The Maritime Zone, Jeff Lantz

Ok folks, try not to fall asleep; the following information, although accurate, may be a little dry for the average reader unless you happen to own beach property or are thinking about buying some. I considered asking Andy Pruder to help me spice up the article a bit, sort of a Fear and Loathing in the Maritime Zone, but: NOT. Anyway, this article should clear up some misconceptions that many people have about the Maritime Zone. I have talked to many Costa Rican attorneys over the years and even read information published on the Internet and in guide books, and it is surprising how much this subject is misinterpreted. This article will explain the basics so that anyone can understand them. If you still have trouble understanding... call Andy.

The Ley Zona Marítima Terrestre 6043 or Maritime Zone Law, commonly called 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 Instituto Costarricense de Turismo (ICT; Costa Rican Tourism Institute). The ZMT is described in two parts, the first 50 meters is public domain or “public zone” and cannot be developed or claimed by private persons. The next 150 meters or "restricted zone" can be legally claimed and occupied by private citizens by soliciting the Municipality for the rights through a “concession application” called a Solicitud de Concesión.

The legal instrument that constitutes the right of occupation is called a Permiso de Uso, essentially a lease or Arriendo, which is registered with the Municipality. In our Canton, the Municipality is in Golfito. 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 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’s important to note that Municipalities around the country handle the building issue in different ways. Even though constructions of all sizes and types have been allowed by the 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. Traditionally, taxes have been quite inexpensive, normally less than $30 for a few acres. However, these days, many Municipalities are establishing new guidelines andraising taxes.

Legally registered occupants can transfer their rights by way of a Cesión 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 or traspaso MUST be ratified by the Municipal Board or Consejo. 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, logically, go through an attorney. Anyone can process the paperwork themselves and just get the attorney to notarize a few necessary documents. My office has processed many transfers without using an attorney. This is not to say that it is a simple process. You still need to understand it and follow up until the transfer is recorded. This is where most attorneys fall short. They present the documents and feel their job is done when in fact it’s the approval and recording portion of the process that requires the most attention. There are currently over 700 transfers waiting in the Golfito Municipality; many have been there for several years, most all of them done by attorneys.

Zoning and Concessions - Over time, individual sections of shoreline property will be declared as having “touristic aptitude,” thus qualifying that section of land for traditional style zoning which is implemented through a zoning proposal or Regulatory Plan called a Plan Regulador. Once the Regulatory Plan is elaborated and approved through thecorresponding institutions: ICT, INVU and the Municipality, the legal occupants inside the newly zoned area can now “activate” their Solicitud de Concesión and transform their Permiso de Uso into a Concesión, a permanent and more specific form of ownership outlined in the ZMT Law. A Concession 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, are inscribed in the National Registry, giving the Concession Holder more security with clear rights to develop, transfer, or even take out a mortgage. Concessions for residential and tourist projects are automatically renewable every 20 years for eternity assuming terms of the Concession Contract are met by the Concession Holder. These terms consist of respect for the public zone, payment of all corresponding taxes, and development in accordance with the zoning regulations laid out in the Regulatory Plan. New taxes are assessed for each Concession and are substantially higher than the previous occupation tax. If you were paying thirty dollars for your occupation tax you could pay a few hundred dollars for your Concession tax.

Even though there has been a substantial amount of development in the ZMT around the country, 95% of the coastal lands do not have approved zoning or Concessions as required by law. Therefore, 95% of the development inside ZMT country wide is technically illegal, and 95% of the lease holders have a Permiso de Uso, not a Concession (more on this in the next issue).

The “purchase” of rights to beach property is essentially a private agreement between the buyer and seller. Technically, the law does not allow "buying and selling" of state domain although it is common practice. 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 takes about 45 days and costs around $500. The corporate board of directors may be formed by foreign residents but the corporation must have at least fifty percent of its shares held by a Costa Rican resident. You will see the initials S.A after many corporation names. This stands for Sociedad Anónima or anonymous society, which is the most common type of corporation used because shareholders have anonymity. 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 a private registry (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 trust as opposed to endorsing shares at closing. Most lawyers will set it up however you ask them but be sure to understand how it works before you decide.

So there you have it. It sounds simple but as always, simple things can get complicated along the way. Make sure you understand the process yourself if you are considering an investment in the Maritime Zone.

Next issue.... zoning and developing inside the ZMT!