Real Estate Development in the Coastal Zone

By Andres Montejo

The Marine Coastal Zone

1. Delimitation ACCORDING TO the Law

1.1 Defining the Marine Coastal Zone

 The Marine Coastal Zone

The Coastal Zoning Law is applied exclusively to Costa Rica’s Marine Coastal Zone. What does this mean? According to the law, this zone “encompasses two hundred meters of beach frontage bordering the Atlantic and Pacific coasts of the Republic regardless of its nature, and measured horizontally from the mean high tide line and the surface and rocks that are visible at low tide.” In addition, and for all legal effects, it includes the islands, islets and crags, as well as the land and natural formations above sea level within the territorial waters of the Republic. Cocos Island, which is under the direct ownership and possession of the State, is an exception. The Marine Coastal Zone also includes the mangrove area, regardless of its extension. 

Sections included in the Marine Coastal Zone

The same law establishes that the zone is divided into two sections:

b.1. Public Zone: The fifty-meter line measured from the mean high tide line and the areas that are left uncovered during low tide, as well as mangroves and the restricted zone.

b.2. Restricted Zone: Constituted by the other one hundred fifty-meter line or by the other lands, in case of islets.

The previous division is important, since it is forbidden to construct any type of building in the public zone; all citizens have free access to it. This public zone cannot be occupied and no one can claim any right over it, except those established by the law. According to the laws in force, it is possible to construct on the restricted zone.

1.2 Location of the Islands as Marine Coastal Zone

Criteria established by the Attorney General’s Office:

In regards to islands, the Procuraduría General de la República (Attorney General’s Office) establishes the following on pg. 12 of ruling C-108-96, July 1^st, 1996:

a. Islands as Marine Coastal Zone:

It is important to include islands in the concept of Marine Coastal Zone. We must remember that in general terms, the Marine Coastal Zone in our country, defined as the two hundred-meter line along the Atlantic and Pacific coasts, measured horizontally from the mean high tide line (article 9, first paragraph, Law No. 6043), is divided into two zones, each with different legal regimes.

The first zone is known as public zone. It is formed by the fifty-meter line besides the mean high tide line (article 10 ibid) and is for public use, especially for the free transit of people.  For this reason, unless otherwise established by the law, it cannot be occupied under any circumstances (Article 20 ibid).

The other zone, known as the restricted zone, includes the other one hundred and fifty-meter line (article 10 ibid), and can be used and enjoyed by individuals through the lease or concession given by the respective municipality and under the period and conditions established by the Coastal Zoning Law (articles 39, 40 and 41 ibid.).

In the case of the islands and considering these delimitations, it is interesting to see how the concept of public zone remains, but that of restricted zone extends throughout the insular territory (article 10 ibid.). Therefore, concessions can be given in any place within an island as long as the fifty meter-wide strip meant for public use is respected and all the conditions and legal requirements are fulfilled. Any area under public domain is also safe; this is the case of the mangroves, which are considered public zone according to the Coastal Zoning Law, (article 11).

b. Exceptions

b-1. Isla del Coco (Cocos Island)
Cocos Island is an example of an island which was excluded from the regime as an exception. Article 5 of the Political Constitution establishes that the island is part of the national territory and it belongs to the State as a National Park and therefore, the State owns it (decree No. 8748 of June 22, 1978, ratified through Law No. 6794 of August 25, 1982). The same is true for all other islands whose domain or administration is determined in the Coastal Zoning Law or in special laws (article 9, second paragraph).

b-2. Isla San Lucas (San Lucas Island)

Along this line, the Coastal Zoning Law (article 78) keeps for San Lucas Island the same legal location previous to its promulgation, based on Law No. 5469 of April 25, 1974, which transfers the property to the Municipality of Puntarenas to be exploited as tourism centers and Decrees No. 16933 of March 31, 1986, and May 3, 1990.

 b-3. Guayabo, Negritos and Pájaros Islands
These islands were declared Biological Reserves, (decrees No. 2858-a of February 28, 1973, and 5963-A of April 28, 1976, ratified by Law No. 6794 of August 25, 1982) and are an instance of the singular treatment provided by a special law.

