Declare your financial independence

It's no surprise people want to do what they want, when they want -- but first they need to plan.

June 30, 2005: 9:39 AM EDT
By Grace Wong, CNN/Money staff writer

NEW YORK (CNN/Money) - As Independence Day rolls around, are you free? Financially, that is.

The meaning of financial independence can be just as difficult to nail down as figuring out what is the perfect level of rich.

For some, it may mean not having to live with mom and dad. Others may describe it as being able to eat as much caviar as they please.

Ultimately, financial independence boils down to one thing: freedom of choice.

"Financial freedom is so intertwined with what a person wants to achieve in life," said Ron Pearson, a certified financial planner with Beach Financial Advisory Service. "It doesn't necessarily mean never having to work again, but instead has more to do with realizing your own dreams."

Maybe you had a fantasy of "making it" as a rock star but took a corporate job to pay the bills. Or perhaps your parents pushed you towards a career in law when you really love the arts.

With some financial planning, you can make the daily grind pay off and get back on the fast track to getting where you want to go.

Step 1: Set the goal

"You have to understand why you want money," said Stacy Francis, certified financial planner and owner of Francis Financial.

She has her clients write down their reasons for wanting money, which helps them define and prioritize their ambitions, she said.

Being crystal clear about what you want puts everything in perspective.

"You might want to buy a new dress, but when you know your priority is to send the kids to college, it makes it easier to make that choice," said Judi Martindale, a CFP in California.

Step 2: Assess the cost

Once you've set your goal, the next step is to figure out what it's going to cost to get there.

If you want to sell your house to live on a beach in Costa Rica, you're not going to have to save as much as if you want to be a jetsetter and keep a home in London.

First, you need to estimate your annual living expenses. For the jetsetter, you need to tally up the cost of two mortgages, taxes, trans-Atlantic flights and other expenses such as food and insurance.

Then, figure out what income you'll have coming in -- retirement savings if you're planning on leaving the workforce, personal savings or earnings if you intend to keep your job.

With those two numbers, you can figure out how much you'll need to achieve your dream.

Calculators can come in handy during this stage of the planning process. These tools can provide a general picture of how long it'll take you to reach your savings goal or how living costs vary from one location to another. You can even see how long it'll take you to become a millionaire.

Step 3: Craft the plan

Then you need to start working towards that goal, and you have the best chance of succeeding if you start out with a solid budget. (For a step-by-step guide to creating a budget.

"The biggest predictor of whether you're going to reach financial independence is by looking at what you're spending and saving," Francis said. "It's as simple as that, it's not rocket science."

Many people cringe at the thought of budgeting, but it really doesn't take a lot of time or effort to keep track of your expenses.

There's already a written record of items you charge and write checks for, which leaves only cash payments unaccounted for. Once you start monitoring your spending habits, you'll be surprised to see where your money goes.

Ideally, you want to be saving at least 10 to 15 percent of your income, Francis said. She recommends her clients be prepared to replace at least 100 percent of their income when they stop working.

Another way to make budgeting bearable is to break down costs, she said.

If you want to buy a $500,000 house in five years and want to put down 10 percent, or $50,000, you'll need to save $10,000 each year. That sum may seem unmanageable, but if you break it down, it comes to putting away $830 each month, or just over $200 a week.

One of the best strategies for getting ahead financially is to downsize your lifestyle. Losing the second car, or selling your $400,000 house and moving into a smaller condo, can translate into huge savings.

Simpler substitutions go a long way, too.

If you opt for the house brew rather than a specialty frothy drink when you pick up your morning coffee, you can save $800 a year. If you keep doing that for 35 years and invest your savings, you could end up with $150,000, assuming an 8 percent compounded annual return.

You need to be prepared for some tradeoffs, but that doesn't mean you have to deprive yourself of what matters most, Pearson said.

He said one of his clients works a stressful job as a power plant operator, but makes room in his budget for flying, his favorite pastime and a major stress reliever.

