Legally speaking, the first step in any purchase process is to identify the property to be acquired.
Registration Report
For registration purposes, a study must be carried out in the National Registry. This report will include the property’s characteristics:
a. Natural environment
b. Location (district, canton and province)
c. Limits
d. Size
e. Survey map number
f. Details of registered owner
g. Approximate value
h. Payment method
i. Registration date
j. Annotations
k. Liens (easements, mortgages, etc.)
Based on the above, we can determine different situations and be clear about the limits, limitations and conditions to which the property is submitted.
1. Possible situations
1. a. Property that is not submitted to any particular regime of the Legal Code; it may be an urban or rural area within the national territory.
1. b. Property that is submitted to the condominium property regime; it can be in a rural or urban area, but follows the requirements and conditions established in the Condominium Property Law and the Condominium’s Regulations.
1.c. Property given by the State through concession. This type of private concession is especially important, because it follows the parameters established by the Legal Code. Law No. 6043 of the Marine Coastal Zone Law establishes in Article 9: “The Marine Coastal Zone is the two hundred meters of beach frontage bordering the Atlantic and Pacific coasts of the Republic regardless of its origin, and measured horizontally from the line of mean high tide and the surface and rocks that are visible at low tide. For all legal effects, the Marine Coastal Zone includes the islands, islets and coastal crags, as well as the land and natural formations above sea level within the territorial waters of the Republic. Cocos Island, which will be under the direct ownership and possession of the State, and the islands whose ownership or administration are established in the present law or special laws, are exceptions.”
Article 15: “The owners of properties bordering the Marine Coastal Zone may ask for the incorporation of their properties to the planning process carried out in this zone. They will pay for it and transfer gratuitously to the State the areas needed for public use. The planning and use of those lands for edifications and installations must comply with the norms established by the Instituto Nacional de Vivienda y Urbanismo (National Institute of Housing and Urban Planning) and the ICT before they are approved by the respective municipality.”
In this case, the following stipulations must be considered if the purchaser is a foreigner. Article 47: “No concessions will be given to:
a) Foreigners who have lived in the county for less than 5 years;
b) Corporations with bearer stocks;
c) Companies or entities in other countries;
d) Entities founded in the country by foreigners;
e) Entities with more than 50% of their shares, quotas or capital belonging to foreigners
Those entities that may have been given concessions will not be able to assign or transfer shares or quotas to foreigners and neither will their partners. Anyhow, a transfer made against this disposition will be null.”
2. Regulating Plan
The first article in Urban Planning Law No. 4240 establishes the following: “…a Regulating Plan is a local planning document consisting of a group of plans, maps, regulations and any other document, graph or supplement, the development policy and the plans for the population’s distribution, land use, roads, public services, common facilities and the construction, conservation and rehabilitation of urban areas…”
Article 16 – “According to the objectives set forth by the different government institutions and the State’s administration, the local regulating plan will include, without being limited by them, the following elements:
a) development policy, including the principles and norms on which it is based, as well as the objectives establishing the needs and growth of the specific area;
b) a study of the population, which will include projections of the future demographic growth, its recommended distribution and norms regarding density;
c) land use showing the location and distribution of lands in regards to housing, commerce, industry, education, recreation, public and any other pertinent use;
d) a circulation study showing in general the location of the main public thoroughfares and of transportation routes and terminals;
e) communal services, to indicate the location and size of the areas required for schools, parks, playgrounds, health units, hospitals, libraries, museums, public markets and such;
f) public services, including a general analysis and location of the main systems and installations of pipes, sanitary sewage and pluvial systems, trash collection and disposal, and such; and
g) housing and urban renovation showing the needs and objectives in regards to housing and reference to the areas that must be subjected to rehabilitation and remodelling.”
These regulating plans are still not yet approved in all the cantons. Nonetheless, in those where they are, the acquirer must consult the respective municipality, considering the location, use and size of the property.
3. Survey Map
In order to individualize the location of the property to be acquired, there must be a simple or certified copy of the survey map issued by the National Cadastre Office. In this sense, Law No. 6545 of the National Cadastre Law establishes in Article 10: “The cadastral certification is the document issued by the Cadastre Office, declaring that the cadastral map has been properly registered in the respective office, and indicating whether the place in which the property is located is a cadastral or cadastered zone. In the second case, the certification may be a reproduction of the cadastral record.”
