Why live in Costa Rica?

A few months ago I led a group of prospective residents on a trip around Costa Rica. After a week of traveling and attending a series of informative seminars, the majority had decided they would like to be here for at least part of the year. Costa Rica has more Americans per capita than any other country outside the United States.

Why do so many people want to live there?

The most obvious reason is the climate. People are tired of freezing winters, scorching summers and the high utility bills that go with them. In Costa Rica they can enjoy one of the best year-round climates in the world (72 degrees average in the Central Valley). We have only two seasons here, dry and rainy, both with an abundance of sunshine. We rarely need air conditioning and never need heat. Costa Rica has more winter sunshine than Hawaii of Florida and fewer people.

Costa Rica is called by many “the Switzerland of the Americas” due to its neutral status and spectacular mountains. From the huge, curling waves of the Pacific coast, to the sight of molten rock tumbling down the sides of a volcano, Costa Rica’s natural beauty has something for everyone. This unique little country offers a real paradise for the nature lover, the fishing enthusiast and water sports fanatic as well as the retiree. Many come here for the lifestyle. Costa Rica fits the bill for anyone sick of the hustle and bustle, seeking a more laid-back way of life. One of the tour participants remarked, “Costa Rica reminds me of the U.S. about 40 years ago when everything was unspoiled, unhurried and uncrowded”.  It will also appeal to people of all ages seeking to move to a new and exotic land outside of the States and Canada and the energetic entrepreneur, the burned-out baby boomer, those sick of long rush-hour commutes and anyone seeking and alternative way of life. This beautiful country is so appealing because it has the warmth and flavor of Mexico, without anti-Americanism and fear of government expropriations; the physical beauty of Guatemala without a large military presence; and the sophistication of Brazil with the abject poverty or serious violent crime.

But Isn’t It Expensive?

Many Americans living in the United States can live in moderate luxury on a modest retirement or investment income in Costa Rica. The favorable exchange rate and low rate of inflation let you stretch your dollars here. The cost of food, utilities and entertainment are all substantially lower than in the United States. Costa Rica’s affordable medical care is among the best anywhere. The quality of health care is comparable to North America but prices are on half or less! Considered by many to be the healthiest country south of Canada, Costa Rica has a higher life-expectancy rate-rumored to be the third longest in the world (76.3 for men) than the United States (76).

Housing is a fraction of what you are accustomed to paying. Besides our homes we have a car and a full-time maid. Household help makes life easier. (You can hire a full-time maid for as little as $200 per month or $1 per hour). My son goes to private school in the country. We eat out a few times a week and enjoy various types of entertainment. We spend a week at the beach during Easter and go to the United States every Christmas. Our monthly expenses are about $1,500.

The country's inexpensive medical care, affordable housing, excellent transportation and communication networks, every imaginable activity to stay busy and happy, a government which goes to great lengths to make retirement and living as easy as possible, contribute to Costa Rica's appeal and make it tops on the list of retirement and expat havens. According to a survey of potential foreign retirement areas in the Robb Report, Costa Rica surpasses all countries including, Mexico, Puerto Rico, Spain, Portugal, Australia, the Caribbean Islands and Greece.

What Sets Costa Rica Apart from its Neighbors?

Countries such as Nicaragua, Belize, Honduras, And Guatemala have lower living costs, but I believe you get what you pay for. The quality of life and lack of infrastructure in these countries leave a lot to be desired. Safety is a concern, especially where paramilitary police have power or where police are corrupt, as in Mexico. Costa Rica is politically stable and is unique in having no army. Although theft occurs, violent crime is minimal.

A Place to Invest

Costa Rica has a myriad of business opportunities awaiting creative hard - working individuals. You can run a global business from here by using Internet access, fax machines and cell phones. It is also relatively easy to start a small business on a shoestring. Furthermore, tax incentives and a government that encourages investments and affords the same rights as citizens contribute to a propitious business climate. Many countries do not permit non-citizen to own property or place restrictions on foreign-owned real estates, but this is not the case in Costa Rica. Anyone may buy real estate with all the legal rights of citizens. Passive investor will find CD's, second mortgages or other investments that pay 25% to 30% in dollars annually. With the new millennium upon us, a shrinking world doe to better communication, a burgeoning global economy-possibilities are unlimited or doing business in Central and South America. Trade pacts between Costa Rica, US, Mexico and South America be reality by 2005. They promise to link all of the nations in the hemisphere in to one trading block.

