Considering an Investment in a Costa Rican Beachfront Property?
Here’s What You Need to Know
Beachfront properties are often sought-after locations for both residential and commercial purposes, but they are also scarce. Acquiring one can be a dream come true for many, but for some, it can turn into a nightmare due to the complexity of regulations. Some legal advisors even discourage purchasing untitled land, which includes most beachfront properties. However, with proper research and expert advice, investing in these properties can be both rewarding and reasonably secure.
Understanding the Maritime Zone
The “maritime zone” encompasses 200 meters of beachfront property: 50 meters of tideland and 150 meters of inland territory. The tideland is considered a “public zone,” while the remaining 150 meters are a “restricted zone.” Islands, estuaries, and mangroves near the ocean are also classified as public zones. This maritime zone is regulated by Law 6043, enacted on March 2, 1977, which states that the maritime zone is state-owned, with some exceptions, and can be leased to private occupants for a duration of 5 to 20 years.
In the 50-meter public zone, leases are generally not granted, and construction is not permitted, with certain exceptions. For instance, constructions existing in the public zone prior to 1977 can continue to exist and be transferred due to the non-retroactive nature of Costa Rican law.
The restricted zone can be leased and used in accordance with the “specific regulatory plan” applicable to that area. These plans are detailed and can vary from one beach to another. They can be reviewed at the local municipality and the Concession Department of the National Tourist Board (Instituto Costarricense de Turismo-I.C.T.).
If you plan to start a business or build a home in the restricted zone, it’s crucial to review the specific regulatory plan to ensure you’re in the correct area.
In beaches with a regulatory plan, the 50-meter public area must have numbered markers (mojones) placed by the National Geographic Institute. Any updated, approved survey plan for a lot must reference at least two of these markers.
Maritime zone land without such demarcation or without a regulatory plan cannot be given in concession. However, you may obtain possession rights and a usage permit (“permiso de uso”), with the understanding that you may be infringing on part of the public zone or be in areas that cannot be given in concession once the regulatory plan is designed.
Currently, most beaches in Costa Rica do not have specific regulatory plans. As these plans are being designed, they tend to allow existing constructions and some modifications. The National Tourist Board is planning to review most current regulatory plans, providing people with possession rights a better chance of getting a change of use of land approved, thereby legalizing their existing use of the land.
Despite the absence of specific regulatory plans and concessions, people have built constructions in the maritime zone. Generally, the state does not take legal actions to demolish them due to the institutional effort and court resources required. However, the government has begun to review this situation, intending to align the law with current practices.
For constructions done without permits, the state takes no responsibility and will not pay indemnity should it be ordered demolished by the courts. Removable (non-concrete) constructions can be authorized by municipalities, as well as sanitary installations in already existing construction. However, abuses in the maritime zone are considered criminal infractions, penalized with up to four years in prison, depending on the case specifics.
In addition to demarcation of the 50 meters of public area, the beach must have a declaration from the I.C.T. on whether it is of tourist or non-tourist interest. For the former, a specific regulatory plan is necessary. For the latter, a “use plan” for the land must be approved by the Agrarian Development Institute (Instituto de Desarrollo Agrario). These plans often emphasize ecological protection, but low-density tourist projects may be approved and may even receive fiscal incentives.
Evaluating the Legal Status of the Land
Even for titled land, on-site research is essential. Both titled and leased land may have on-site issues to be resolved, such as labor responsibilities due to the presence of employees or other occupants. These issues must be addressed during purchase negotiations and clearly defined in written agreements.
Understanding the Role of the Municipality and the Register of Concessions
Concession contracts in the maritime zone are registered both in the appropriate municipality and in the Register of Concessions, now located on the premises of the National Register (Registro Nacional) in Zapote. To be valid, a concession must be registered in the Register of Concessions.
A common mistake is to confuse recognition of “possession” (or occupancy) and the authorization to pay a canon (land use tax), with the rights of a concession. Possession rights and the payment of the canon allow you to occupy the property, but the concession required to define the conditions of the occupation cannot be ratified by the I.C.T. and, therefore, cannot be registered. Without a concession, construction may be stopped and criminal charges for infraction of the maritime zone law can be filed.
Can a Foreigner Obtain a Concession in the Maritime Zone?
Yes, provided they have been a resident of Costa Rica for at least five years. Another legal possibility is through a Costa Rican company, domiciled in Costa Rica. In this situation, a foreigner can be the shareholder of a maximum of 50 percent of nominated shares.
Understanding the Concession Procedure
Once you know that a property is in an area that can be leased, you must also verify that it complies with certain measurement requirements. Residential properties must have a minimum of 15 meters and a maximum of 30 meters of frontage, with a minimum area of 300 square meters and a maximum of 2000 square meters. For commercial use, the minimum frontage is 10 meters and the maximum 20 meters, with a maximum area of 1000 square meters allowed.
If the sellers own the property, they must have a dossier for the land filed with the municipality. Do not confuse the fact that the previous owners paid a canon with whether a concession was given. Payment of this canon is provisional—municipalities take it even if there is no regulatory plan. It is a tax only for the use of the land. This alone does not oblige the state to grant a concession, it is at most a proof of possession.
Avoiding Common Pitfalls
Several common sources of frustration are related to the purchase of shoreline properties. These include confusion over what is included in the purchase, failure to register shoreline property in the municipalities or the National Register, and buying possession rights for a beach that has not been declared by the I.C.T., marked by the National Geographic Institute, or had a regulatory plan or plan of use of land designed.
In conclusion, investing in a piece of paradise at the shoreline can be a rewarding experience if done correctly. While the necessary procedures can be time-consuming and costly, a slow development approach while enjoying the beauty of nature and the kindness of people can result in a satisfying investment that embodies the “Pura Vida Costa Rica” spirit.