Maritime Zone Concession Land
Santa Teresa, Mal Pais and Manzanillo are blessed with over 25 km of majestic, light golden-sand, beachfront land. The beauty and remoteness of these beaches is one oft he popular draws tot he area.
Real Estate located within the Maritime Zone is dealt with in a differently than titled or posession land. The Maritime Zone Law or Ley Zona Maritima Terestre 6043, commonly called the “Concession Law”, was established in 1977 and defines the Maritime Zone (ZMT) as the 200-meter strip of land along the shoreline, calculated from the “average high tide”. It is owned by the state and jointly administered by the local Municipality and the Costa Rican Tourist Institute (ICT). The ZMT is divided into 2 parts. The first 50 meters is the “public zone” and cannot be developed or claimed by private persons. The next 150 meters, the “restricted zone”, can be legally claimed and occupied by private citizens by soliciting the rights from the Municipality through a concession application (solicitud de concesion).
Initially, the legal instrument that constitutes the right of occupation is called a Permiso de Uso (right of use), essentially a lease (arriendo), which is registered with the Municipality by submitting the Solicitud de Concesion. Contrary to popular belief, these leases have no time limit as they are designed as an “interim right” of ownership until proper zoning and concessions can be processed and registered. Stories of 99-year leases etc. are simply untrue. According to the law as it is written, the lease-holder has the right to occupy the land and build a temporary structure. However, it is important to note that municipalities around the country handle the building issue in different ways. In Santa Teresa, Mal Pais and Manzanillo, the Municipality of Cobano administers beachfront land through it’s Zoning Plan, “Plan Regulador”. Even though buildings of all sizes and types have been allowed by some municipalities, certain risks are involved depending on how you go about it. Each occupant pays a yearly “occupation tax” or canon to maintain their Permiso de Uso. In the Mal Pais, Santa Teresa, Manzanillo area, the zonging plan is strictly enforced.
A Concession (concesion) is as close to a title as you can get even though the land technically is still owned by the state. The Concession Contract, spelling out the terms of the Concession, is inscribed in the National Registry and provides the Concession holder more security with clear rights to develop or transfer. Concessions for residential and tourist projects are automatically renewable every 20 years for eternity assuming the terms of the Concession Contract are met by the Concession Holder, which typically are: respect the public zone, pay taxes and develop in accordance with the zoning regulations laid out in the Regulatory Plan. New taxes are assessed for each Concession and are often substantially higher than the previous occupation tax.
Even though there has been a substantial amount of development in the ZMT, to this day, many of the coastal lands in Costa Rica still do not have approved zoning or Concessions. And since development cannot take place without property zoning, Much of the development inside the ZMT in Costa Rica is technically illegal. Also, since concessions are only granted once there is approved zoning, the lessors of real estate have a Permiso de Uso, not a Concession. This fact may sound alarming but basically, the Costa Rican government recognizes the fact that zoning the coastline has not kept up with actual development allowed by the local government. In many cases, existing development will be “grandfathered in” once zoning eventually takes place.
The purchase of rights to beachfront real estate in Santa Teresa and Mal Pais is essentially a private agreement between the buyer and seller. Technically, the law does not allow buying and selling of state domain. That is why a token amount for the value appears in the public transfer documents instead of the actual purchase price. Costa Ricans or foreigners having 5 years of residency can register beach property in their own name. All other foreign citizens must register the rights to their beach parcel through a Costa Rican corporation formed by an attorney, a simple process that costs around $600. You will see the initials S.A after many corporation names. This stands for Sociadad Anonima or “anonymous society” which is the most common type of corporation used because shareholders used to have anonymity. Under the new disclosure laws of 2019, a Registry of Shareholders is now kept by the Costa Rican government, effectively eliminating the anonymity of shareholders. This regsitry is not public, but is accessible by the government. Normally, a prearranged agreement is made so at the time of closing the property sale, the Costa Rican shareholder endorses their shares over to the foreign shareholder so they end up holding 100% of the shares. These are “bearer shares” and are registered in the corporate books. This procedure has been common practice around the country, however some lawyers have devised other methods by holding the shares in a “legal trust” as opposed to endorsing shares at closing. It remains to be seen how Concession Land will be affected by the new disclosure regulations and how attorneys will work around the requirement that a Costa Rican or resident foreigner hold over 50% oft he shares oft he corporation. Please contact an attorney for an opinion as to how the new laws will impact such parcels.
Legally registered occupants can transfer their rights by way of a Cession de Derechos, where the registered occupant “gives up his rights and passes them on to another person”. Transferring rights is a simple process but there is a very specific format that must be followed. The transfer (traspaso) must be ratified by the Municipal Board (Consejo Municipal). Even though the law does not require an attorney to process lease transfers and concessions, the vast majority of people who buy land inside the ZMT wisely go through an attorney. You still need to understand the process and follow up until the transfer is recorded. This is where many attorneys fall short. They present the documents and feel their job is done when in fact it is the approval and recording portion of the process that requires the most time and attention.