The Adventure of Starting Over

Some move here to start over and seek adventure in a exotic land. They are tired of dead-end jobs or the rat race and want new challenges, a chance to pursue their dreams and achieve greater personal growth. As an expat, you have the challenge of immersing yourself in a new culture and if you choose, the rewards of learning a foreign language. Newcomers can make friends easily because foreigners gravitate toward one another.

Adjusting and Keeping Busy

Adjustment to new way of life can take months. However, an open mind, positive attitude and a willingness to seek out new experiences can make the transition relatively painless. Costa Rica has come along way in the last decade. Satellite and Direct TV, private mail service and the Internet make it easier to stay in touch with family and friends in the US and keep up with what is going on all over the world. If you don't own a computer, you can go to an Internet Cafe. A friend of ours, a 20-year resident of Costa Rica, said, "My days are so filled with exiting activities and interesting experiences that each day seems like a whole lifetime. I really feel that I have discovered the fountain of youth".

Another plus is that Costa Rica has the reputation of having the most beautiful, flirtatious and accessible women in Latin America. It comes as no surprise that Costa Rica women are highly sought as companions by foreign men of all ages. Single men will have no problem finding love, romance and a second chance in life with a devoted Costa Rican woman.

You will never be bored here unless you choose to be. Costa Rica has something for everyone. In the TicoTimes, the weekly English-language newspaper, you can find hundreds of interesting activities: movies in English, support groups, computer and bridge clubs. You name it, and Costa Rica has it.

Costa Rica's sunniest region, Guanacaste contains a mind-boggling selection of beaches, offering access to world class sport fishing, skin diving and championship golfing. But there's more to the North Pacific than sun, sand and surf - its attractions include vast expanses of endangered wilderness, forest cloaked volcanoes, historic towns and ranches.

Located in the tropical latitudes, between the giant biological influences of North and South America and bordered by two oceans, mountainous Costa Rica enjoys an immense diversity of climates and environmental regions. While Costa Rica covers a mere 0.03% of the planet's surface, the nation is endowed with over 5% of all life forms on earth. Costa Rica have preserved this invaluable biodiversity in protected areas covering fully one quarter of the land. No other country in the world has so much actively protected area per capita. Costa Rica is a model for conservation in harmony with community development and economic growth. An impressive 22,647 miles of roads give easy access to every habitat.

"Switzerland of the Americas"

Costa Rica is the oldest democracy in Latin America. In 1949, the modern constitution abolished the army and directed the country's resources to education, social programs and economic development. This political stability has attracted many international organizations to Costa Rica, such as the Inter-American Court of Human Rights, the International Development Bank and the Earth Council.

Costa Rica has one of the strongest U.S. dollar reserves in Central America (nearly 1 billion), a democratic government, a high level of education, a strong labor force and one of the best infrastructures in Central America.

Heath Care

Free universal health care covers everything from dentistry, to maternity care, to open heart surgery. As a result, Costa Rica's population is very healthy and enjoys a life expectancy exceeding that of North Americans. Quality of health care in Costa Rica is comparable to North American, but at rates 50% to 70% less, making medical tourism an important business in Costa Rica.

Education

Costa Rica has the highest literacy in the Americas of over 96%. Free and compulsory education for all until 3rd year or high school, with some of the best universities in all of Latin America, Costa Rica boasts a highly educated work force.

Technology

With its highly educated work force, Costa Rica is becoming the America's "Silicon Valley" of the South. Intel has recently built the world's largest microchip processing plant in Costa Rica with other companies following suit such as IBM, Cisco Systems, Microsoft, Motorola, Acer Corporation, to name a few. The government's pro-business attitude coupled with the country's highly educated work force is quickly making Costa Rica the place to do business.

Tourism

Ranking number one as far as investment are concerned, tourism remains in a dynamic role as Costa Rica's number one industry. A major improvement in tourism has been noted in the past ten years - tourism income is up 500%. Visitors to Costa Rica consist mainly of North Americans and Europeans.

As a result, there has been a tremendous surge in development within Costa Rica's hotel sector.