Achieving your financial dream doesn't mean you have to give up on your values, either. Last year, Americans reached into their pockets to give about $249 billion to charitable causes, setting a new record.

Pearson said one of his clients, a doctor, has saved huge amounts by living below his means. He's interested in helping the blind, and now that his financial planning has put early retirement on the horizon, he is considering transitioning into the non-profit world, either by setting up a foundation for the blind or by giving aid to organizations devoted to that cause.

If philanthropy is a priority in your life, but you can't afford to make large gift donations, you can find different ways of giving, such as by donating your time to volunteer or charity work.

Whether you want to supersize or downsize your life, get away from it all or see it all, you need a plan to get you there.

There are no hard and fast rules, but a good rule of thumb is to make sure your plan matches your risk tolerance and goals.

Can Retirees Live Better Abroad?

My husband and I are seriously considering another country for retirement. What should we consider?

November 2, 2004: 12:16 PM EST
By Lewis Schiff, the Armchair Millionaire

NEW YORK (Armchair Millionaire) - Dear Armchair Millionaire: My husband and I are seriously considering relocating to another country for retirement. What are the financial issues we should consider in this kind of move? -- Ready to Retire

Dear Ready,

If you do end up retiring abroad, you may find that you have plenty of American neighbors. Because the U.S. does not track the number of its citizens who leave the country, it's tough to get an exact number of how many Americans retire overseas. However, the U.S. State Department estimates that there are about 4 million U.S. non-military citizens living abroad, and that about a quarter of them are retirees.

Our recent question about retiring abroad to members of the Armchair Millionaire community revealed some interest there, too. Here are a few of the comments we heard:

"Yes, I have thought of moving to another country. Costa Rica would rank right up there at the top because of its beautiful climate, scenery and cheaper cost of living." -- John C.

"New Zealand. Just a beautiful, lush countryside. English-speaking. Dollar is strong. Imagine California with only a population of 3 million instead of 33 million and coastline on the north, east, south and west." -- Joey

"I consider moving out of the States all the time. Contrary to what many Americans believe, there are now several countries -- including Canada, the Nordic nations, and other parts of Western Europe -- that now boast a higher standard of living than we do (not to mention superior healthcare for the dollar). Also, more than ten countries now tout more civil rights and freedoms than we do (disappointingly ironic when you consider the label, "Land of the Free"). And for retirees, there's always the option of taking your American dollars where they buy more. -- Jon

Pulling up roots and moving to a new country is obviously a huge step, so above all else you should make the decision carefully. There are dozens of issues to consider, from cultural and language issues to the weather. My checklist zeros in on the key financial issues you should consider.

The Armchair Millionaire's Checklist of What to Consider Before Moving Abroad

What is the real cost of living? While the lower cost of living in many countries is one of the primary things that makes living abroad attractive, you need to figure in additional costs that you might occur abroad that you might not here in the U.S.

Travel back and forth between your adopted country and the U.S. is one obvious cost that will offset the lower cost of living, but you will also want to look at whether the exchange rate is favorable to you or not.

How will you obtain health care? Medicare does not cover health services outside of the United States, so you will need to explore how your medical needs will be taken care of.

Some countries with government-sponsored health insurance also extend coverage to resident foreigners. In other countries, you may need to purchase private health insurance. As a last resort, you may need to rely on a U.S. health insurance company that will provide coverage for Americans living abroad.

What will you pay in taxes? As a U.S. citizen, you still have to pay taxes on your income regardless of where in the world you may be living.

However, living abroad may qualify you for various deductions and credits that you would not otherwise receive. So consider whether your tax liability will substantially change if you choose to live abroad.

How are the communications? While we take reliable phone and Internet links for granted here in the U.S., they do not exist every where.

Given that you'll probably want to manage your U.S. banking, investments and bill paying activities online from your home abroad, you'll need access to a good telecommunications system.

