Maritime Zone, Costa Rica

Maritime Zone:

Costa Rica's property ownership located in the shorelines, are regulated and established by the “Ley de la Zona Marítimo Terrestre” (Maritime Zone Law) Nº6043, dated March 02, 1977. The maritime zone encompasses 200 hundred meters counted from the low tide line and are owned by the Costa Rican Government, in this case represented by the local Municipalities. This zone, is subdivided in two parts: (a) The so-called “public zone” or “zona pública”. In this zone no form of ownership is allowed in any form whatsoever. Therefore, if you heard in the past that there are properties with “private beaches” is completely not true, such a thing is prohibited in Costa Rica; (b) The “restricted zone” or “zona restringida”, owned by the Government as well but is suitable for grant of “leases” called concessions, made usually from 5-20 years. No ownership is present in this zone, concessionaire only has what we call “concession rights”, and in the event of proven default of the Concession Agreement, the Municipality will be allowed to void and take back the property. Properties acquired before the establishment of this law are not subject of application of this law, and they have the normal status of any titled property.

Folio Real structure

The Folio Real Structure:

This is the “social security” number of properties. It is the unique number assigned to each property to identify it and distinguish it from other properties. This number is comprised of three parts: the first number indicates the Province; Costa Rica is divided in 7 provinces, each one assigned with a number as follows: 1. San José, 2. Alajuela, 3. Cartago, 4. Heredia, 5. Guanacaste, 6. Puntarenas & 7. Limón, therefore a typical Folio real Number in Guanacaste for example shall always initiate with 5-. The second group of six numbers is the number of the property itself; and the last group of numbers indicates how many co-owners the property has, for example, if the Property has only one owner, at the end you will see “-000”, if there are two owners you will see “-001 and -002” and so on, that is how you can know when the property has multiple owners. At the end, a normal Folio Real number, in Guanacaste for example, with only one owner will look like this: 5-386523-000. All Titled and recorded Concession properties MUST have this number in order for clear title to be obtained. The Concession properties duly recorded at the Public Registry should have a “Z” just right before the “-000”, for example: 5-000177Z-000.

Real Estate Sales Agreement

Why is important a Real Estate Sales Agreement (R.E.S.A)?

Whenever is possible, the Broker has to foreseeing any troubles when the sales commission is to be paid. Many of our associate brokers asked about how to protect themselves against this difficulties… the answer is simple: a Real Estate Sales Agreement (R.E.S.A.), a document signed by the Broker or Brokerage Company and the seller, stipulating commission to be paid, payment schedules, eventualities, communications in the event of default, procedures, time for selling, etc. This document, will likely be formed by at least two pages and it will be a strongly recommended tool for the broker to protect his commission in the future. Of course, this document is drafted by LandCo completely free for the broker if the Closing is to be carried out by our Company. Take your time, it will take no more than 2 minutes to sign and it will save months of troubles.

The Special Power of Attorney in Costa Rica

The SPECIAL POWER OF ATTORNEY (SPA):

This is a SPECIAL, SPECIFIC & UNIQUE document that authorizes a person (or corporation) to act on behalf of another to perform specific and special actions such as purchase of a property. This tool is especially useful for clients that wish to close on their property without returning to Costa Rica. It is best to sign the SPA before leaving the country because the law requires this SPA to be signed in the presence of a Costa Rican Notary Public. Otherwise, a visit to a Costa Rican Consulate in the US (or another foreign country) will be necessary, or the Notary Public will have to go the residence country of the one granting the SPA. One exception to this rule, however, is if the property is being purchased through a corporation. In this case, a signed proxy letter will be sufficient and there is no need to visit a consulate. The Special Power of Attorneys can work both ways, for the Seller and the Buyer, no matter if such parties are persons or corporations. Important rule for the Special Power of Attorney: by law, the SPA is a document for a specific act, then, has to be drafted very carefully, and in case of being used for a Real Estate Transaction, it has to be very complete regarding Purchase Price and details of the Property, moreover, has to be drafted by a Notary and recorded in his Book of Deeds. No “private” documents are valid in this matter.

Concession Properties in Costa Rica

Concession properties in Costa Rica:

Properties located within the 150 meters farther inland from the low tide line, and are not titled are called “concesiones”, these kind of properties can not be owned, but “leased” with the Government of Costa Rica, represented by the Municipalities. The law, allows the government to grant these “leases” for the occupation and use of this area for a term of 20 years (in average). As a very “business-killer-issue”, the law restricts foreign ownership of land under concessions. The following may not acquire a concession: (a) A foreigner, without at least the past 5 years of residency in Costa Rica; (b) Corporations domiciled outside of Costa Rica; (c) Costa Rican corporations incorporated by foreigners; (d) Corporations with 50% or more ownership by foreigners. Important note: any transfer which is carried out in violation of the law shall deemed void. However, there is always some possibility of having the investors to control the assets of the corporation for example by submitting the shares in a trust with the 51% tico shareholder. Concessions SHALL be duly recorded at the Municipality and at the Public Registry to be ready for a “sell”. Always be sure of this before dealing with these properties.

How to amend property measurements in Costa Rica?

How to amend property measurements?

A lot of clients have asked us about how to amend their or others properties; basically there are 4 ways to do it: (a) According to article 13 of the Ley de Informaciones Posesorias (Adverse Possession Law) the measurement of properties born before October 23, 1930 and its segregations can be amended by the sole declaration of the owner in a simple deed. Rules and tops: (i) Properties until 5,000 m2, no limit (until 5,000 m2) (ii) Properties from 5,000 until 5 hects (50%), (iii) Properties from 5 hects until 30 hects (25% and (iv) Properties over 30 hects (30%); (b) According to article 22 Ley de Catastro Nacional: measurement of properties can be amended by the sole declaration of the owner, not exceeding 10% of the total area of the property (there are no restrictions for this rule and can be used for all properties) and (c) Using a Adverse Possession Procedure at Court. Of course, this last procedure is long and probably can take around 12 to 18 months. All these procedures will need a new survey plan do be done and an attorney to configure all legal details.