Can a Foreigner Acquire a Beachfront Property Interest in Costa Rica?
Is it possible for foreigners to acquire a beachfront property interest in Costa Rica? The answer is less than straightforward and requires an understanding of the legal issues outlined in this article.
Maritime Zone Law
In 1977, Costa Rica passed the Maritime Zone Law, which established property ownership rights for beachfront property in Costa Rica. Under the Costa Rica Constitution, the initial 50 meters inland from the high-tide line on beachfront properties, as established by the Costa Rica National Geographic Institute, has always been reserved for public use and enjoyment. This is an inalienable right of public enjoyment, where no private use of the property is permitted.
After the passage of the Maritime Zone Law, properties which had previously received a registered property title in the National Registry, with a survey plan to the 50 meters inland from the high-tide line, retained their fee simple ownership rights. However, properties held only in a right of possession by their owners, became subject to the concession property provisions of the Maritime Zone Law.
Concession property
The concession property provisions provide for the leasing of land from the government that equates with the next 150 meters inland from the 50-meter public zone line previously described. Concessions are only granted in those beachfront areas where the local municipality has adopted a municipal zoning plan, providing for the existence of such concessions for touristic-oriented, commercial or residential use.
The municipality is charged with the administering of such concessions granted by the government. The normal concession lease granted is for a 20-year period. Annual payments, similar to municipal property taxes, must be paid to the municipality, in order to keep the concession lease current.
Restrictions on foreigners acquiring a concession property interest
Foreigners must have five years of legal residency status in Costa Rica prior to acquiring a majority interest in a concession property. In circumstances of a foreigner wishing to acquire such an interest prior to having five years of residency status, a trust may be created where a Costa Rican citizen holds a 51% interest in the concession property, during the foreigner’s five-year residency requirement period being established. Following the establishment of five-years of residency, the concession interest held in trust may be transferred to the foreigner in its entirety.
Foreigner inheritance of a concession property interest
An interesting consideration for foreigners is the testamentary disposition of such concession interests. An inheriting party must also meet the five-year residency rule in order to acquire the entire concession property lease interest following probate. Alternatively, they would have to establish a trust-holding relationship, as was previously described, until the residency requirement was met.
My opinion
Concession property interests present some unique legal due diligence requirements compared to those of titled property interests. Any foreigner seeking to acquire a concession property interest would be well advised to seek professional legal assistance from a knowledgeable real estate attorney prior to entering into any contractual arrangements.
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