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protecting your investment
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Protecting Your Investment

Protecting Your Investment

Your property in paradise meets all your essential needs – sun, fun and plenty of relaxation. It also provides a solid investment for the future. To protect your investment, you must take care of the property year-round by keeping it well-maintained and legally owned. For many property investors in Costa Rica, this means hiring part or full-time help.

Property Managers

Local property management services can be a lifesaver for many Costa Rican homeowners. Duties of a property manager often range from basic rental services – tenant applications, rent collection, maintenance requests and property advertisement – to more advanced services, including construction, development, maintenance and property repairs.

Typically, property management firms charge a monthly sliding scale fee that corresponds to 3-12% of each month’s rent. Some companies charge a flat fee, so make sure that their provided services fairly correspond to the 3-12% price range.

Property managers are a turn-key solution to protecting your new Costa Rican home. Make sure to hire a reputable company recommended by friends, and call several references to establish credentials. Like back home, you must be diligent about who you hire to take care of your vacation home. Always have your lawyer thoroughly read through contracts, and if you have any questions regarding services offered, clear them up before signing on the dotted line.

Caretakers and House Sitters

Trustworthy, responsible individuals with basic home repair skills make for excellent caretakers. It is important to hire someone that you trust absolutely to take care of your home, so choose wisely. Often, this is best done by word-of-mouth recommendations and extensive reference and background checks.

Caretakers can live on- or off-site, while house sitters almost always live on-site. These individuals are usually willing to do home maintenance, including housecleaning, gardening and small repairs, in exchange for no rent. Caretakers are often provided with a small monthly salary, usually equivalent to minimum wage.

If you choose to hire a caretaker or house sitter, you must take legal precautions to protect your ownership rights. Whether on-site or not, your lawyer must draw up a contract that details your continuing and perpetual rights as homeowner. For an on-site house sitter or caretaker, your lawyer should write a modified lease agreement, specifying rent due (either monetary or monthly labor requirements), length of employment, and any possible grounds for terminating the contract. For legal purposes, we recommend that you follow this legal process in all cases, even if the prospective house sitter is a close friend or relative.

A Note on Squatters

You may have heard talk about squatters and squatter rights in Costa Rica. Do not be concerned: though squatters are a real consideration for homeowners, your property is perfectly protected under Costa Rican law.

Costa Rican law dictates that a squatter can acquire rights to a property if the property owner allows that person to use or maintain possession of the property for more than a year. This refers only to property possession without a lease, rental contract, or other legal document that governs the property ownership and lease.

If a landlord does not take action to evict squatters during the first three months of their invasion, then squatters cannot be evicted at all. If the landlord does not take action within a year, the squatter has a right to demand compensation for any improvements he has made to the land. Once the property has been acquired (one year of uncontested property possession) it cannot be taken away, except for reasons such as eminent domain, and then only with proper compensation. Additionally, if a squatter has held possession of a property for at least ten years, he or she may go to court, claim full ownership of the property and register the property at the Public Registrar (Registro Publico).

To avoid problems with squatters, study the title of your property as it is registered in the Public Registrar. Review the ownership status of the property to make sure that ownership and possession rights are not challenged in a local court. Remember, a legal title does not mean that squatters have not encroached on the land or that other situations exist which may affect the ownership. Be smart, and talk to your real estate lawyer; he or she will know exactly what to search for in a property’s history.

We strongly recommend that you hire a property management firm, caretaker or housesitter to take care of your property. Keep fastidious records, maintain duplicate copies of your property management or caretaker lease agreements, and issue receipts for caretaker salaries. It is a good idea for friends to look in on the property while you’re away, even if you have an on-site caretaker.

If you have taken all necessary precautions and squatters still show up, do not despair. The law is on your side, so make sure to:

  1. Contact your real estate lawyer immediately.

  2. Order them off your property immediately (by law, you have three months).

  3. Legally establish the exact date of their encroachment. You will need your lawyer’s help for this step.

  4. Document your ownership of the property. Post “No Trespassing” (“Propiedad Privada”) signs along the property borders.

  5. Record the squatters with a video camera. Make sure the video is properly dated, perhaps by showing the day’s newspaper during the recording.

  6. Have the local police or rural guard (guardia rural) come to inspect your property and describe the conditions in writing.

  7. File the dates with a notary public. (Your real estate lawyer is likely a notary public.)

If more than three but fewer than twelve months have passed since the squatters first arrived, you need to undertake administrative eviction. You must file proof of the date of invasion, and produce property registries, bills of sale and other documents to prove you are the rightful owner. If more than a year has passed, you will have to go to court.

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