BUYING REAL ESTATE IN COSTA RICA

Beachfront property is more commonly known as “concession property.” In Costa Rica, 95% of beachfront property is concession property and is governed by the Shoreline Zone Law (Law No. 6043) and other specific regulations including but not limited to special dispositions ensuing from local governments (i.e. municipalities) and the Costa Rican Board of Tourism (ICT). These legal dispositions establish the conditions under which foreigners and local residents can lease concession property.

In Costa Rica, a concession is defined as the right to use and enjoy a specific portion of land located on the shoreline zone for a predetermined period of time and based on a predetermined use of soil (zoning or master plan; in Spanish, “Plan Regulador”). The Government grants this right by means of a private agreement between concessionaire and corresponding municipality which is further recorded in the Public Registry. This agreement also establishes a yearly concession fee that is paid based on an appraisal performed by government financial authorities.

Costa Rica’s shoreline zone is comprised of 200 meters starting at the mean high tide mark and heading inland. The 200 meter zone is government owned; no individual or company can own this area.

The shoreline zone is further divided into two strips of land. The first strip is 50 meters (approximately 150 feet) wide and is known as the “public zone.” This zone is absolutely public and is not available for ownership of any kind. No development is allowed, except for constructions approved by government entities (i.e. marinas). Furthermore, this area is deemed public, therefore, it is available for use of any individual.

The following 150 meters can be subject to occupation or lease by individuals or companies. This is done either through a concession with the respective municipality (in case of residential and commercially exploitable portions of land) or a management Plan with the Ministry of Environment and Energy (MINAE), in the case of environmentally sensitive, low density, portions of land. In both cases, the property can be used, although not owned (same as with a lease).

Both concession agreements and management plans are entered into between private parties and the Government for a limited period of time. That ranges between 5 and 20 years, at the Government’s discretion, however most concessions and management plans are granted for 20 years. During such period, the concessionaire pays a fee for the use and occupation of such Government land. Renewal for equal and consecutive periods is negotiated between private parties and the corresponding government authority. Renewal is usually based on the concessionaire’s ability to comply with his or her commitments and obligations during the previous agreement. Such obligations include having assumed the compromise to build on, subdivide or perform other acts of development or improvement on the concession land, in which case the concessionaire will be required to obtain all appropriate permits from the local municipality.

Unlike fee simple property, foreigners do not have the same rights as citizens when it comes to leasing shoreline zone concession land. The law establishes that foreigners cannot be majority owners of concession land. A foreigner can, however, enter into a partnership with a Costa Rican citizen, in which the Costa Rican national appears as the majority holder of the concession land. An exception to this prohibition applies to foreigners who have resided in Costa Rica for at least five years; these foreigners can also appear as majority holders of a concession.