Buying Property in Costa Rica? What You Need to Know!

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Herbert Ulloa Salas

El licenciado Herbert Ulloa Salas es abogado con el bufete ubicado a la par de la oficina de La Leona, 300 metros al oeste de la Bomba Osa.  Especializa en escriturar propiedades en posesión pero desempeña en todos sectores de ley civil.  Communiquése con él al ulloabillo@hotmail.com


SUCESOS


Lic. Herbert Ulloa and Paul Collar

Buying land on the Osa can involve a roller-coaster of emotions, from elation at finding that perfect property to anxiety when due diligence reserva-forestalreveals title challenges, then hope, anxiety, stress, and exhilaration at closing.  For first time buyers, Costa Rica real estate law can be a maze of unfamiliar terms and complex zoning structures, complicated further by multiple administrative jurisdictions.  There are: Titled and Untitled lands, Maritime Zone Law, Natural Patrimony of the State, the Golfo Dulce Forestry Reserve, and INDER/IDA.  There are many special circumstances of properties on today’s market that require buyers to educate themselves, both for properties for sale on our beautiful peninsula as well as for Costa Rica as a whole.

There are two things to keep in mind for all properties.  First, the property map—or plano—does not convey ownership.  The name that appears on the plano does not correspond to the land owner, or not always, nor does it need to.  Secondly, and this is particularly important for small lots, the property should have a Land Use Permit (Uso de Suelo).  This is issued by the Municipality and shows what a buyer can and cannot do with the property.

TITLE

TITLED properties are the least likely to present complications in real estate deals.  A title search is typically enough to show if the property has any liens, judicial assessments, easements, or other annotations.  The title search will also indicate if titling was achieved through possession and if so if it is still in its three-year grace period in which title can be legally challenged.  Despite the simplicity of a title search, it is important to go beyond this first review to ensure that the property is not the subject of pending civil litigation, boundary disputes, third party possession, or have other complications.

UNTITLED properties include lands passed down through inheritance, perhaps segregated multiple times, but never formally titled and are called “possession” landsThese are not at all off-limits for purchase, but they carry more risk, and terms of a deal should include titling.  The process of titling a possession land includes testimonial evidence from neighbors, property bills of sale, existing property maps, and all documents pertaining to informal transfers for a stipulated period of record, 10 years for unprotected areas, and 48 years (and counting) for Forestry Reserve and other protected areas.  A local lawyer will know first-hand of many such details about the property, its ownership, the seller, and any conflicts pending or past and is the best resource for evaluating such properties for possible purchase.

NATURAL PATRIMONY

Beyond title, the next important consideration is lands that fall under the umbrella of the Natural Patrimony of the State (Patrimonio Natural del Estado).  These include properties located inside protected areas, like the Golfo Dulce Forestry Reserve, or that have full forest coverage even if they are not in protected areas, as well as coastal lands regulated under the Maritime/Terrestrial Zone Law.

GOLFO DULCE FOREST RESERVE

Forestry reserve properties belong mostly to the State.  They can be titled to third parties, but the window of opportunity for achieving such title is shrinking.  One of the key requirements of titling reserve lands is testimonial evidence of possession back to 1968.  This requires a minimum of THREE witnesses from 48 years ago (and counting) that can credibly testify to details of the original possession and the chain of property custody to the present time.  That in itself is already a tall order, though still achievable in many cases.  Still, with each passing year, as old-timers die and memories fade, this becomes an increasing challenge.

Outside of the Reserve, testimonial evidence is required for ten years, so the challenges of titling are fewer, and it is a simpler and quicker process, absent past and present legal conflicts, boundary disputes, or third-party possession.

MARITIME / TERRESTRIAL ZONE

By constitutional mandate, coastal real estate is owned by the Republic of Costa Rica and may not be owned or titled by third parties.  The exceptions to this are those beachfront properties that were successfully titled prior to passage of the Maritime Zone Law in 1977.   However, titled beachfront is much more the exception than the rule, not just on the Osa, but nationwide.  The Maritime Zone is regulated and administered by MINAE where coastal zones include Natural Patrimony forests, even if they are not part of a protected area.  In all other cases, it is the Municipality that administers the Maritime Zone.

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MUNICIPAL JURISDICTION

For the Maritime Zone under Municipal jurisdiction, properties are leased under two permitting paradigms:  maritime concession and maritime use permit.