Can you buy a home? Many countries do not allow foreigners to buy real estate, or place restrictions on which property you may buy.

If buying a retirement home is in your plans, be certain to understand any restrictions in the country of your choice in advance.

THE BOTTOM LINE: Moving abroad -- whether for retirement, a new job opportunity or just to sample another way of life -- can be a complicated and costly step. Be sure you understand exactly what you're getting yourself into before making the move.

Shopping the World for a House

The real estate boom knows no borders. It's not just the rich and eccentric who are buying abroad.

June 22, 2004: 11:24 AM EDT
By Sarah Max, CNN/Money senior writer

BEND, Ore. (CNN/Money) – Eyebrows went up when Dale Anderson and his wife, Kim, told their friends they were buying a second house in Paraiso del Mar, a new housing development in La Paz, Mexico.

"They thought it was outrageous," said Anderson, 63, a small business owner in Canton, Ohio. "Then they started looking into it themselves."

Like a growing number of Americans, the Anderson's friends soon realized that buying property outside the country isn't such a far-fetched idea. Seaside condominiums and golf course homes in Paraiso del Mar, for example, range from $180,000 to $375,000. That's a bargain considering what similar property would cost in California, Florida or South Carolina.

"This will be a major life change," said Phillip Allen, 55, a business development consultant in Denver who plans to relocate to Paraiso del Mar with his fiancée, Trish Rudeen, as soon as construction on their two-bedroom home is completed next year. In the mean time, they've bought a share in a sailboat and a copy of "Spanish for Dummies."

"I had never been to Mexico until this past May," said Rudeen, 53. "I was pleasantly surprised."

It's a small world after all.

Real estate agents in Mexico, the Caribbean and Central America say they've seen an influx of American buyers over the past couple of years. "We have definitely noticed a trend of more buying abroad," said Jeff Hornberger, manager of international business development for the National Association of Realtors.

Although it's tough to track overseas real estate transactions, traffic on EscapeArtist.com and its affiliated sites reflects a growing interest in living and buying real estate abroad. The site has 1.5 million unique visitors of a month, according to founder Roger Gallo, and 700,000 people subscribe to the site's online newsletters, which include the "Offshore Real Estate Quarterly."

"We are adding between 4,000 and 5,000 subscribers a month," said Gallo, speaking from his office in Panama.

La Paz, Mexico is an emerging second-home market for Americans. Money Magazine named it a "Best Place to Retire" in 2003.

Good weather, inexpensive real estate and, in some countries, low taxes are part of the appeal. At the same time, rising home values stateside have made it easier to pay for second properties. The Internet, meanwhile, makes it easier to shop the world market for real estate, and in the case of some overseas buyers, live outside the country full time.

"Prior to 9/11 it was a lot of retirees looking for somewhere warm and cheap," said Les Nunez, a Canadian who moved to Costa Rica nine years ago to open a RE/MAX franchise. "Now I'm seeing a lot of younger American buyers particularly people with portable skills, like graphic artists and software designers."

According to Nunez, a 2,500-square foot condo in Costa Rica's capital, Santa Jose, ranges from $150,000 to $200,000. Property taxes for that same condo run about $200 a year, he said, and capital gains taxes are "nonexistent."

Gallo's countries of choice for real estate investments include Argentina, Brazil, Ecuador, Uruguay and, of course, Panama. "You can build here for about $35 a square foot," he said, adding that this is one country south of the border where financing and title insurance are widely available.

Americans are also heading north. According to Scott Brown, senior vice president for Playground Destination Properties in Vancouver, British Columbia, Canada – and Whistler in particular – has long been a popular market for buyers from nearby Washington. "But about year and half ago we started seeing the Texas buyer," he said. "People want to come here to ski in the winter and escape the heat in the summer."

Still an emerging market

Taking your home search to different parts of the globe requires even more scrutiny of the fine print.