We must remember that article 73 of the Coastal Zoning Law excludes those Marine Coastal Zones that are included in equivalent national parks and reserves and regulated by its respective legislation.

2.   Public Registry Procedures

2.1 Concession Registry of the Marine Coastal Zone

Requirements:

A. New Concessions

1- Literal recording of the contract signed by the grantee and the respective Municipality

2- Notarial declaration proving:

a. the inspection of the property; the date must be included

b. the publication of the decree, and if there was or was not any opposition.

c. the result of the Authorization given by the Instituto Costarricense de Turismo ICT (Costa Rican Tourism Board), the Concession Department or the Leasing Section of the Instituto de Desarrollo Agrario – IDA (Institute of Farming Development), correspondingly.

d. the final resolution adopted by the Town council, giving the concession requested

3- All of the above, in addition to the requirements established for the Recording of documents in the Public Registry (nature, location, limits, size, cadastral maps, use, terms, annual fees, liens).

4- Recording Rights: according to the contract’s appraisal based on Table I, Number 4 of the Public Registry’s Tariff Law

B. Extensions

Recording of the extension agreement, signed by the grantee and the respective municipality. The agreement must fulfil the following general requirements for documents to be recorded in the Public Registry (nature, location, cadastral maps, size, and extension appraisal).

The following must also be included in the recording:

a.            resolution by the competent institution (ICT – IDA)

b.            municipal resolution, properly signed

The town council will approve or reject the resolution project. The resolution is sent to the municipal executive, who must put the parties on notice about the town council’s resolution.

In regards to the town council’s resolution, an administrative procedure must be followed. An administrative appeal of unsuitability is submitted to the Third Section of the Appellate Court. In this way, the process is concluded and the administrative proceedings are exhausted.

2. Revision of the form and beginning of proceedings 

Article 34 of Regulation

Objective: Check if the form is complete

If the procedure is incomplete, the municipality will let the interested party know so corrections can be made.

If the proceeding is complete the municipality will provide the interested party with the following information:

a.       cost of decree

b.       inspection costs, if any

The purpose of the inspection is to check the property:

a.       location

b.       boundary lines

c.       benchmarks

d.       sketches

e.       construction data

f.         crops and improvements

NOTE: There are no inspections when extensions are given.

Procedure in case of opposition:

Article 38 of Regulations:

a.       the opposition is presented at the municipality

b.       there is a term of 30 working days

c.       copy of decree in municipalities (article 39)

The objective of this procedure is to give the interested parties the opportunity to express any opposition against the concession.

If a third party opposes:

a.       the municipality puts the interested party on notice.

b.       the municipal executive mediates by summoning the parties to an appearance, where they should provide evidence to sustain their claims.

c.       after this appearance, a notary certificate signed by the interested parties is issued.

d.       the municipal executive prepares a resolution project based on the evidence provided deciding the total or partial approval or overruling of the concession.

Such a resolution project is presented at the town council, along with all the evidence.

2.2 Municipality Procedures

The municipalities are the ones who manage the Marine Coastal Zone.

Special: New concessions or extensions of the existing ones.

1. Submit Concession Request: Cross checks with the ICT. Regulated in Articles 26 through 47 of Regulations.

2. Requirements: 

Provide the following information:

a.       Name of the municipality

b.       Name of interested party, personal information, exact place for notification, spouse’s name (article 30 of regulations)

c.       Sketch or land’s description

d.       Land’s nature and boundary lines

e.       Land’s purpose: agriculture, industry, business, tourism, recreation, residence, and other

f.         How long it has been occupied, title by which the land was acquired

g.       Type of flora and fauna in the place

h.      Type of timber-yielding resources: whether it is for agricultural purposes

i.         Type of access: land, air, water, etc.

j.         Whether there is a previous concession or not

k.       If the public zone is demarcated

l.         If there is a zoning plan

m.    If tributación directa (tax office) carried out an appraisal

n.      Publication of decrees

o.       Inspection costs

p.       Declaration, in accordance with article 46 of the regulation, that there is no kinship with councilmen or their substitutes, or with the municipal executive in 1^st and 2^nd degree of blood relationship.