Ownership of Land

Costa Rican laws and constitution protect private ownership of land and foreigners enjoy the same rights as citizens. There are almost no restrictions to ownership of private land, except that given or sold to Costa Rican citizens as part of government programs, which can be freely traded or acquired by foreigners only after the original owner has held it for a certain period of time. Neither citizenship, residence, nor even presence in the country is required for land ownership.

Registration

Costa Rica boasts of a safe from of title registration to protect buyers from hidden claims. It is centered in the REGISTRO NACIONAL DE LA PROPIEDAD (National Property Registry), where both title and documents and surveys plotted for every property are recorded. Any change in the status of a title or any claims that might affect it must also be noted on the title registry pare, thus making it easy to verify.

Those who want to buy land in Costa Rica should get professional counsel, which include a search or the title in the registry, so as to confirm that there are not liens on it, and to establish its proper ownership. Once the deal is completed, you should also secure documents from a lawyer to prove that the sale was registered, for your own safety and present to somebody else.

Property Taxes & Capital Gains

Property taxes are very low when compared to Europe, the US and Canada. A big incentive to investors is zero capital gains tax when you resell your property.

Building Cost

Building costs average is $65/sqft (about $650/m2). It depends upon your fixtures and finishes. Homes built to US and Europe standards start at 125,000 US dollars, less in certain areas.

Do I need to use the services of a Realtor?

You should always seek the services of a reputable and well-respected broker, who will provide you with the information you need to make a legal and successful transaction. Your agent will assist you avoid common pitfalls, build your knowledge of the area, and compare values of properties.

Residency

There are special immigration laws that allow people with fixed incomes over $600 monthly to obtain residency permits. Other permits are available if you work with recognized companies, or are an investor or business owner.

Title searches on ¨Folio Real¨ properties may be initiated in the computer system, which is accessible on-line, but will then probably require to be continued in the book/page/entry system, especially when the computer search shows liens, encumbrances or other property characteristics that were ¨inherited¨ from older transactions on such land before it was transferred to the ¨Folio Real¨ system. Additionally, although the computer system will indicate a list of liens and encumbrances, in most cases a through and complete title search will require the review of microfilmed or scanned documents indicating the details of such finds, which are not accessible on-line and can only be obtained at the offices of the Public Register.

Although, as indicated, the ¨Folio Real¨ system is accessible on-line, in general terms private parties lack the legal training to be able to accurately, safely and thoroughly interpret the formation, as well as follow-up any required further steps, reason for which we strongly recommend for a knowledgeable  professional to be used for performing the title search.

In addition to the performance of a title search, when the property is owned by a corporate entity, it is essential to perform a corporate search et the Commercial Section of the Public Register, since only this step will allow to verify that the entity transferring the property is in good standing and that the proposed signatory of the transfer deed has sufficient capacities to do so.

B. "FOLIO REAL" SEARCH REPORTS

When reviewing a "Folio Real" title search report, the main elements that will appear and need to be understood are the following:

1. "Folio Real" number:

 This number is traditionally reported as composed of:

(i)         (i) a single number from one to seven, indicating the Province where the property is located, namely 1 for San Jose, 2 for Alajuela, 3 for Cartago, 4 for Heredia, 5 for Guanacaste, 6 for Puntarenas and 7 for Limon;

(ii)        (ii) then followed by a sequence of five or six numbers;

(iii)       (iii) finally with a sequence of three more numbers, which are generally three zeroes (indicating that the property is fully owned by one person or corporation) or two zeroes followed by another number (indicating partial ownership by different parties).

2. Location information:

The report will show the name and number for the Province, County and District where the property is located.

3. Measure:

An indication of the size of the property, in square meters will be made.

4. Boundaries:

There will be four boundaries indicated, normally North, South, East and West; although it is also possible to find them as Northwest, Northeast, Southwest and Southeast. Boundaries can consist, mainly of names of the owners of the neighboring properties, natural landmarks such as rivers or lakes, or man made landmarks such as public roads.

5. Owner information:

For corporations, it will indicate the company´ s name and its corporate identification number. In the case of individuals, the Register will show full name, identification number and marital status. In the case of marital status, it is crucial to verify that it has not changed from the one shown at the Register (i.e. married once to divorced once; married once to widowed once) since in many cases the transfer or other transaction will not be authorized without a Court´ s resolution resolving the division of assets.