In Mexico, for example, foreigners are technically not allowed to own land within 50 kilometers of the coast. They can buy such land via a fideocomiso or trust deed that makes them beneficiaries of the land for 50 years, after which point it can be renewed. Still, many Americans may not be comfortable with such an arrangement. "I love Mexico, but I wouldn't buy there," said Gallo.

According to John Glaab, vice president with The Settlement Company in Los Cabos, a number of reputable companies, including Stewart Title and First American Title, offer title insurance in Mexico, thereby protecting buyers if they lose their property because of a dispute in ownership.

Another consideration for Americans buying abroad is financing. In most countries mortgages are not widely available, but that seems to be changing in Mexico and elsewhere.

"You're starting to see 20 or 30 year mortgages that are similar to what you'd get in the U.S.," said John Fair, the developer of Paraiso del Mar, adding that the rates are about two percentage points higher, while down payments of 20 percent to 30 percent are typically required.

Property taxes, though they depend on where you buy, are generally quite low. "In La Paz, they're about 0.2 percent a year," said Fair. That's about $600 a year for a $300,000 house.

Sellers don't get the same capital gains break they get in the United States. The capital gains tax equivalent in Mexico is 33 percent this year and will go down to 32 percent next year, said Fair, though sellers can deduct what they owe in Mexico from their capital gains liability in the United States.

"I know capital gains [tax treatment] is not as good as it is in the United States, but that's not a factor for us," said Phillip Allen. "We don't plan to sell."

Purchasing Property In Costa Rica

A Guide to Understanding the Real Estate System and Buying Process

Introduction

The acquisition of real estate is one of the most significant investments a person makes during his or her lifetime. It can also be one of the most stressful. In foreign countries such as Costa Rica, the normal stress of the purchasing process can be compounded with other risk factors, such as language barriers and unfamiliarity with local laws and procedures. That said, foreigners can and do legally and successfully purchase property in Costa Rica. In fact, Costa Rica offers potential buyers many types of real estate products including houses, condominiums, time-shares, farms, finished lots and beachfront property. The following guide is designed to help buyers navigate their way through the real estate buying process for all types of purchases. The guide is divided into three main sections covering:

I. Property Types and Property Rights

II. Purchase Process:

a. Legal vocabulary of property purchase
b. Methods of Purchase
c. Buying process step-by-step d. Fees

III. Investment Protection: strategies and tools to protect property investment

I. Property Ownership and other common forms of possession

Just like in the US, Canada, and Europe, there are different types of property available to buyers. Understanding the various types that are available for purchase is critical in the evaluation process. This section highlights the property types that can be purchased in Costa Rica and the implications of each type of ownership for the buyer.

a. Fee Simple:

the owner of the property the absolute right to materially own the property, use it, enjoy it (i.e. usufruct), sell it, lease it, improve it (i.e. transformation), etc., subject only to conditions outlined in the Costa Rican Laws. Fee simple also means that if the owner is obstructed from enjoying any of his/her rights to the property, he/she has the right to be made whole, in other words, have the property restored in its original condition. Buyers who purchase fee simple title have the most rights under to law to enjoy and use the property as they see fit.

b. Concessions in the Maritime Zone:

1. Public Area: The first 50 meters measured horizontally from the high tide line. This zone is not available for ownership of any kind. No kind of development is allowed except for constructions approved by governmental entities. Further, this area is deemed a public area and any individual wishing to utilize this area for enjoyment has the right to do so. In other words, there are no truly private beaches in the Maritime Zone.

2. Restricted/Concession Area: The next 150 meters. This area is available for Concessions to be granted. A concession is in essence a “lease” on the property granted to the lessee for a specific period of time. Normally the concession period is granted for 20 years. An owner of a concession may build on that concession, subdivide the concession and perform other acts to the property. However, appropriate permits from the local municipality must be obtained.

