By Garland M. Baker
Special to A.M. Costa Rica
Gated communities in Costa Rica are double-edged swords. They
usually give residents more security but take away individual rights at
the same time. Ley 7933, Ley Reguladora de la Propiedad en
Condominio, or the law to regulate condominium property is to blame.
The problem: The voting rights of condominium associations. Article 27
of the law dictates 100 percent membership approval to change any
article of incorporation or bylaw. This fact clearly violates the
democratic principle that establishes the interest of the majority
outweighs the minority. Years back, the Sala IV, Costa Rica’s
constitutional court, upheld this inequity in the law stating it was
proportional and reasonable.
The owners in condominiums make up the homeowners association. Elected
officials from within the group lead it. This group can tweak little
things of common interest to the whole group but cannot change anything
of consequence. In some cases, developers hang on to many votes and
sway the voting even on the little matters.
Costa Rican law requires three legal books for this association:
1. actas de asamblea or
2. actas de junta directiva
or board of director minutes, and
3. caja or cash for accounting
of the organization.
Allan Garro, of Garro Law,
says many if not most of the residents buying into a project never read
the bylaws of a condominium before purchase. Even fewer of them know
about the governing law and how it affects their ownership and
People that contact him for advice are surprised when they learn the
facts, he added.
When buying into a development, it is important to know the rules
because they may include many restrictions on having children, pets,
and parties, along with maintenance and upkeep mandates.
When someone does not follow the rules, they can get a written warning
letter initially, but can end up evicted. Yes, even owners get
thrown out of their own places.
Developers started to use the condominium law about 15 years ago. They
moved away from the traditional structure of using fully titled
There are good reasons condominiums in gated communities are better for
1. There is more security.
2. Houses do not need their own gates, window bars, high walls and
3. Ground keepers maintain common areas for everyone.
4. Internal regulations control construction, parties, noise, pets and
Developers like them, too, because local municipalities prefer to
approve them. These types of projects let municipalities off the hook
because homeowners are responsible for the maintenance of internal
road, sidewalks, and open space.
Project designers can target special groups like retirees or
high-income buyers for luxury housing to maximize their profits.
Finca or farm is
the name given to real property parcels in Costa Rica. Divided property
under the condominium law, the mother property becomes the finca matriz or mother farm. The
word matriz is a feminine
noun in Spanish meaning womb,
original, or master.
A.M. Costa Rica graphic
Each individual property inside the mother becomes a finca filial. Filial means the same
thing in Spanish as it does in English: of or relating to a
son or daughter, or bearing or assuming the relation of a child or
offspring to a parent.
When a property goes condo, each finca filial
gets registered at the Registro Nacional separately with a unique
number. In other words, people get a real piece of property with
property ownership rights. However, they are limited by the
Now here is where it gets tricky or interesting, depending on one's
point of view. Beach property inside the maritime zone in Costa Rica
cannot be owned.
However, developers are building condos on the land called concession
land. The holder of a legal concession over the maritime zone can
build a project and go condo under the condominium law.
It is a relatively safe investment if the project has all the correct
permits from the local municipality, the tourism ministry, the national
housing institute, and the health ministry.
Even though the land is leased or in-concession,
owners of each condo
share in the licensing agreement obtained by the developer with the
Costa Rican government as a sub-leasee.
However, this is a complex issue. All concessions are required to
held 50 percent by Costa Ricans, and the rule of thumb is 51
This means majority ownership, or controlling interest must be held by
one or more Costa Rican citizens. Having this ownership or
the hands of one person or a small group could be dangerous to the
whole because it could contribute to a takeover or unwanted
Something like what happens on Wall Street everyday.
What happens when a project just does not qualify for condo?
some developers are still physically dividing properties into lots and
selling a 99-year rental contract over the space. On this area
build. Or the same developer will offer to build to suit. This
does not exist here legally, but real estate people are busy selling
property based on it every day.
More importantly, local law and jurisprudence holds any contract over
10 years as abusive. In this kind of scenario, one never holds title to
anything, just a trumped-up rental contract.
Another flaky deal is where one just gets stock or shares representing
a piece of a property, again, no legal ownership of legal property.
Buyers need to be careful when buying a condominium. They need to
the structure used which created the project. They need to read the
rules and regulations and understand their real rights and how they
might be limited.
Homework is the key when considering a gated community. Those
that do not do some studying are usually sorry later.
Garland M. Baker, a
certified international property specialist, is a
45-year resident and naturalized citizen of Costa Rica. His firm’s team
provides multidisciplinary professional services to the country’s
international community. Reach him at firstname.lastname@example.org. Baker has
undertaken the research leading to these series of articles in
conjunction with A.M. Costa Rica. Find the collection at http://crexpertise.info, a free reprint is available at the end of
article. Copyright 2015. Use without permission prohibited.