Buying Beachfront Property
The owners of the two lots offered for sale here moved to Costa Rica after more than a decade of living directly on the beach along the west coast of Florida. We originally couldn't decide which of the many appealing areas of Costa Rica we wanted to call our new home, but felt certain about three things: it had to be beachfront property, with a house already built, and it couldn't be on the Caribbean coast. So why did we end up purchasing undeveloped property in Cahuita which was very close to, but not on the beach?
We first lived in a beautiful beachfront house on the Pacific coast, but became increasingly dismayed by the transformation of our once-pristine beach by uncontrolled development (the same sort of "mega mania" which caused us to leave Forida). We also disliked the fact that most ex-pats lived in gated developments or remote developments, and did not (and often could not) blend in with the local community and culture. And we were uncomfortable with the fact that almost all beachfront property was held persuant to a time-limited lease from the government (called a concession) rather that actual title.
We decided to take a break from the frustrating search for that elusive "perfect" Pacific coast community by taking a week-long vacation in the one area in which we were sure we didn't want to live: the Southern Caribbean. It didn't take long to discover that the negative myths we'd heard or read about this area were just that: myths, with little or no basis in reality. After two days in Puerto Viejo (much too crowded and noisy for our taste), we followed a friend's recommendation and came to Cahuita. It was love at first sight -- with the village, its people and its National Park -- and we immediately started looking for a house to buy. Alas, Cahuita had (and still has) a severe shortage of houses that even came close to having the features we wanted. And although we knew about the risks inherent in buying beachfront property anywhere in Costa Rica, discussions with many people convinced us that buying such property was even riskier on the Caribbean coast, where concessions were not yet available and almost all "owners" of beachfront property actually had no more than a tenuous "right of occupation."
Reluctantly, we had to agree with a friend who argued: "You've come here to relax. Why live with the stress of knowing that your property isn't titled and can be taken from you any day?" Instead we decided that the best option was to purchase titled property very close to the National Park's protected beaches. And we discovered that the area has many skilled craftsmen who can build a custom house in a few months for a fraction of what it would cost on Costa Rica's Pacific coast, or in the United States.
Although many realtors and sellers try to minimize the risks of purchasing oceanfront land, the United States Embassy in Costa Rica has the most comprehensive and accurate description of the risks inherent in purchasing untitled beachfront property. The document was last revised in 1998, and some of its warnings about concession property seemed theoretical until recently. But beginning in October of 2007, the government's began a re-evaluation of concession land along the Pacific Coast and in the Southern Zone, based on the increased market value of the land, and both concession royalties (a yearly canon) and property taxes for these properties have skyrocketed. (Most inland property is taxed at only 0.25% of the declared value, but Maritime Zone Property is taxed at considerably higher and variable rates.) The text in blue, below, is from the US Embassy's 1998 warning about the significant risks in buying beachfront property held under a concession, and the even greater risk of buying property with only a "right of occupation" (the status of most beachfront property on the Caribbean Coast):
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.
The principal problem is that 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). . .
It is absolutely imperative that the area proposed for development be covered by a Plan Regulador created by the ICT [the southern Caribbean communities do not yet have any approved Plan Regulador and so cannot grant concessions, only "rights of occupation"] 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. . . .
[E]ven 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).
If you agree with our conclusion that the beachfront dream is simply too risky, consider the best alternative: fully titled property near not just "a beach", but a gorgeous National Park with miles of protected beaches and other wonders.