Living on a tropical beach for a reasonable investment is the dream of many of us.
Costa Rica has long been a country where many foreigners explore the option of purchasing beach front property. A few beaches here have fee-simple titled properties directly on the beach, but most are controlled by the Costa Rican government in what is referred to as rights of possession.
Costa Rican fee simple titled properties and their conditions of ownership are similar to those in North America and Europe. Both foreigners and nationals have the right to own fee simple properties here and the owners have the absolute right to use the properties, sell, lease, and improve them.
In 1977, the Costa Rican Congress passed the Maritime Zone Law, which established property ownership rights for beachfront property. Under the Costa Rica Constitution, the initial fifty-meters of land going inland from the high-tide line on beachfront properties, as established by the National Geographic Institute, is reserved for public use and is not available for ownership of any kind and no form of development is permitted within the public zone. Thus, in Costa Rica, there is no such thing as a completely private beach and this is in the best interest of the Costa Ricans as well as the thousands of tourists who visit here every year.
After the passage of the Maritime Zone Law in 1977, properties which had previously received a registered property title in the National Registry with a survey plan to the fifty-meter line, have retained their titled ownership rights. However, properties held only in a right of possession became subject to the Concession provisions of the Maritime Zone Law. The Concession provisions allow the Costa Rican government to lease the first one hundred and fifty meters of land inland from the fifty-meter public zone. Concessions are only granted in those beachfront areas where the local Municipality has adopted a Municipal Zoning Plan providing for the existence of such Concessions. The Municipality is charged with the administration of the Concessions granted by the government. The normal Concession lease is granted for twenty years and annual payments, similar to municipal property taxes, must be paid to the municipality, in order to keep the Concession current.
Unlike fee simple property ownership, Costa Ricans and foreigners are treated differently when it comes to owning Concession properties. Foreigners, with at least five years of Legal Residency Status in Costa Rica, can own one-hundred percent of Concession property. Foreigners with less than five years of Legal Residency are only permitted to own a maximum of forty-nine percent of a Concession property.
In order to comply with the Concession requirements, some lawyers set up Costa Rican trusts and corporations for their foreign clients, with a Costa Rican citizen owning fifty-one percent ownership of the trust or corporation, and the foreigner holding a minority of forty-nine percent. Once the foreigner has five years of Legal Residency, the fifty-one percent of the trust or corporation’s ownership by the national may be transferred to the foreigner, giving complete ownership of the Concession to the trust or corporation that the lawyer established for the foreign client. However, this type of arrangement is not without risk and there have been cases where the foreigners have been taken advantage of.
Another important consideration for foreigners wanting to establish a trust or corporation for the ownership of a Concession is that any family members inheriting the concession rights must also meet the five-year Legal Residency rule, in order to acquire a Concession interest following the distribution of assets in Probate court.
The writer, Attorney Richard Philps, is a naturalized citizen of Costa Rica, and practiced law in Canada for fourteen years, prior to moving to Costa Rica in 1998. He then earned his Bachelor of Law and Licensing Degrees, as well as a Post-Graduate Degree in Notary and Registry Law, and he is a member of the Costa Rica College of Lawyers. Attorney Philps practices law in the areas of real estate and development, corporate, commercial, contract, immigration, and banking with the Law Firm of Petersen & Philps. You can contact him at 506-2288-4381, or send him message at: firstname.lastname@example.org. Website: www.costaricacanadalaw.com