6. Map number:

In most cases, the ¨Folio Real¨ will show an existing registered map for the property (in Spanish, ¨Plano Catastrado¨), although there are still properties in which such map number is not quoted or simply does not exist.

Within the public Register, the department that registers and keeps record of these maps (namely, the Department of ¨Catastro¨) is different and separate from the Property Register, where ¨Folio Real¨ is. This means that one may encounter a registered map which is not quoted at the property Register and that even shows data such as measure or boundaries which does not coincide with the computer search. If that is the case, there must be a determination of the consequences of these differences and if they are not obstacles for the transaction, a rectification of the record must be made at the moment of the transfer.

By law, no property transfers can be currently made if the land does not have a registered map, and such map must be quoted in the transfer deed. If such map does not exist, it must be made by a specialized registered surveyor, and then recorded before the transaction can be effectively achieved and a delay of several weeks should be expected while this process takes place.

7. Encumbrances:

This item is referred to in Spanish as ¨Gravamenes¨ and it includes many items that under other countries´ legal terminology may be considered not only as encumbrances but also as liens,

If the title indicates the existence of ¨Gravamenes¨, the most common elements that can be found are:

(i)         (i) Mortgages, which will show their term, amount, creditor and debtor. Further information and mortgage terms would need to be consulted in microfilmed or scanned documents at the Register.

(ii)        (ii) Easements, which might be in favor or against the property and could, consist on road rights, rights for the passage of water, transiting rights, etc.

(iii)       (iii) Conditions and limitations, which normally originate when the property was originally titled and generally concern public roads, bodies of water, limitations on sale or use, etc. and expire after a certain term.

Encumbrances will show a reference number that allows its follow-up with microfilmed or scanned documents, in many cases directly related to the filling data of the document that originated them.

8. Annotations:

All filed documents pending registration for transactions on the property as well as some court procedures concerning the title-searched property will also be shown.

Pending registration may be due to filing of complete or erroneous documents, lack of payment of taxes, etc. A document filed on a property while an annotation appears will not be registered until the annotated document or documents are either registered or removed from the queue following a special procedure.

C. ADDITIONAL ELEMENTS

1. Form of ownership:

Although titled land can be purchased in Costa Rica in the name of individual as well as in the name of a company, and foreign ownership is fully permitted, it is advisable to purchase property through a corporation. This structure allows to have flexibility and more predictability on areas ranging from estate planning (if share ownership is properly structured the investor can avoid his heirs a painful and lengthy long-distance probate procedure), tax management (as an example, rules on corporate expenses are more flexible than the ones on personal ones), and representation (shareholders meetings can facilitate granting special powers of attorney or other types of authorizations for many actions thus not requiring physical presence in the country).

2. Buying the shares of the company that owns the property instead of transferring it through the Register:

A somehow common practice has been to transfer the shares of an exiting company that owns the land to be purchased, instead of transferring it through the Public Register to a third party.

Although the share transfer system may sound appealing at first sight, since it allows to save money in notary fees and transfer taxes and may seen like a faster way to achieve the goal of transferring control of the property to the buyer, we do not recommend to take this path and strongly advise to transfer property through the register under the standard procedure of a notarized deed.

When you acquire the shares of a corporation in Costa Rica, as in most other countries, you do not only get the company´ s assets (in this case, mainly, the land) but also its liabilities, and there is no mechanism to satisfactory list them or rule out their existence, such liabilities, if existent, would directly affect the land being acquired.

Under such terms, it is highly recommended that the extra cost is taken and that normal transfer through the Public register is made. Many people will consider such extra cost as a type of insurance of the property which will shield them against possible future claims from the seller´ s creditors.

3. Buying only a piece of a registered  property:

Purchases of portions of a titled property in Costa Rica, this is called ¨segregacion¨.

For such purposes, a registered map for the land to be purchased is required, as well as an authorization for the local government (¨Municipalidad¨) where it is located. Such authorization must appear in the registered map in the form of a stamp, which is referred to as ¨visado municipal¨.

4. Concession land:

Several areas of the country, mainly the ones affected by the Maritime Zone Law and located adjacent to the ocean, are not subject to private ownership and their possession is granted as a concession which could simplistically be compared to a lease made from the government for  a specific period of time.

