What are the four most common restrictions that may limit the operation of a short-term rental?
by Quatro Legal Real Estate Team | Jan 25, 2024 | Article, Real Estate
One of the most important decisions to buy property as investment in Costa Rica is to clear the operational restrictions that may apply to the short-term rental. Therefore, it is important to do your due diligence on the potential restrictions that may be applicable to such activity. We see many property buyers that purchase an apartment, house or condo and then are unable to perform the activity they intended which may result in a negative impact to their investment. Here are a few things to confirm prior to deciding on investing on a property for short-term rental:
- Zoning restrictions: In Costa Rica there is a broad and general set of zoning regulations and laws applicable to all its territory which establish the general rules and activities that can be performed in a specific area depending on its characteristics and location. These laws and rules may prohibit or restrict certain activities. In example, operating a short-term rental in an area with industrial use may not be permitted. Moreover, Municipalities as jurisdictional entities in charge of management and supervising economic and development activities in their territories may have their own zoning plans with more specific rules and land uses creating requirements and limitations to the operation of a short-term rental. These zoning plans are created to maximize and organize the use of the land.
- HOA restrictions: Another important aspect to consider when buying a property, condo, apartment, or house within and/or subject to a homeowner’s association is to confirm if short-term rental activity may be performed and if so under which rules. Nowadays, it is more and more common to see HOA rules, covenants and regulations that prohibit or limit short-term rentals to a specific target of people, in example limiting access to children, or allow them only during specific periods of the years or by mandating the short-term rental activity is done through the HOA administration or a specific management entity.
- Licensing requirements: The Law for the Regularization of Non-Traditional Lodging and its Intermediation through Digital Platforms and its Regulations does not require or indicates that short-term rentals are supposed to obtain licenses for operation. However, Municipalities as managers of economic activities in their territories have the faculty to issue specific rules and regulations to enforce licensing and operational requirements to businesses within their territories.
- Health requirements: All lodging facilities must comply with minimal health requirements for operation that may be subject to inspection and closure by the Ministry of Health. The Law for the Regularization of Non-Traditional Lodging and its Intermediation through Digital Platforms and its Regulations states that all short-term rentals must comply with periodic cleaning of the facility; provide sanitary services for personal hygiene, including at least a bathroom and toilet; provide regular maintenance of the facilities; guarantee minimum sanitary and hygienic conditions and provide the necessary containers for the separation and management of solid waste.
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