You are here: Home E-Guide to Real Estate in Costa Rica Chapter 8 - Due Diligence Fourth step: The local bureaucracy

Fourth step: The local bureaucracy

Property taxes, building permits, and zoning are all handled by local municipalities. The country is divided up into 81 municipalities, each one representing a cantón (like a county) with a seat, a mayor, a council, and all the attendant elements of bureaucracy. Some municipalities are easier to work with than others. The municipality in your canton of choice is where you’ll do part of your due diligence, and it’s also where you’ll eventually apply for your building permits if you plan to construct anything.

For the purposes of due diligence, the first thing to check is whether previous owners have paid all their taxes. The easy way to do this (other than checking the National Registry for tax liens) is obtaining property tax receipts from the owner for last few years of taxes. These receipts have the double benefit of helping to confirm ownership. Your attorney can also look up property tax records at the Municipality, though it shouldn’t be necessary.

The municipality is also the place where you or your attorney would go to get information on uso de suelo, or land-use restrictions. How the property is zoned according to the municipality’s plan maestro (often translated “master plan” but more properly meaning “zoning plan”) will determine what you can and can’t build on it, or if you can convert a house into a hotel. Property zoned forest can be built on only with difficulty, while property zoned agricultural has density restrictions (though there are often plenty of loopholes). Each zoning plan is different, so restrictions must be approached on a case-by-case basis.

At the moment, only a handful of municipalities have comprehensive zoning plans, though some of them maintain a patchwork system of do’s and dont’s. The lack of thorough zoning restrictions has caused quite a serious logjam in some parts of the country, as developers with bulging pocket books have swamped back-water municipalities with projects previously unimagined. The central government recently took action in Guanacaste, issuing a four-year decree to restrict the heights of new buildings within five kilometers of the coast. New zoning plans would replace that decree, and a few municipalities – like Santa Cruz, home of development-heavy Tamarindo – are creeping their way toward finalizing zoning plans.

All that to say, you probably won’t encounter many restrictions in the municipality on what you can build. That cuts both ways, since neither can you be sure that your next-door neighbor won’t be allowed to build a soccer stadium or a brothel, but for the moment there’s not much you can do. One of the few things you can do is have your attorney or some other well-connected acquaintance ask around at the municipality about what kind of permits your future neighbors have been granted. Be careful, however, to take rumored projects with a grain of salt: Everyone is planning to build 20-story condominium developments in Costa Rica, but very few people have the financing and political clout to follow through. Until permits are approved, it’s just a pipe dream.