2.      Demarcation

a.       To separate the Public Zone from the Restricted Zone

b.       Carried out by the Municipality

 According to Articles 62 and 63 of the Coastal Zoning Law, the Instituto Geográfico Nacional (National Geographic Institute) must demarcate the public zone.

a.       The demarcation of the restricted zone:

b.       Must be made by the Municipality, according to article 63 of the Marine Costal Zone Law.

c.       Must be made using concrete benchmarks every seventy five meters.

d.       Will be covered by the grantees who are adjacent to the Marine Coastal Zone.

e.       Will be calculated dividing by the number of linear meters.

4. According to Articles 49 and 50 of the Regulation, an appraisal will guarantee that the contract will not be signed without the previous establishment of an annual fee. This appraisal must be revised every five years.

2.3 How to obtain concessions in the Marine Costal Zone

Concessions in the restricted zone are controlled by the Marine Coastal Zone Law and concessions in islands and islets require the approval of the Congress.

There are numerous procedures that can be limited by any opposition.

Concession of the administrative contract:

Generates supervening duties, such as:

a.       payment of annual fees

b.       state’s duty to keep the grantee within the given domain

c.       signing a contract within the term established

Procedure for new concessions:

Second Chapter of the MCZL Regulations   Executive Decree No. 7841, of 16-12-77, Paragraph B.

Previous requirements: 

Those established by Administrative Law and Jurisprudence

1- Existence of a Zoning Plan: There should be a previous national development plan and a general land use plan. State institutions like ICT, INVU, MIDEPLAN, etc. will intervene. The zoning plan is subject to guidelines and suggestions established by the general Land Use Plan.

-Article 1 of the Urban Planning Act

-Article 17, Regulations of the MCZL

-Can be modified or derogated in the same way they were issued

2- Declaration of the Zone’s suitability for Tourism purposes (Article 19 of the MCZL) is promoted by the ICT or the respective municipality and will be issued by the ICT.

The declaration issued by the ICT must include the following information:

a.       access to the zone

b.       natural attributes

c.       social and cultural characteristics of the inhabitants

d.       all other aspects the institution may consider necessary

e.       the declaration is issued based on a fifty-question questionnaire, where each item is given a score, all points are added and depending on the result, it may qualify as a zone that is suitable for tourism.

2.4 Condominiums in the Marine Coastal Zone

Since 1999 and based on Law 7933, the Condominium Ownership Act authorizes the creation of condominiums in the Marine Coastal Zone in articles 1 and 3. Moreover, the regulating law of development and the execution of the tourism project in the Gulf of Papagayo, related laws and regulations, also authorize the creation of condominiums and condo-hotels in this zone. Since they are concession zones, the land still belongs to the Government of the Republic of Costa Rica. Nevertheless, the floors, apartments, locales and all buildings constructed belong, as private units, to each buyer.

2.5 How to obtain a concession

No piece of property within the Marine Coastal Zone in general or in the zone of Papagayo can be occupied without a concession properly given by the municipality or the respective authorities. There are two ways to obtain a concession:

1) When any individual or company has already a concession given over a property.

