Costa Rica is famed throughout the world for its beautiful, untainted beaches. It is therefore no surprise that beachfront property is actively sought by American developers, retirees and those looking for vacation homes. The significant caveat regarding beachfront development is that it is rarely the bargain it appears.

No private ownership of beachfront property is allowed. The Costa Rican government owns the first 200 meters of the beach front area, known as the Zona Marítimo Terrestre, or the Maritime Zone, and it is governed by the Ley sobre la Zona Marítimo Terrestre (hereafter referred to as 'ZM').

The first 50 meters are public beaches on which absolutely no construction may take place or any concession be granted. The remaining 150 meters may be developed via special "concessions" that are granted by a governing Municipality (ZM Art. 35). In order for any construction to take place on this 150 meters the area must be part of a Plan Regulador, or a special zoning district created by the Instituto Costarricense de Turismo (ICT).
 
It shoud be noted that some privately owned beachfront property does exist, due to the fact it was registered prior to the 1977 Maritime Zone law, which has a grandfather provision providing for such ownership (ZM Art. 6).

Before actually attempting to obtain a concession for developing rights in the Zona Maritimo Terrestre, a foreign investor must first be in compliance with Article 31 and 47 of the Ley Sobre la Zona Maritimo Terrestre (Carballo, 28 June 1995 interview). Article 31 specifies that at least fifty percent of the development capital must be Costa Rican (ZM Art. 31). In addition, foreign investors must have resided in Costa Rica for at least five years (ZM Art. 47).

Such discrimination concerning foreign ownership could possibly be questioned on a constitutional basis in the Sala Constituicional, or the Constitutional Court. Article 19 of the Costa Rican Constitution (CRC) explicitly states that foreigners have the same individual and social rights as Costa Ricans (CRC Art. 19). However, Article 19 does contain ambiguity with the inclusion of the clause, "with the exceptions and limitations that the Constitution and its laws establish," thereby creating the window for Article 31 of the Ley de Zona Marítimo Terrestre which allows discrimination against foreign investment (CRC Art. 19 and ZM Art. 31).

Inevitably there are methods employed by those who seek to circumvent the restrictions of foreign ownership as established by Article 31 (Carballo, 27 June 1995 interview). A common procedure entails establishing a Costa Rican as the "legal" owner of a parcel of land by recording his/her name on the necessary documentation. Frequently the name of the attorney or one of his/her staff is used as the local owner on the concession. Needless to say such measures have a certain amount of inherent risk. For example, in July 1995, the Municipality of Golfito threatened to pull the concession rights of many foreign investors on the grounds of Article 57, which states that "no person together with his/her spouse and minor children will be able to have more than one concession" (ZM Art. 57). The fact that many foreign owners use the same lawyers, and hence have the same names as the legal owners of their concessions, is now creating a major problem in the Golfito region. Such non-compliance with the law may result in the nullification of concessions without compensation.

The first step for a foreign firm or individual interested in developing the 150 meters of the Zona Marítimo Terrestre is to contact the Municipality that has jurisdiction over the desired coastal areas (ICT, 7 July 1995 interview). It is absolutely imperative that the area proposed for development be covered by a Plan Regulador created by the ICT and that its zoning requirements be compatible with the proposed development project. Beware of so-called "rights of occupation" granted by Municipalities. Such rights are only tentative and must ultimately succumb to the zoning requirements of a Plan Regulador when, or if, it is created by the ICT, making "rights of occupation" too volatile and susceptible to corruption to be recommended for development.

 If the ICT has already created a Plan Regulador in an area, the developer must abide by the arrangements of the Plan or risk losing the concession. If a Plan Regulador does not exist, a firm wishing to develop the area must write a proposal for the implementation of such a Plan. The proposal is in essence an environmental impact statement that must include detailed information about possible damage to the environment, proposed rights of way and other necessary infrastructure developments. By law, the Municipalities are unable to grant concessions in the Zona Marítimo without the aforementioned development plan (ZM Art. 38) and without the consent of the ICT (ZM Art. 37).

Foreign investors wishing to develop tourist areas in the Zona Marítimo may seek tax incentives from the ICT. The granting of such incentives are governed by law No. 6990 of 30 July 1985 which was amended by law No. 3293 of April 1992. Regulations for tourist areas are governed by Decree No. 9387 of 8 January 1979 (ICT 7 July, 1995 interview). Keep in mind that the ICT has the sole faculty to declare tourist zones and such zones are published in the Diario Oficial (La Gaceta) (ZM Art. 27).

An understanding of the law and its inherent ambiguities is absolutely necessary before purchasing concessionaire rights. Obviously, one should not heed hearsay or follow the advice of friends and neighbors. Such behavior could result not only in the loss of the concession but also that of improvements, such as a house, on the property without compensation from the Municipality. The following are some principal points of the law that must be adhered to:

Concessions cannot be granted to:

• Foreigners who have not been residents for five years
• Companies with bearer shares
• Foreign companies based abroad
• A company set up in Costa Rica exclusively for foreigners
• A company with more than fifty percent foreign capital (ZM Art. 47)

Concessions can be forfeited for the following reasons:

• Failure to apply for an extension of a concession in a timely manner
• The forfeiture of rights by the interested parties
• The death or legal absence of the concession holder with no heir
• Not abiding by the established obligations of Article 51
• Cancellation of the concession (ZM Art. 52)

The ICT can cancel a concession for:

• Non payment of the yearly canon or royalty
• Breach of contract (e.g. use of the land for purposes other than those expressly stated by ICT)
• Violation of the ordinances of the law that grants the concession
• Impediment of the use of the public right of way
• Other causes that this law establishes (ZM Art. 53)

The reality of purchasing a concession in the Zona Marítimo is that ambiguities exist within the written law, so that as regulations are created and amended, rights to property may also change. The lesson garnered from concession holders is that there are no guarantees and there is no foolproof way around the law. Additionally, even if a concession is granted, there are no guarantees that the concessions will be renewed or that the price of the concession or the yearly canon will be within reason. The fact remains that one is not purchasing property but is simply "leasing" it with absolutely no title. Therefore, one must be willing to accept the risk inherent in any such endeavor. In fact, official correspondence of 10 May 1995, from the Attomey General's office to the Municipality of Golfito, explicitly states that these concessions are temporary and precarious (Bulgareilli, 1995).

More useful information:
Purchasing Property
Building a Home in Costa Rica
Establishing Residency
Oceanfront Property
Squatters
Expropriation