THINGS TO WATCHOUT FOR...

TIPS AND ADVICE
In a nutshell, there are four major hazards of property ownership in Costa Rica: the uncertainties of the Zona Marítimo Terrestre, land use regulations, the unavoidable reality of squatters and the possibility of expropriation. The following are some tips and suggestions you should read through to make sure your purchase of real estate in Costa Rica goes smoothly.

Land Use Regulations
In Costa Rica, there are some restrictions for land use. Whether you are a national or a foreigner, the restrictions apply for all. It is for this reason that Buyowner Costa Rica recommends for each property to be warily researched; you must determine if the location, ground conditions, ecological problems, etc. are appropriate for the use you require. Advice from professionals on these subjects is a must; experts such as Engineers, Real Estate Brokers and different Governmental Entities, depending on the location and use you want to give to your property. Among the consultants you should seek there is: MAG (Ministry of Agriculture and Cattle), INVU (National Institute of Housing and Development), Ministry of Health, Ministry of Energy and Environment, MIVAH (Ministry of Housing and Human Resources), AyA ( Water and Sewage Authority), MOPT (Ministry of Public Works and Transportation), (IDA)Institute of Farming Development and the corresponding municipality.

Similarly, it is important to know if there are declared “ecological reserve” zones (forestry, ecology, etc), which impose restrictions on the land use. For example, there are water reserve zones where only 10% of the land can be used for construction or "Agricultural Vocation", where it is prohibited to construct buildings and yet others of the forestry reserve which limits cutting of trees

Squatters
According to Costa Rican law, a person can acquire rights to a property if the property owner allows that person to use or maintain possession of the property for more than a year. Once the property has been acquired it can't be taken away, except for reasons such as eminent domain, and then only with proper compensation.
If a person has held possession of a property for at least ten years, that person can go to court, claim full ownership of the property and register the property at the Registro Publico.
If a landlord does not take action to expel squatters during the first three months of their invasion, then squatters may not be evicted at all. If the landlord does not take action within a year, the squatter has a right to demand compensation for any improvements he has made to the land.
If you find yourself having squatter problems you must act quickly, before the third month of the date the squatter moved in. You need to start an Interdicto (a civil procedure) or level criminal charges, called “Usurpación” in Spanish. Delay may cost you dearly in red tape and legal procedures.

Preventing squatter problems
Be certain to study the title of your property as it is registered in the Registro Publico. You must review the ownership status of the property to make sure that possession rights are not challenged in a local court. Bear in mind that just because the property is registered, it does not mean that no squatters have infested the land or that other situations might not arise which affect the ownership.

Make sure you investigate the legal conditions and rights of any worker living or hired by the former property owner. Ensure these workers were properly compensated by the former owner. If you buy the property and rehire the current workers, write a contract citing the date of hire, wages, benefits and conditions of employment, stating unequivocally that he or she is a worker and not a possessor.

Take pains to ensure that the property does not look abandoned. If you buy land that is registered on the National Registry, hire someone to take care of the property and have them inform you if squatters are encroaching on the property. Nevertheless, be very careful! Caretakers may be able to claim rights to the land if they have been living on the property for a certain length of time.

To avoid squatter battles, keep good books and keep all the receipts of payments for your caretaker. You will avoid hassles if you register the person as an employee. (You will need to pay minimum wage plus Social Security.) What's more, it be advantageous to have a friend or acquaintance look in on your property while the caretaker is working.

If squatters invade, make sure you do the following:
A. Chase them away within three months of their arrival.
B. Establish the exact date of the invasion.
C. Document your ownership of the property.
D. Record the squatters with a video camera.
E. Have the local Rural Guard visit your property to inspect it and describe the conditions in writing.
C. File the dates with a public notary.
If more than the three but less than twelve months have passed since the invasion, you need to undertake administrative eviction. You must file proof of the date of invasion and produce property registries, bills of sale and other documents to prove you are the rightful owner.
If more than a year has passed, you will have to go to court.
For further information, please visit our ‘Squatter Conflict’ section here.
Maritime Zone Law "Zona Marítimo Terrestre" (For Beach Property)
Costa Rica is famed throughout the world for its beautiful, untainted beaches. It is therefore no surprise that beachfront property is actively sought by developers worldwide, retirees and those looking for vacation homes. The significant warning regarding beachfront development is that it is rarely the bargain it appears.
The principal problem is that no private ownership of beachfront property is allowed. The Costa Rican government owns the first 200 meters of the beach front area, known as the Zona Marítimo Terrestre or the Maritime Zone, and it is governed by the Ley sobre la Zona Marítimo Terrestre (ZM for short). Like we explained in our ‘Beach Building’ section, the first 50 meters are public beaches on which absolutely no construction may take place or any concession may be granted. The remaining 150 meters may be developed via special "concessions" that are granted by a governing Municipality (ZM Art. 35). In order for any construction to take place on this 150 meters the area must be part of a Plan Regulador or a special zoning district created by the Instituto Costarricense de Turismo (ICT).
If the ICT has already created a Plan Regulador in an area, the developer must abide by the arrangements of the Plan or risk losing the concession. If a Plan Regulador does not exist, a firm wishing to develop the area must write a proposal for the implementation of such a Plan. The proposal is, essentially, an environmental impact statement that must include detailed information about possible damage to the environment, proposed rights of way and other necessary infrastructure developments. By law, the municipalities are unable to grant concessions in the Zona Marítimo without the aforementioned development plan (ZM Art. 38) and without the consent of the ICT (ZM Art. 37).
An understanding of the law and its inherent ambiguities is absolutely necessary before purchasing concessionaire rights. Obviously, you should not heed hearsay or follow the advice of friends and neighbors. Such behavior could result not only in the loss of the concession but also in that of improvements, such as a house, on the property without compensation from the Municipality. The following are some principal points of the law that must be adhered to:
Concessions cannot be granted to:

• Foreigners who have not been residents for five years
• Companies with bearer shares
• Foreign companies based abroad
• A company set up in Costa Rica exclusively for foreigners
• A company with more than fifty percent foreign capital (ZM Art. 47)

Concessions can be forfeited for the following reasons:

• Failure to apply for an extension of a concession in a timely manner
• The forfeiture of rights by the interested parties
• The death or legal absence of the concession holder with no heir
• Not abiding by the established obligations of Article 51
• Cancellation of the concession (ZM Art. 52)

The ICT can cancel a concession for:

• Non payment of the yearly canon or royalty
• Breach of contract (e.g. use of the land for purposes other than those expressly stated by ICT)
• Violation of the ordinances of the law that grants the concession
• Impediment of the use of the public right of way
• Other causes that this law establishes (ZM Art. 53)

The reality of purchasing a concession in the Zona Marítimo is that ambiguities exist within the written law, so that as regulations are created and amended, rights to property may also change. The lesson garnered from concession holders is that there are no guarantees and there is no foolproof way around the law. Moreover, even if a concession is granted, there are no guarantees that the concessions will be renewed or that the price of the concession or the yearly canon will be within reason. The fact remains that one is not purchasing property but is simply "leasing" it with absolutely no title. Therefore, one must be willing to accept the risk inherent in any such endeavor. In fact, official correspondence of 10 May 1995, from the Attomey General's office to the Municipality of Golfito , explicitly states that these concessions are temporary and precarious (Bulgareilli, 1995).

For further information, please visit out ‘Beach Building’ section by following this link.

Expropriation
An inescapable risk in the past when it comes to real estate purchasing has been governmental expropriation of land, predominantly for the purposes of establishing or enlarging national parks or indigenous reserves. While this is perhaps not the greatest hazard associated with land ownership in Costa Rica, it has been a very well-publicized and expensive danger due to the fact that the government does not have a history of fair and quick reparations for the expropriated lands.

Prior to 1995, no single law governed expropriation matters in Costa Rica. The dispersed nature of the law, along with general judicial and executive branch inefficiency, has contributed to the prolonged nature of many expropriation disputes, some of which have gone on for more than a decade without resolution.

The prospects for future expropriation cases may be more favorable, for on 8 June 1995 , the Nueva Ley de Expropriation (New Expropriation Law, NLE for short) No. 7495, came into play. The stated purpose of the legislation is to replace with a single law the several laws that allow the expropriation of private property by any state institution. The new law seems aimed primarily at ensuring that expropriations take place only after full and adequate payment is made, regardless of the nationality of the holder of such property. In addition, while an earlier bill was aimed at making expropriation easier, the new law imposes obligations and restraints on the state and its institutions (Quiros, 1995). A few of the more important provisions of the new law are: (1) the return of the property within ten years if it is not used for the purpose for which it was intended (NLE Art. 16); (2) onlv one month is granted to the tax office to do an appraisal of the property to be expropriated (NLE Art. 21); (3) payment in cash is required unless otherwise agreed upon (NLE Art. 47); (4) only six months are allowed to fully complete registration of the property (NLE Art. 20); and (5) local and international arbitration are contemplated (NLE Art. 27). The possibility of international mediation could permit cases to be brought before the International Center for the Settlement of Investment Disputes (ICSID). (Quiros, 1995).
All in all, it appears that if expropriation of land is to occur in the future, the owner may be in a better position than in the past to receive a prompt and equitable settlement. It must be pinpointed, however, that the new law has yet to be tested and it remains to be seen whether it will prove to be a dramatic improvement over the prior laws.

Interested in reading some more?
Buyowner Costa Rica offers you some more articles that can help you out when it comes to purchasing real estate in our country. Click on the following links for further reading:

• Purchasing property
• Beach building
• Squatter conflicts