3. Ownership Limitations: Unlike fee simple property, foreigners do not have the same rights as citizens when it comes to purchasing concession property. The law establishes that foreigners cannot be majority owners of a concession property. A foreigner can, however, enter into a partnership with a Costa Rican citizen where the ownership is divided 49% / 51% between the foreigner and Costa Rican respectively. One exception is if a foreigner has resided in Costa Rica for at least five years, then they may be majority owners of a concession. Both foreigners and Costa Ricans alike are required to purchase all Maritime Zone property through concession.

c. Properties in Condominium:

i. When US citizens think of Condominiums, they normally think of large apartments or townhouses. In Costa Rica, however, there is a specific law called “Condominium Law” that provides certain benefits to developers of many different types of properties, including single family residence projects, finished lot projects, condos, etc. This set of laws allows a developer to restrict and regulate certain aspects of the development. Each Condominium developments has its own by-laws containing all of the restrictions, limitations and privileges that can be enjoyed by individuals who purchase a property in such a development. Ownership of property “in condominium” is fee simple ownership, but usually carries with it a few additional restrictions set forth by the developer. It is advised that you require the owner of the property to give you a copy of the by-laws to check for architectural guidelines, land use restrictions, and other limitations that may be placed on your property. Most often, developers use the condominium laws to allow them to build private roads in a development and set architectural guidelines. For the most part, condominium laws are designed to protect the integrity of a development and maintain the “look and feel” of the project.

d. Untitled property

i. There are properties in Costa Rica that are not recorded at the Public Registry of Properties. Families have inhabited some properties of this type for generations while others have never been occupied. In either case, it is possible that someone claims that they “own” the property and may put it up for sale. They may even have fence lines or other boundary markers that separate “their” property from a neighbor’s. Regardless of the time that an inhabitant has lived on the property or to what extent they have demonstrated ownership, unless that property is registered at the Public Registry, there is no official owner. i.e. the title is unclear. It is strongly recommended that this type of property be avoided at all costs because there is no way to prove that the “owner” has the right to transfer the property, or even worse, what the dimensions of the property really are.

e. Time Share:

i. This option allows an owner the right to use a property for certain weeks of the year. In most cases the time-share ownership grants similar rights as implied in the condominium regulation except that in the time-share it is limited to certain weeks during the year. In this manner one single unit is subdivided into parts and sold individually. Time-share resorts are not common in Costa Rica.

II. The Purchase Process

A. Basic Terminology – Feeling comfortable with the purchase process starts with understanding the most common terminology. While the purchase process may seem very simple, there are some keys ideas with which a buyer should be familiar. The following defines the most common vocabulary used in real estate transactions in Costa Rica.

a) Folio Real: This is the “social security” number of properties. It is the unique number assigned to each property to identify it and distinguish it from other properties. This number is comprised of three parts: the first number indicates the province, the second group of six numbers is the number of the property itself and the last group of numbers indicates how many co-owners the property has. All titled properties MUST have this number in order for clear title to be obtained.

b) Transfer or Conveyance Deed: (escritura de traspaso): This document contains all of the stipulations regarding the transfer of real estate including basic information about the buyer, seller, the property, and any special terms of sale, such as easements or mortgages. An attorney who is also a Public Notary must prepare this document and the deed must be recorded in his/her Notary Book as well as at the Public Registry of Property. Stewart Title provides this service through our underwriters who are also attorneys. Once the deed has been prepared and signed at the close, it is the attorney’s responsibility to record the deed immediately at the Public Registry. The recording process consists of two phases. In the first phase, the notary presents the deed to the public registry for its annotation; from this moment the property is protected against any third party interest. After the registry verifies the deed is structurally correct, the second phase of registration begins and the property is recorded in the name of the new owner. Because Costa Rica operates on a “first in time, first in right” system, registering the deed immediately is critical to ensuring that the new buyer’s rights to the property are ahead of any other claims by third parties.

c) Public Registry of Properties

d) Public Notary: Attorney licensed by law to perform legal acts with Public Faith. All transactions performed by a Notary are recorded in his/her Notary Book. A public notary is necessary in order to purchase a property. Most attorneys in Costa Rica are also Public Notaries.

