go a long ways in getting you started.

PRIVATE LAND / TITLED : In Costa Rica, foreigners can own titled property in their own name and share the same rights as a Costa Rican citizen. There are two documents which, similar to the states, describe "titled" or fee simple property ( land outside the beach zone ): First, the title itself or escritura. Titles are registered in the national registry or Registro Nacional, and show ownership along with any leans, mortgages, or judgements. The second part is the registered survey map or plano catastrado. The plano serves the purpose of recording measurements, size and location along with other useful information like whether the land falls inside restricted areas such as IDA Land (co-op owned lands with the government) or inside protected areas like national parks and reserves. NOTE: The escritura and the plano may be different from each other and yet refer to the same property. The plano is NOT the ownership document and may even reflect a previous owner’s name. Ownership of the land (title or escritura) is recorded in a separate department of the national registry. Both parts must be checked to verify that ownership and mapping coincide with the same piece of land. These two departments are currently making internal changes to make the process a little less clumsy. Once a property is titled for the very first time (original inscription), there is a three-year "incubation period" where third parties can make a claim. However, any new claims must carry a fair amount of proof before a title can be challenged. After three years, a claim can still be filed but calls for extraordinary circumstances. There is a ten-year statue of limitations for such claims.

DECLARATION OF VALUE: ( Titled Land ) It is common in many land transactions to not claim the actual selling price but declare a lower value so as not to pay higher taxes and registration fees. This is the buyer’s decision but may not be advisable in all cases. If there were ever a future claim against the seller or the government, or you wanted to mortgage the property, any reference would be made to the recorded value and not the actual price that was paid. You may also consider that in the future if you resell the property, it may be more difficult to explain a substantial difference between what you are asking and what you paid for the property. Consult your lawyer before making this decision.

PRIVATE LAND / UNTITLED : ... also called "possession" land. Most of the land in Costa Rica falls in this category. Even though many lands are untitled, it does not mean that they do not qualify for title. Some do and some don’t. In a possession scenario, it is the recording of the legal transaction that establishes possession or ownership rights...not a title. The reason for this is that for many years, farmers and settlers (for any number of reasons) never applied for their title but possessed them in a "legal manner", established boundaries and transferred rights through private documentation. When properly recorded, these rights are completely legal, fully transferable and can qualify for inscription in the national registry as fee simple title. Legitimate possession rights can be demonstrated by researching the history of ownership recorded through private documentation. This is done through a properly recorded bill of sale in a lawyers protocol book. The bill of sale or carta de venta shows transfer of ownership and describes the property in words relating to the surrounding properties and well defined landmarks. Pages from the lawyer’s protocol book are then registered in the national registry.

The other side of the possession issue, are lands occupied and claimed by illegitimate settlers or "squatters"; someone claiming rights of ownership but have no "ownership documentation", only that they occupied the land for a certain amount of time. In these cases, there may be some form of rightsestablished but it is more difficult to define. Costa Rica does have a homestead law or precario law that sets the guidelines, however it is outdated and needs to be modified. Sometimes there is a clear distinction between "legitimate possession" and "illegitimate possession" and sometimes there is not! BEWARE!

In 1941, a titling procedure called Ley de Informacion Posesoria was created by the government as a means for landholdes to record or "register" their land that has been "held in possession". Many lands have been registered using this procedure. Minimum requirements to qualify for a registered title to possession land are a registered survey and verifiable history of legitimate possession "passively and publicly" for a minimum of 10 years with no disputes. The remaining parts to complete the title process are notarized statements from adjacent property owners along with a judge’s inspection and review of all documents. This process, done with the help of a lawyer, can take up to a year (possibly more) and cost between $1,500 and $3,000 depending on the size of the land. NOTE: Possession lands cannot be liened or mortgaged as they have not yet been recorded in the national registry.

In some cases, a buyer will pay for the title process after the sale or even make it a condition of the sale or escrow. Keep in mind that not all cases are alike. It takes a good understanding of the history of ownership for each property. In general terms, it is a good rule to not buy untitled property if you are not clear about how it works. However, considering that most of the land in the country is untitled, it is logical that most of the land transactions have to do with untitled land. Many people have safely bought possession lands including foreigners. Many foreigners here in the Osa have purchased possession land.

