'Laws on Property Purchase and Land Use'

Laws on Property Purchase and Land Use

12/27/09 04:23

The property market in Costa Rica is relatively open, as it allows foreigners to own pieces of land themselves without much legal hindrance. There are some things that you have to know about the property laws and land use policy in Costa Rica, however. This was adapted from TheRealCostaRica.com.

• Fifty-Meter Zone. The first fifty meters of land from the coast in high-tide is declared public property. Nobody can erect permanent structures along this zone. However, temporary structures may be put up in places where it is needed, like those areas in front of hotels.

• 150-Meter Zone. The next 150 meters of land from the 50-meter zone is owned by the municipality and may be only leased to interested parties. Costa Ricans may freely lease this land. For foreigners, however, a Costa Rican must own more than 50% of the company used to lease. Logically, a foreigner may not lease a land in this zone for personal purposes.

• National Frontiers. Only Costa Ricans are allowed to purchase land within two kilometers from the country's national frontiers.

• Land Titles. Most lands in Costa Rica are already titled. You can check with your lawyer regarding this. I recommend not to purchase a land that is not yet titled because having this registered can take up a lot of time and money on your part. Also, lands that are registered for the first time may be contested by other parties for the next 10 years. This means you will have to endure another decade of defending your case once other claims go up.

• Property Transfer. Depending on some other conditions, there will be a transfer tax amounting from 2 to 5 percent of the land's registered value. Unless otherwise specified in the contract, it is assumed that this cost will be split between you and the seller of the property. If the purchase is through cash, then the buyer has the right to choose the lawyer. If the property is on a mortgage, the seller will have to choose.

• Property Taxes. Costa Rica collects a property tax for all private properties equivalent to 0.25% of their registered values. If the property has a registered value of less than ¢6,147,000, then that property (assumed to be a house and lot) shall be exempted. The local government also imposes local community taxes of varying amounts depending on certain factors, though this shall not be more than $10 per month.

For more information, please refer to this article.

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