e) Power of Attorney: ( Poder )

(1) This document authorizes a person to act on behalf of another to perform specific actions such as the purchase of a property. This tool is especially useful for clients that wish to close on their property without returning to Costa Rica. It is best to sign the power of attorney before leaving the country because the law requires that the power of attorney be signed in the presence of a Costa Rican notary. Thus, a visit to a Costa Rican consulate in the US is necessary. One exception to this rule, however, is if the property is being purchased through a corporation. In this case, a signed proxy letter will suffice and there is no need to visit a consulate.

f) Survey Plan ( Cadastral Department ): In addition to the Public Registry of Properties, which holds all property deeds, Costa Rica also has a Cadastral Office that holds all of the property surveys. In order to transfer, mortgage or acquire a property, a survey must be recorded at the Public Registry. When dealing with property segregations, a municipality authorization is also required to be inserted on the survey. The official drawing of the property is validated through an approval process by the Public Registry of Properties as well as by the municipality in which the property is located. Because the Public Registry and Cadastral Office are separate entities, it is not uncommon for old property surveys to be on file at the Cadastral Office. If this is the case, it is recommended that a new survey plan be registered with the Cadastral Office so that there can be no dispute over boundary lines.

B. Purchasing Methodologies

1. Acquiring Properties through direct transfer: A purchase process whereby one or more physical individuals acquire a property in their personal name.

2. Acquiring Properties through corporations: A common practice in Costa Rica is to acquire properties through a new corporation or through an existing corporation that currently owns the property of interest. The process of setting up a corporation is not complicated, but does require a knowledgeable attorney who understands the exact protocols and procedures necessary to properly set up the corporation. The advantage of this system is that it allows a buyer to protect their asset anonymously. Further, if a purchaser acquires a property through an existing corporation that already owns the property, there are no government transfer taxes and stamps to pay. The reason is that transfer taxes and stamps must be paid anytime that there is a change in the ownership of the property. If a buyer acquires the shares of an existing corporation, technically there is no change in the recorded owner of the property (i.e. the corporation still owns the property). However, if a property is acquired through forming a new corporation to buy the property, the transfer taxes and stamps must be paid because the name of the property owner has changed. The risk for the buyer in acquiring an existing corporation is that the corporation might have other liabilities and there is no way to verify 100% that the corporation is clean. When buying a Costa Rican corporation, it is important to keep in mind that there are other obligations and responsibilities that must be addressed. Examples include yearly tax declarations (even if the corporation is inactive), payment of income taxes if any, and keeping the legal books of the corporation up to date and in order.

C. Step-by-Step through the purchase process (Using Title Guaranty & Escrow Services)

1. Once a buyer has seen a property of interest, the next step is to understand what the process of acquiring the property may entail. The following are the basic steps that a purchaser follows when buying a property.

Step 1: Sign an Option to Purchase/Sale with seller

Step 2: Deposit funds into escrow

Step 3: Title research performed and Title Commitment issued (review if property is free and clear of defects)

Step 4: Closing – Execution of Transfer Deed, Endorsement of Shares and/or Mortgage Deed and disburse funds

Step 5: Register new owner with Public Registry

Step 6: Receive official Title Guaranty

D. Fee Structure

1. Transfer taxes, stamps and other charges: In order to record the transfer of the property, the government charges 1.5% of the purchase price and an additional 1% is charged for other stamps at the Public Registry.

2. Notary Fees: Notaries are required by law to charge 1.25% as their legal fees.

3. Survey fees: If you require or demand a new survey for your property, there are qualified surveyors available to perform this function. Pricing depends on the location and size of the property.