In addition, the number of the property’s cadastral map must be submitted to register the purchase.
4. History of the property
Information about the property’s owners, liens and other annotations of the past ten years can be obtained through a study carried out in the National Registry. This revision will provide a record of the property that may help with future procedures, such as correcting the measurements, knowing about previous uses, as well as types of owners and others details.
5. Common services and amenities
The property’s location reflects the type of public services provided in that particular geographical zone and which therefore give or take away added value from the land. When these services are evident, the purchaser must ask for the following from the respective institutions:
a. Instituto Costarricense de Electricidad (Costa Rican Institute of Electricity): installation of public phones and availability of telephone lines.
b. Instituto Costarricense de Acueductos y Alcantarillados (Costa Rican Institute of Aqueducts and Sewerage): drinking water and sewerage in case it is in charge of these services; if not, the name of the company or municipality responsible for providing these services.
c. Compañía Nacional de Fuerza y Luz (National Electricity Company): Public lighting and electric wiring.
d. Respective municipality: days when garbage is collected, amount to pay for municipal rates and property taxes, information about any regulating plan, limits and limitations of the property to be acquired and a certificate indicating that the seller is current with his tax and rate payments.
e. Ministerio de Ambiente y Energía–MINAE (Ministry of Environment and Energy): Whenever necessary, and depending on the property’s location, he must ask for the environmental requirements, if any, and if an environmental-impact study must be carried out.
6. Documents The Seller Must Provide
Even when the previous information can be requested from the corresponding institutions, the seller must provide the following information:
a. Certification from the respective Municipality of being current with the payment of municipal taxes and rates and property taxes.
b. Last receipt of the payment of municipal taxes and rates and property taxes.
c. Certification from the Municipality, water company in charge or the Instituto Costarricense de Acueductos y Alcantarillados indicating that the property is current with the payment of water and sewage services.
d. Last receipt for the payment of telephone services.
e. Certification from the Municipality, or company in charge or the Compañía Nacional de Fuerza y Luz (National Electricity Company) indicating that the property is current with the payment of public lighting and electrical services.
f. Last receipt for payment of telephone services, when required.
7. Access
Construction Law No. 833 establishes the following in Article 4:
“Public thoroughfare is regarded as the entire area of public domain and common use. Through disposition of an administrative authority, it will be used for free transit following the planning laws and regulations. As a matter of fact, it is already destined for public use.
Depending on the type, public thoroughfares will also be used to ensure the aeration and illumination of the nearby buildings; facilitate the access to adjacent properties; the installation of any channel, artifact or accessory belonging to public works or meant for public service.”
Considering the above, it is important, though not necessary, to ask for a report on future projections of the roads and highway, as well as their regulations, bridle paths and other communal facilities from the Ministerio de Obras Públicas y Transportes – MOPT (Ministry of Public Works and Transportation) and the local Municipality. This measure is important because future constructions may affect the property directly, or may well increase the added value.
8. Construction and Appraisal of the Land
When the property acquired has a building, the following aspects must be studied and considered:
Electric distribution
Earthquake-proof construction
Construction’s durability
Structure (beams, columns, walls, etc.)
Finishes
Total area
Green areas
Appraisal: the previous characteristics must be appraised, as well as the zone’s unitary value (value in square meters, added value, construction’s total area)
The following nomenclature is used:
a) V.R.: current reposition value (R.V.)
b) D.A.: current accumulated depreciation (A.D.)
c) V.D.: current depreciated value (D.V.)
9. The Registered Owner
To determine the possible advantages through the acquisition of a property from a person or legal entity, the following aspects must be analyzed:
9.a. Property belonging to a legal entity: If the property belongs to a corporation, it may be possible to acquire shares from that company; which would imply the acquisition of the company’s assets, including the property to be acquired.
The problem arises with liabilities, because there may be unrecorded debts that can affect the acquirers. Therefore, one must ask for a certification from an authorized public accountant, indicating the company’s balance report; an indispensable aspect in order to know if it is safe to acquire the shares representing the nominal capital or not.
9. b. Property belonging to an individual: In case the property is under the name of an individual, it must be acquired following the normal process established for this instance. A notary public must be contacted to pay for seals, transfer costs, fees and duly sign the deed. This formalization or “closing” is the stage in which any negotiation process ends.