Concessions are difficult to examine and in many cases the prospective buyer will not be able to get a good level of certainty on what is being acquired. This type of transaction should be avoided if pieces of land with similar conditions and titled can be found; otherwise, additional caution must be exerted.

Many foreign individuals starting a business in Costa Rica or merely purchasing real estate for investment purposes decide to use a corporate entity as the owner of such. This decision is a very wise one, and it is what we highly recommend to our clients as the first choice to be followed.

Ownership through a corporation allows one to have flexibility and more predictability in areas ranging from estate planning (if share ownership is properly structured the investor can avoid his heirs a painful and lengthy long-distance probate procedure), tax management 8as an example, rules on corporate expenses are more flexible than the ones on personal ones), and representation (shareholders meetings can facilitate granting special powers of attorney or other types of authorizations for many actions thus not requiring local presence in the country).

The first question often asked by our clients is whether to use (or form) a Costa Rican corporate entity to use one already existing and controlled by such individuals abroad. Our advice is, in most cases, the use of a local entity. Although foreign corporate entities can own land and engage in business activities in the country, registration procedures (both at the Public Register and with government entities) as well as negotiation of contracts with private parties can get complicated delayed and/or find obstacles when they are involved.

In any event, if a foreign entity will be used, note should be taken that we normally recommend registering the foreign entity in the Costa Rican Commercial register as a branch or at least to register specific powers of attorney for such also in the Costa Rican Commercial Register. Both cases require a special and formal procedure that may take several weeks.

As mentioned before, in the great majority of cases, the use of a local corporate entity is preferred. Although Costa Rican Commercial law contemplates many types of corporate forms, only two of them offer the investor the comfort of having structures similar to the limited liability companies to which he or she may be used to in their countries of origin.

Such corporate forms are the ¨sociedad de Responsabilidad Limitada¨ and the ¨Sociedad Anonima¨. In both cases, shareholders are only responsible for their participation on the company’s social capital and their own personal assets are fully protected and out of reach from any potential creditor the company may have.

The ¨Sociedad de Responsabilidad Limitada¨, also referred to as ¨S.R.L.¨¨, ¨Limitada¨ or ¨Ltda¨, is a simpler form than the ¨Sociedad Anonima¨ and in most cases fills-up the banks on its legal treatment from the much broader regulation of the ¨Sociedad Anonima¨. S.R.L.´ s are usually used only if any of their special features are especially appealing to the investor.

The special features of the S.R.L. are mainly the following:

1. Shares can not be transferred to non-shareholders without the previous express consent of the other shareholders, who have a right of first refusal to purchase them.

2. These companies require, for their administration, no more than one individual (Manager), thus this is an  especially appealing structure for cases in which the investor does not want to use and register making public) the names of additional individuals to form part of what in the S.A. would be called a Board of Directors, as explained below. The ¨Sociedad Anonima¨ also referred to as S.A., is the most widely used corporate structure in Costa Rica. It is a pretty flexible and its legal treatment is extensive. In general terms, it can have any type of social capital (usually a low amount is used without any negative consequence) divided in as much shareholders that can be previewed, since such shares are, by law, not divisible). The S.A. has many features, of which the most important are:

1 Since the positions of President, Secretary and Treasurer are legally mandatory and must be occupied by three different individuals, it must have a Board of Directors of at least three members, as well as one Comptroller, who must not hold any powers of attorney on behalf of the company.

2 Shares are represented by physical documents and more than one of them can be included in a certificate. They can be transferred to any non-shareholder without the approval of the other shareholders. Transfer is made through a combination of a transfer contract, the endorsement of share certificate(s) and an entry in the company´ s Shareholders Registry Book.

3 Its By-Laws can be changed at any time, as well as any powers of attorney existing for the company, by means of a Shareholders Meeting, which can be held with the presence of all the shareholders or with individuals appointed by a proxy issued by them.

4 It is possible to establish special features for the protection of minorities and their voting rights.

5 Their legal representatives (holding powers of attorney to act on behalf of the company) are liable for any actions taken against the interest of the company and/or its shareholders.

