Expropriation in Costa Rica: Key Insights for Investors

In this article, as part of our ongoing Quatro Legal Real Estate series, we’re going to be talking about expropriation in Costa Rica. Many clients and investors interested in buying in Costa Rica ask about the threat of expropriation by the Costa Rican government. Their concern is whether their real estate investment could be jeopardized by expropriation procedure, making Costa Rica an unsafe place to invest.

What to Know about Purchasing Property in Costa Rica: The Risk of Expropriation

Costa Rica, in general, has a stable climate for investment and this extends to buying property or investing in development projects or business ventures. However, Costa Rica, like any other country in the world, has the right to take private property from individuals.

When complying with legal due process, this process is called expropriation. In a nutshell, an expropriation is a legal process used by the government to take properties for public use, such as building infrastructure, like hospitals, schools, roads, and projects that value or satisfy a public need. However, all of this needs to be discussed by Congress.

In principle, not every property is subject to this grave risk. From a foreign buyer perspective, citizenship will not be a factor that will increase or decrease the risk of expropriation. In other words, Costa Ricans and expats have the same chances of being subject to an expropriation procedure as the law considers them equal.

The constitution stipulates that private property can be expropriated to Costa Ricans or foreign nationals only when the due process has taken place and in cases of public interest. So, if expropriation can happen to anyone and pretty much in any property, what are the steps for an expropriation to take place?

The Expropriation Process in Costa Rica

To start, there needs to be a declaration of public interest. This declaration can be made by the executive branch or congress and it implies a set of studies and technicalities to support it.

There needs to be the initiation of an expropriation legal procedure. The government through the state attorney office must file an expropriation lawsuit guided by our expropriations law.

Once the lawsuit is filed, the property owner can challenge the expropriation procedure. They will be given due process to oppose the expropriation and challenge the assessment of value done by the Costa Rican state.

Once this happens, there’s the matter of payment of compensation. Once proceedings have unfolded and both sides have presented their arguments, including evidence pertaining to the actual value of the property through appraisals, market studies, zoning valuations, property tax declarations, et cetera. The judge will rule on the value to be paid to the property owner as compensation for their loss.

Once the payment has been settled, possession of the property will be taken by the Costa Rican state on the property or properties related to the case.

The biggest takeaway that we can have of the expropriation in Costa Rica is that this can happen to anyone. So due diligence prior to investing is essential to determine the existence of specific public interests over certain areas of lands.

Many lands involved in expropriations in the past have been areas necessary to create national parks, indigenous reserves, agricultural projects, or public infrastructure. Good due diligence could have revealed risk of expropriation. So, make sure that you include this research prior to making an investment.

Looking for legal counsel in Costa Rica you can trust? Get in touch today.

Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change. For the most accurate and up-to-date information, please contact our office directly. Some images may be AI generated.