BEACH LANDS: or Maritime Zone lands are dealt with in a different way. The Maritime Zone Law or Ley Zona Maritima Terestre 6043, commonly called the "Concession Law", was established in1977 and defines the Maritime Zone (ZMT) as the 200 meter strip of land along the shoreline, calculated from the "average high tide". It is owned by the state and jointly administered by the corresponding municipality and the federal institution ICT (Costa Rican Tourism Institute). The ZMT is described in two parts...the first 50 meters is public domain or "public zone" and cannot be developed or claimed by private persons. The next 150 meters or "restricted zone" can be claimed by private persons who solicit the municipality for the concession rights.

First, it is important to understand that the Maritime Law and awarding concessions was designed under the assumption that the land has undergone an approval process establishing what we know as "zoning" or planificacion. If not, rights of ownership and development of coastline property is strictly on a provisional basis. In these cases, the municipal goverment administrates what is considered a "right of occupation" through a permiso de uso, a provisional lease or right of usage also called an ariendo, which is recorded with the municipality once an application or solicitude de concesion is received and acknowledged. Contrary to popular belief, these provisional leases have no time limit as they are intended only as an "interim right" until proper zoning is in place and concessions can be awarded. The "interim occupant" may pay a voluntary, symbolic "occupation tax" or canon for the corresponding permiso de uso and has the right to make certain improvements to the land and build a "temporary structure"...nothing more. Even though you will find permenant structures of all types and sizes all along the coastline country wide, this does not necessarily mean that the mandatory zoning and concession process took place. Over the years, municipal governments have been very complacent about development along the coastline. However, the law is clear, development on any particular parcel of land is allowed only once zoning has been approved and a concession has been awarded.

Zoning and Concessions: Over time, sections of shoreline around the country have been declared as having "touristic aptitude", thus qualifying that section of land for traditional development and zoning under the Maritime Law. Zoning is implemented through a proposal or regulatory plan called a plan regulador. Once a regulatory plan is elaborated and approved through the corresponding institutions: ICT, INVU and the local municipality, the "recognized occupants" inside the newly zoned area can now process and "activate" their solicitude de concesion assuming the intended use coincides with the declared zoning or usage called uso del suelo. Concessions are awarded in the form of a contract and are inscribed in the national registry giving the concession holder exclusive rights of ownership, development and right of transfer. Concessions for residential and tourist projects are automatically renewable every 20 years for eternity assuming the terms of the concession contract are met by the concession holder, which basically are... respect the public zone, pay your taxes and develop in accordance to the zoning regulations laid out in the regulatory plan. Stories of 99 year leases etc. are simply not true.

Even though there has been a substantial amount of development in the ZMT over the years, surprisingly, 90% of the coastline in Costa Rica is still without approved zoning...and 90% of the occupants inside the ZMT have a provisional permiso de uso, NOT a concession....and therefore, 90% of the development inside the ZMT is technically illegal. This fact may sound alarming but in the past, the government never placed a high priority on this issue and people built and developed under lax rules by the local municipality. Today, the situation is much different in terms of allowing any further development along the coastline even though there is still little or no government funding available to pay for the required regulatory plans. However, the government does allow third parties to present zoning proposals for approval assisted by private certified planners. Costs to hire a team of planners are actually quite reasonable; $20,000 - $30,000 for a complete proposal covering approximately one kilometer of coastline. The zoning and concession process typically takes 3-4 years to complete.

The "purchase" of beach property is essentially a private agreement between two parties. Technically, the law prohibits "buying and selling" of state domain. Costa Rican citizens or foreigners having at least 5 years of residency can register beach property in their own name. All other foreign citizens must register the rights to their beach parcel through a Costa Rican corporation formed by an attorney, a simple process that takes about 30 days and costs around $600. The corporate board of directors may be formed by foreign residents but must have at least fifty percent of it's shares held by a Costa Rican citizen. You will see the initials S.A after many corporation names. This stands for Sociadad Anonima or "anonymous society" which is the most common type of corporation used because shareholders have anonimity. The shares are "bearer shares" and are registered in a private registry (the corporate books).