6 They must have three corporate books (shareholder meetings, shareholders registry book and board of directors meeting book) and three accounting books. These books must be authorized by the local tax authorities and are a requirement for implementing any change in the company´ s By-Laws or in its power of attorney structure since no shareholders meeting can be held without being recorded in the specific book authorized for such purposes.

Companies in Costa Rica must additionally register before the Tax Authorities. In the event the company is not involved in business activities in the country for the specific fiscal year (for example, when it is solely used for holding assets), formal tax registration is not required (only book authorization) although a fiscal year end declaration is always needed (though it will state that no economical activity existed during the period) in order to avoid the application of penalties.

The normal fiscal year for companies declaring taxes in Costa Rica goes from October 1 to September 30 of each year; filings can usually be made until the end of December. A different fiscal year can be authorized for companies that are fully owned or related to foreign entities that have a different term in their countries of registration.

It is important to conclude that the choice of corporate structure must ideally be made at the time the investment or business project is being created. This decision will have a major impact and specific consequences on the implementation of said project and if taken wisely, it will be one of the foundations for its success.

Costa Rica’s capital city, San Jose lies at an altitude of just over 3,750 feet above sea level and offers a nearly perfect climate year round. A blend of the old and new, san Jose feels more like at town that has grown in all directions than a big metropolis. The absence of tall buildings (with a couple of exceptions) and many historical buildings such as the National Theater, the main Post Office, the Ministry of Foreign Relations “yellow house”, and the many parks all over San Jose help the city to keep a charming “homey” feel that is very appealing to travelers and locals. So appealing in fact that many of the former return to become the latter.

Temperatures most of the year are in the 70-76 Fahrenheit degree range and even during the rainy season (also known as the green season) which runs from May to October, one finds sunny mornings with rain showers early in the afternoon which quickly pass leaving a fresh and revitalized environment and cool nights.

San Jose offers many accommodations in all price ranges and plenty of restaurants and entertainment options including theater, movies, casinos, discos, bars, nightclubs, museums, shops, and even a zoo. The best part of all this is the downtown San Jose is relatively small and you can walk to all these places if you are just in the mood to relax, pull up a chair at one located at the Costa Rica Hotel just across from the National Theater which is a favorite people watching spot for both visitors and residents alike. Come discover all that Costa Rica has to offer on your next vacation, you won’t be disappointed and you just might become one of our newest residents welcome and enjoy.

Neighborhoods of the Central Valley

Over the half of Costa Rica´ s population of just over 4 million people lives in the Central Valley also called the Central Plateau or Meseta Central in Spanish.

This valley lies at an altitude between 3000 and 4000 feet above sea level and offers a spring like climate year-round. It is surrounded by mountains and is Costa Rica´ s primary agricultural region as the rich volcanic soil makes it ideal for growing almost anything including what is arguably the best coffee in the world. The capital city of San Jose is located here as well.

It includes the cities of Alajuela and Heredia as well as Santa Ana and Escazu which are extremely popular areas for new arrivals as well as seasoned residents.

SABANA – ROHRMOSER – PAVAS

La Sabana Park is a large city park with lakes, trails, museums, sports fields, Stadium, Olympic pool and many more attractions open to the general public which is located just on the outskirts of the center of the city and has nice upscale neighborhoods to the north, south and west named after it. Just west and north of those is Rohrmoser which is an exclusive neighborhood made up of mainly homes with some businesses along the main tree lined road of Rohrmoser Boulevard. Many embassy homes are located in this area as well as some very nice neighborhood parks. Most residents here are middle to upper class with a mixture of Costa Ricans and foreign nationals. There is excellent access to all major highways and to all types of services and amenities. Shopping in the area includes Plaza Mayor Mall, an English language bookstore and movie theaters. Pavas is just west and south of La Sabana and is highly commercial with homes there being mostly middle class. The main road is Pavas Boulevard and the US embassy is located here as well as banks, restaurants, shops cafes, bakeries, and just about any type of store you might need or want.

ESCAZU – BELLO HORIZONTE – TREJOS MONTEALEGRE

This is an extremely popular neighborhood with foreign residents and in fact as you go down the main road into Escazu and see the variety of stores and restaurants such as Tony Roma´ s, TGI Friday´ s, McDonalds, KFC, and such that you have to blink twice to make sure you are not back in the USA. Here you can find palatial