 In the case of an individual, there must be a concession transfer in recorded public deed and properly approved and authorized by the local municipality; if the grantee is a legal entity, the same transfer procedure in public deed must be carried out and presented before a notary public with the duly authorization of the municipality. Nevertheless, if considered timely, there can be a negotiation so that the buyer acquires the society shares and may then use the concession. One must be very careful with this last position, because as a legal entity, the company will have acquired rights and duties, which must be properly registered in the company’s books. Before acquiring a company, one must first ask for a countable certification from an authorized public accountant. In case the land to be acquired was not given as a concession, the coastal law, along with its regulations and special and related laws will establish a procedure in order to obtain the Marine Coastal Zone concession. With the previous requirements, there must be a zoning plan called “coastal zoning plan”; such a plan may be elaborated directly by the local municipality or by the interested parties, but to become effective, it must be approved by the municipality and the Instituto Nacional de Vivienda y Urbanismo (National Institute of Housing and Urban Planning) and in accordance with development plans, one can ask for the intervention of the ICT. This plan is subject to the limits and suggestions established by the general urban planning law and to the Marine Coastal Zone Law.

2) Demarcation.

This demarcation establishes the boundary lines between the public zone and the restricted zone, which can be given in concession. The demarcation is made by the Instituto Geográfico Nacional (National Geographic Institute), based on articles 63 and 62 of the law. These benchmarks called “boundary stones” are made of concrete and should be seventy five meters apart from one another. In case there are no interested parties, the demarcation should be requested to the Instituto Geográfico Nacional and the applicant should cover the expenses. Once the interested party fulfills the above requirements, a topographer must be hired to measure the land for concession and submit it to the National Cadastre. Once this is done, he should submit a request to the municipality which will determine the land’s suitability and the reasons to obtain the concession, who is asking for the cadastral maps and evidence of the existence of a zoning plan and benchmarks. This document is submitted to the Marine Coastal Zone office, which will analyze it and let the interested party know about any mistake or missing document. 

In the request and based on the plan attached, the access to the area must be indicated, as well as the natural attributes, social and cultural aspects, and the payment of the corresponding municipal tax stamps. Once submitted, it is analyzed by the municipality, which will indicate the mistakes so that they can be corrected and once mended, the respective office will suggest to the council whether it may be approved or not. If it is approved, a concession contract must be signed, before establishing the canon to pay to the municipality during one year and before the establishment of the concession’s terms: according to the Marine Coastal Zone Law, the time limit will range from 5 to 20 years and may be extended. Once the contract is signed, the documents, including this contract should be recorded before a notary public and registered in the Concession Registry Section of the National Registry.

The zone of the Gulf of Papagayo north of the country receives special treatment according to the regulating law and because of the implementation of the tourism project of the Gulf of Papagayo, where concessions or partial concessions, in the case of condo-hotels, are established directly through the ICT, which is responsible for their approval. As for partial concessions, when there are projects in which villas or special zones or specific zones are sold, there should be a contract between the grantee and the buyer, establishing the conditions and their acceptance previously authorized to the first grantee. Once this is done and signed, a draft deed will be submitted to the ICT for the Minister of Tourism to approve this partial transfer of the concession analyzed by the ICT. When the requirements are fulfilled, the contracts must be transcribed into a public deed, which is signed by the assigning party, the grantee or the acquirer of the partial concession and by the Minister of Tourism. In this case, the deed is signed by the Minister of Tourism. 

Since the zone of Papagayo is a zone under a special regime, its tourist and investment potential must be considered. Investments in national or foreign projects are a priority. The fact that those concessions are given for 40 extendable years should also be taken into account. Any type of concession, either in the zone of the Gulf of Papagayo or in the Marine Coastal Zone, generates a series of duties such as the annual payment of a canon, the duty of concessionary maintenance within the domain and obviously, the signing of the contracts mentioned above. The canons vary depending on the municipality involved. It is important to say that the canon of the zone of Papagayo is paid to the ICT and a general canon of the concession is paid to the Municipality. It can then be concluded that the country’s coastal zone and certain settlements or ports keep a special regime of difficult acquisition, but have concessions that are well regulated and secure.

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This article was prepared by attorney Andres Montejo. His law firm specializes in Costa Rica real estate law and has offices in San Jose and Guanacaste (Do It Center, near Liberia Airport).