Alternative to the Maritime Law: In 1992, The Ministry of Environment and Energy or MINAE created a new law called The Law for Conservation of Wildlife No. 7317. This decree by the central government offers a program for landowners allowing them to declare their land as a "protected zone" while maintaining ownership rights and allowing certain development and or other activities. This program also encompasses the beach lands or Maritime Zone. In this case, administration of the permiso de uso essentially changes from the local municipality to MINAE. Usage rights are similar to those described in the Maritime Law except in some ways are less restrictive. In particular, traditional zoning or a Plan Regulador is not required and the uso del suelo (declared usage is established through a simpler instrument called a Plan de Manejo or management plan. The plan de manejo describes the project and land usage, be it a residence, tourist project, agriculture or other uses of public and social interest. The specified area or protected zone is then declared a wildlife refuge or Refugio de Vida Sylvestre. Basic guidelines for environmental impact and sustainable development are spelled out in the refuge law, however, large projects are required to present a more detailed study. The purpose of these refugios is to place more lands in state protection while still allowing low impact development. For refugios in the Maritime Zone, concessions are not awarded. Instead, usage contracts are registered with 10 year permisos de uso. Contracts are renewable each term by soliciting the ministry every 9th year. A fixed occupation tax or canon is paid yearly to MINAE but refugios incorporating private, titled land are exempt from the vienes imuebles (land tax). This has become a popular zoning alternative for maritime lands around the country in cases where low impact usage and environmental condtions can be justified. There are no restrictions on foreign ownership under the refuge program. This option may or may not apply or make sense in all cases so it is important to make a proper analysis.

ABOUT SQUATTER’S RIGHTS: "What do I do if I am an absentee owner. How do I protect my land from being occupied by third parties?" The answer is simple… have someone responsible check on it once a month while you are gone. You can also have someone live on the property as your caretaker. If you hire a caretaker, draw up a written agreement and have it notarized by an attorney. Handshake agreements can be full of good intentions but may be a problem later. Don’t make this avoidable mistake. Get it in writing.

Articles in the civil code outlines Costa Rica’s homestead law or Precario law. Basically, the law allows peaceful occupation of "untitled and unattended land" unless there is opposition by the existing owner. If your land is unattended and someone moves onto the land, they begin to establish certain rights after three months. Action for removal is required before the end of the third month but the process is less complicate than if they occupy the land for a longer period. If squatters have occupied the land for more than three months but less than a year, the process of eviction called desalojar or desalojo, becomes more involved. Although eviction is more complicated, you are not yet required to reimburse the occupants for their "improvements" to the property. If the land is occupied for more than a year but less than ten years, you may still be able to recover the property, but the legal process may take years and you will be required to make a settlement for the "improvements" made by the occupants. "Improvements" can range from the construction of shacks, planting of crops and even cutting of trees to clear the property. Improvements and compensation are established by the court. In most cases, it is best to negotiate an out of court settlement. If someone is living on a property you are interested in buying, be it the owner, a relative, a worker etc., you must be sure this is addressed and settled as a condition of the transaction. Precario rights can affect both titled and untitled land but the process of eviction for titled property is in theory, faster and less complicated.

The department of IDA, The Agrarian Development Institute, was established in 1961. This government agency was formed when Costa Rica was trying to develop and expand it’s farming production. The institute was designed to represent landowners in cases where legitimate possession rights were being challenged or where land was not being utilized for some form of productive agriculture. One job of the institute is to defend the rights of the possessor as outlined in the precario law…sort of a public defense body for peasant landowners unable to defend themselves against larger landowners trying to "expand" their territory. However, there are many cases today where the system is abused and people fall victim to "de-facto tenants". That is why it is important to know the history of possession and above all…. follow the rules. If ownership is legitimate…it must be demonstrated within the guidelines outlined in the law. It is important to remember that the precario law and the recognition of possession rights is considered the first step in the titling process and is the basis of how many lands were originally settled and eventually titled in Costa Rica … in a legal manner.

