Buying beach property - part II

Purchase of Land through Costa Rican Companies

In any of the above mentioned cases, both Costa Ricans and foreigners are always advised to buy land through a company. Among the advantages of forming companies for this specific reason, the reduction of personal liabilities and taxes are the most outstanding.

Ownership of recordable assets, such as real estate and cars, has become the main purpose of most of the registered companies in the country. Hence this method of "indirect" possession, is the most highly recommended means of managing recordable assets.

Once formed, a corporation may be fully controlled by a sole shareholder. This allows the concentration of corporate powers which allows a single individual, or a small group of people, to operate the company in a relatively simple and inexpensive manner. Your attorney will be able to help you find the best ways to ensure control of the company and the overall handling of corporate power.

Buying beach property - part I

Buying beach property

Public Law No. 6043 of 2 March1977 establishes a restricted coastal zone called the "Zone Maritimo/Terrestre." It comprises a 200 meters long strip of land along both the Pacific and Atlantic coasts of Costa Rica, measured from the high tide line toward the inland. This "Maritime/terrestrial" restricted zone is given a differentiated treatment since it is owned by the national government and administered by local governments (municipalities). It is divided into two sections:

a) The Public Zone (Zone Publica): 50 meters wide strip of land between the high tide line and the outer line of the "Restricted Zone" (Zone Restringida).

b) The Restricted Zone (Zone Restringida): 150 meters wide strip of land from the inner limit of the Public Zone toward the inland.

No private individual or corporation is allowed to build on or use for private purposes any portion whatsoever of the Public Zone. However, they may obtain a lease concession on the Restricted Zone for private or business use.

Leases on the Restricted Zone are authorized by the Instituto Costarricense de Turismo (ICT) and granted by the relevant municipality. Beneficiaries of lease concessions are granted the use, occupation, and possession of the land, including the right to build.

No lease concessions are granted to non-Costa Ricans who have resided in the country less than 5 years, nor to foreign companies, nor to national companies of which 50% or more of its stock is owned by non-Costa Ricans.

Lease concessions may be transferred with the previous approval of the municipality and the ICT. They are generally granted for periods of time that range from 5 to 20 years. The lease granting municipality is entitled to charge a small leasing fee. The lessee can apply for an extension of the lease concession at the Municipality. Extensions are normally granted with the previous approval of the ICT.

There are very few exceptions to Law No. 6043 of 2 March 1977. Beach front land that is not regulated by this Law can be found, but it is extremely unusual to have property titles in areas within the restricted 200 meters.

An American investor wishing to acquire a lease concession must do it through a Costa Rican corporation. Land not included in the Public or the Restricted Zones can be purchased individually and with no special restriction or limitation

Before acquiring a lease concession, the buyer would ask his or her attorney to examine the Municipality Records, verify the seller's ownership status, as well as general tax and leasing dues. A similar procedure applies to the purchase of non-restricted land described above.