Municipal Maritime Concession

The strongest of all maritime occupancy permits is the Maritime Zone CONCESSION.  Concessions are inscribed in the National Registry, much like titled properties, where they are available for review and due diligence.  To obtain concession, however, the coastal land must first obtain approval of a Zoning Plan (Plan Regulador) normally undertaken for kilometer-long stretches of coastland that require cooperation between neighbors and the required capital.  The Zoning Plan determines the land use for each section of beach, including for commercial ecotourism, residential, and infrastructural and common areas.  In addition to all the usual regulatory reviews, concession applications must also be reviewed and approved by the Costa Rican Tourism Institute (ICT).

Municipal Maritime Use Permit

The maritime USE PERMIT carries fewer protections than concession zoning but also does not require years of planning nor require the capital outlay of Zoning Plan development.  The maritime use permit is the zoning mechanism that is used before a Zoning Plan is in place and must be renewed semi-annually through notification.  Applications go through a Municipal inspection for approval by the Municipal Council.  Use permits may not be transferred and are valid only for the person or company to which they are granted by the Muni.  For property sales, the seller must renounce the current use permit so that the buyer may apply for it.  The primary factor governing use permits is the “first come, first served” rule, meaning that if somebody applies for one before you do on the same piece of land, they have the first right to use the land when the use permit is issued, irrespective of who is in actual possession.

MINAE JURISDICTION:  USE PERMITS

Since the implementation of the Natural Patrimony of the State law, coastal zones identified by MINAE as having forest cover must apply for maritime use permits through MINAE and not the Municipality.  The use permit application requirements are the same as with Municipal use permit, but additional restrictions can apply if it is located within a designated protected area.  Again, the priority is “first come, first served,” irrespective of who has actual possession.

Coastal Zone Protected Areas

Inside a coastal protected area—think Corcovado National Park—use permits are granted for mostly for SINAC installations.  Private parties are legally allowed use permits provided that their ambitions are not for ecotourism purposes but for training and research that leaves even these highly protected areas open to the ambitions of conservation organizations with such project ambitions.  In the case of Maritime properties that are also inside the Golfo Dulce Forestry Reserve—think Carate, Mogos, and Drake—no formal management plan has been approved, so coastal properties three are unable to apply for use permits until MINAET’s management plan is completed and approved.

Coastal Zone Outside Protected Areas

For all other coastal properties that fall under Natural Patrimony, use permits can be issued under three types of land-use planning:  research, training, and ecotourism.  All applications must show a work plan detailing how the project will achieve one or more of these required use activities.  Residential is allowed, but only in furtherance of one or more of the required use activities.

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INDER / IDA

Land grants and redistribution on the Osa result mostly from the dismantling of the giant Osa Forestal, a land grant corporation that once held the land now comprised by Corcovado National Park as well as other Osa tracts.  Redistribution and management of thousands of hectares are administered by today’s INDER, formerly IDA.  Land grant properties remain under INDER, which concedes land blocks to applicants under various categories.  Beneficiaries are required to occupy and work the land for a stipulated period, typically fifteen years, before full title accrues and is granted to the beneficiary.

Like other real estate on the peninsula, INDER holdings include titled and untitled land, both outside and inside the Forestry Reserve and other Natural Patrimony lands.  By law all these holdings should be administered by MINAE, the regulating authority.  But MINAE does not have the resources to perform this duty.  Therefore, the first step with any INDER property of interest is to investigate the possessor’s standing with the INDER regional office

Titled INDER/IDA Properties

These are properties that are still registered in IDA/INDER name but for which the beneficiary has completed land grant requirements and has qualified for title transfer into his or her name.  These are fair game for further title transfer and relatively seamless and low-risk purchase options.

Titled but with INDER/IDA Limitations

These include properties in which the possessor has not yet fulfilled the fifteen year occupancy requirement and of which the beneficiary is not yet vested with full ownership.  Any transfer of such a property is illegal and can result in sanctions up to and including revocation of the title and return to INDER ownership.

Untitled INDER/IDA Properties in Protected Areas

Finally there are also untitled INDER properties that are located inside a protected area, and these are among the most challenging of all property types to pursue and obtain clear title.  Still, even for these properties, a legal path to title often exists.

IN CONCLUSION

Title transfer in real estate transactions can be governed by a variety of institutions, including the Municipality, MINAE, and INDER, each with its own bureaucracies and guidelines.  With Natural Patrimony, Maritime Zone law, and land-reform title limits potentially factoring into real estate transactions, there are many boxes for prospective buyers to check off the list during due diligence.  The least costly part of buying land successfully in the Osa is educating yourself upfront, and the first step for any serious prospective buyer is to seek legal guidance to navigate the maze of real estate law.

 

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