4. Mortgage registration fees: The government charges .6% of the mortgage value to register the mortgage deed on the property

5. Title Guaranty fees: Guaranty fees are typically based on a sliding scale depending on the purchase price.

6. Escrow Fees: Fees are dependant on the escrow provider.

7. Incorporation: Fees for purchasing a corporation typically run between $500-$1000.

III. Protecting the real estate investment

One of the greatest concerns of foreigners purchasing real estate in a foreign country is to ensure that the transaction will be executed legally and if the system can ensure a lifetime of enjoyment of the property. The Costa Rican legal system, if followed correctly, does give ample protection to investors, but if the transaction is not executed properly, loss can and does occur. To guarantee the security of any real estate investment, there are three tools that should be present in any real estate transaction.

a. Adequate legal representation and experienced Notary - While a notary’s primary duty is to provide Public Faith to a transaction, his/her job is also to act as the legal representative of the buyer, providing legal advice and representation throughout the process.

b. Title Guaranty - As in the US, the title guaranty serves as a contract by which a third party (Guaranty Company) commits to indemnify losses due to legal situations that could affect the property, minus any exceptions or exclusions from the coverage. This legal document grants the buyer the security and peace of mind that the property has free and clear title to and is protected in the event of defect. The process of issuing a Title Guaranty includes the issuance of a Title Commitment before the closing to allow the buyer time to examine the legal status of the property and evaluate if the property is in proper condition for purchase. The final title guaranty is issued after the close and is based on the title commitment. The Title Guaranty is a new concept in Costa Rica and Latin America in general, but it has already proven to add value to initial real estate purchases, re-sales and has encouraged transparency and increased liquidity in the real estate process.

c. Escrow - Most buyers from the US understand Escrow service to include not only the managing of funds for a property purchase, but all of the administrative work required to execute a closing. In fact, in states where an attorney is not required for a real estate purchase, the escrow agent becomes the central party responsible for ensuring that all documentation is in order before the close. In Costa Rica, the escrow agent performs many of the same duties. The primary function is the financial service to prevent manipulation or mishandling of funds prior to closing. The escrow agent is a neutral third party with responsibility for issuing checks and executing payments. This system gives confidence to all interested parties (e.g. attorneys, brokers, seller, buyer) that funds are protected during the buying process and that all funds will be disbursed appropriately to all parties at closing.

Conclusion

The real estate buying process in Costa Rica need not be intimidating or confusing. By understanding the steps in the process and pitfalls to avoid, a buyer can confidently invest in and enjoy their property for years to come.

Decision Restricts Coastal Development

By Rebecca Kimitch

More protected coastal forest and less beachfront development could be the result of a recent pronouncement by the Government Attorney’s Office.

The office has ruled that municipalities cannot grant concessions for development in forested areas of the Maritime Zone. Though the ruling is not a new law, but rather an interpretation of pre-existing laws, it challenges the reality practiced for years by municipalities and developers up and down Costa Rica’s two coasts.

The Maritime Zone is the first 200 meters of land from the high tide line along most of the country’s shores and belongs to the state by law. The first 50 meters are considered public terrain and cannot be developed privately for hotels

, restaurants or homes , through concessions granted by municipalities.

The recently released Government Attorney report clarifies that forested areas in the Maritime Zone are part of natural patrimony and should be overseen by the Ministry of Environment and Energy (MINAE).

While natural patrimony is not an officially protected area , it “means you cannot built any project that goes against the conservation of the area”, said that Alvaro Ugalde, director of the Osa Conservation Area, in the Southern Zone.

Environment Minister Carlos Manuel Rodríguez explained that MINAE does not have the power to grant concessions.

This, in effect, means concessions can no longer be granted in the maritime zone where forest exists, explained Ligia Flores, an expert in the field of concessions in the maritime zone.

“The report is nothing new, it is just being applied ….and it is absolutely right”, she said , adding it is in sharp contrast to municipalities’ existing practices.

FLORES is owner of Consultores Turisticos Asociados, which helps developers acquire maritime concessions. She said she has at least 100 clients from the southern port town of Golfito to the northern province of Guanacaste – who are in the process of soliciting concessions and could be affected by the Government Attorney’s pronouncement.