OPTION AGREEMENTS: In some cases, a buyer may want to make a down payment or buy an "option" on a piece of land. The final deal may depend on some outstanding details to be worked out or obligations to be met, but both the buyer and the seller would like to formalize a provisional agreement. Examples might be that the land needs to be re-measured to verify boundaries or that the seller offers to make improvements before closing. Option money can be given directly to the seller or be held in "escrow" depending on the circumstances of the deal. Option contracts must be notarized by an attorney but are normally not recorded in the National Registry. Therefore, it is recommended the buyer put down a minimum amount in case the deal goes astray. If the deal falls through, it may be difficult to recuperate monies spent. Going to court is a lengthy process and not worth the effort unless large sums are involved. Terms of the sale should be written in the option contract including settlement if the deal does not transpire. Usually, the buyer forfeits the option money if he backs out of the deal without good cause.

REAL ESTATE AGENTS: In Costa Rica, there is little governmental regulation of the real estate industry. However, a knowledgeable real estate expert will be invaluable in helping you with many aspects of your purchase. Get a local recommendation for an agent with a good track record. Ask several of the foreigners living the area who has the best reputation in town... and then ask the agent for some references. In general, a good agent performs a more critical role than stateside agents as the system in Costa Rica is far less sophisticated. There are no formal escrow companies, mortgage companies or banks that assist in the process. In some ways, this puts more responsibility on the agent. For example: All listings must be thoroughly researched before a property can even be considered, especially in rural areas. In some cases, a field agent will not only show you property, but also work directly with the lawyer, the surveyor, the property owner, the registry, and follow up on a host of details until the transaction is completed. The agent represents both the buyer and seller so that when it’s time to draw up the sale document, all issues are discussed and agreed upon before closing a transaction. In any field of endeavor, competency is paramount. Never more so than in successful real estate transactions in Costa Rica. Agent commissions are normally paid by the seller but in some cases, the buyer and seller may split the commission if agreed to in advance.

NOTE: Beware of people off the street...bartenders, taxi drivers etc. (Costa Ricans AND foreigners) that offer to sell you property. They have no sense of real estate as a business and the attraction of a commission from the seller may outweigh their concern for the protection of the buyer...YOU! There are many properties in Costa Rica where ownership rights are unclear, borders are undefined or properties with problems due to hidden conflicts of one sort or another. Getting a lawyer is not enough! A knowledgeable field agent that knows the area and the history of the property will not only show you qualified properties, but will help work out many issues before it’s time to finalize the details with a lawyer. A good agent will also help educate you so you can make an informed decision!

LAWYERS AND CLOSING / THE PROCESS OF SETTLEMENT: Once you have found the property you want to buy, you will need an attorney / notary to execute the transaction. As with real estate agents, it is typical for an attorney to represent both the buyer and seller. It is the buyer’s right to select the attorney…an important step. Equally important as selecting your agent! Ask around and get a good recommendation by others that have had a good experience. Again, you may want to ask for client references. Documents are in Spanish so if you don’t speak and read good Spanish, make sure your attorney can translate them for you. Only a state certified Notary can authenticate a real estate transaction. In Costa Rica, a Notary must also be a lawyer. However, some practicing lawyers are not Notaries but work with a partner that is the official Notary. This is not a problem. Just make sure it is clear that all documents will be certified by your attorney or his / her partner.

It is the lawyer’s role to draw up the contract or carta de venta. However, before the sale document is executed, the lawyer must verify the position of the existing registration including liens, mortgages, etc, and make sure all back taxes and government fees are paid up to date.

IMPORTANT: Keep in mind that a lawyer may not cover ALL the issues in some land transactions, be them titled, untitled or beachfront properties. Some, which may need to be considered in the sales contract. In most cases, the lawyer never even sees the physical property and can’t advise you on issues such as describing physical access (it may differ from access shown on the survey map), or that the survey map coincides with the physical borders like fence lines, and in some cases ( as with possession property ), organize notarized statements with bordering neighbors stating there are no boundary disputes or usage agreements with third parties. Also, describing and guaranteeing water rights, and how to handle existing tenants or crops. Another example is in transferring beach leases. The lawyer’s job is basically finished when the documents are presented at the local municipality. Who will follow up to make sure the transfer is approved? A good agent will. Your agent plays a vital role in the entire process. Get a good one and remember...getting a lawyer is not always enough!

• TRANSFER TAX: 1.5% of the declared value
• PUBLIC REGISTRY FEE: 0.50% of the declared value is paid to the registry for recording the documents
• DOCUMENTARY STAMPS: 0.55% (approximately) of the declared value for stamps affixed to the documents.