You are here: Home E-Guide to Real Estate in Costa Rica Chapter 11 - Legal Matters Property rights

Property rights

Foreigners have the same rights to own property as Costa Ricans, and Costa Rica generally does a very thorough job of protecting the rights of property owners. But according to Costa Rican law, there are a handful of circumstances under which a property owner would partially or fully lose certain rights to the use of his or her property.

Maritime Zone

If you’ve already read the full rundown of Maritime Zone (zona marítima) law regulations, you know that no one can actually own property in that zone, and that foreigners cannot own more than 49% of a corporation that holds a Maritime Zone concession. The other thing to emphasize is that Maritime Zone concessions last 20 years. At the end of that time, the government typically renews them. However, the government is perfectly within its legal rights to give your concession to someone else if it so chooses. While this hasn’t happened anywhere yet, keep in mind that the construction and real estate mania only hit this country about 10 years ago, and many Maritime Zone concessions are brand new, in places that are just starting to develop. The municipality could very well decide to hand your ZMT concession to a five-star hotel developer, rather than allow it to be used for a single family home (though to do that, the municipality would need to reimburse you for the value of anything you’ve built on the property).

Squatter’s rights

Squatter’s (precaristas) rights in Costa Rica are intended to distribute unregistered land to people who didn’t have any. While squatter’s rights in Costa Rica are not as broad as they are in some countries, you could partially or fully lose the use of your land if squatters take up residence on it. This can only happen if you own a large piece of property that has nothing on it, so the surest way to keep this from happening is use your land. Land that is in use or being somehow developed cannot be squatted upon. The second surest way to keep squatters out is to hire someone to patrol your property regularly. Squatters only start to gain rights to your land after doing something with it for a period of one year completely unmolested by the owner or the owner’s representative.

After one year, you would have to pay them for their investment in the property, but they would not necessarily have the right to stay on the land. The longer the squatters stay on a piece of land unmolested, the more rights over it they gain. At 10 years, they legally own the land. Finally, squatting legally has to be done in good faith. That is, the squatters must believe that the land is unregistered. Knowingly squatting on registered property is illegal.

Rental law

If you decide to rent your property to someone, be aware that the renter has various rights to the property under rental law (La Ley General de Arrendamientos Urbanos y Suburbanos Ley 7527). The country’s rental law applies only to residential property, and other conditions apply when renting out agricultural or commercial property. Importantly, short-term vacation rentals are also excluded from the law, though that exclusion applies only to establishments registered as hotels or bed and breakfasts with the Costa Rican Tourism Board. Compared to recent years, the current condition of the country’s rental law represents a significant improvement as far as the rights granted to landlords. Following is a general overview of rental law. It is highly recommended that you seek the council of an attorney before renting out a property. Likewise, be sure to get an English translation of any rental contract before you sign.

Contracts: Rental agreements can be oral or written. To play it safe, however, be sure to get everything in writing, and get/give signed receipts for every payment.

Contract length: Renters have the right to stay in a property for up to three years. Like all the rights granted to renters, this one is irrevocable, meaning signed contracts stipulating a shorter stay are moot should the renter later choose to stay the full three years.

Contract termination notification: Owners must notify renters, in writing, of their decision to not renew a contract at least three months before it expires. Otherwise, the contract renews automatically.

Paying the rent: Renters must pay the rent within seven days of the agreed-upon date. If the renter fails to do so, the owner may immediately start eviction proceedings.

Rent increases: Rents paid in colones may be increased annually according to the conditions laid out in the rental contract. Landlords may increase the rent a maximum of 15% annually. In the event that 12-month inflation is higher than 15%, they may add an additional percentage as determined by a government body called the Junta Directiva del Banco Hipotecario de la Vivienda. Added up, the increase is not to exceed the rate of inflation.

Foreign currency: Rent on properties levied in a foreign currency may not be increased during the length of the contract.

Deposit: Cannot exceed one month’s rent.

Property visits: The owner has the right to inspect the property once a month or when circumstances require. Inspections must be carried out in the presence of the renter or his/her representative.

Improvements: Any improvements made to the property stay with the property once the rental contract expires.

Repairs: Owners are responsible for keeping the property in good condition. Serious damage that requires immediate attention must be reported to the owner by the renter right away. If the owner does not respond promptly, the renter has the right to repair the problem and deduct the cost from subsequent months’ rent.

Transfer of contract: A rental contract remains valid in the event of a transfer of the property. Renters have the right to remain in the property through the duration of the contract, regardless of the owner. The important exception is that the owner may evict a renter if he or one of his family members is going to use the property as a primary residence.