Leasing in Costa Rica: What Tenants-to-Be Need to Know
THE firstthing to be awareof when leasing inCosta Rica is thatthe regulationsapplicable to suchrelationships aresomewhat differentfrom the onestenants mayencounter in othercountries.Future tenantsshould take intoaccount severalkey aspects when entering into a leasingrelationship in Costa Rica. Most of theseissues apply whether the agreement is forhousing or for business purposes.Written Agreement. Though notrequired by law, a written agreement statingthe terms and conditions for the leaseis advisable, so as not to leave the interpretationof key elements of the relationshipto default legal principles or to thecourts.Property Identification. By law, everypiece of land subject to a lease must beidentified with its folio real registrationnumber – the identification given to it bythe Public Registry. The omission of thisrequirement is a common mistake in leasingcontracts. This information is alsohelpful in performing a title search toensure the landlord has the legal right torent the property.Use of Premises. Local leases usuallyrestrict the use of the premises for specificpurposes. In residential cases, it is standardpractice that no commercial activitiescan be carried out in a residence. In businessleases, a concrete objective is included,which in many cases can be veryrestrictive, so it is in the tenant’s bestinterest to insist on establishing a descriptionof use that covers the full extent ofthe intended activities.Rent. Rent can be expressed in any currency,but can always be paid in colones.A receipt for rent paid should be expectedand required. Most people are unawarethat when rent is set in dollars or in anyother foreign currency, yearly adjustmentsare allowed only for commercial leasesand prohibited in residential agreements.Utilities are usually paid by the tenant.Look for separate meters to avoid disputeover allocation of amounts.Term. By law, leases cannot be draftedfor terms shorter than three years, so anycontract with a shorter term, even ifagreed to in writing by the parties, is consideredvalid for three years. This is bindingon the landlord, but the tenant can beprotected by an advance termination provisionin the contract enabling him or herto request such a provision with noticeand/or payment of a penalty or loss of thesecurity deposit. If no advance terminationprovision is established, the tenantcould be liable, when terminating the contractbefore its term, for unpaid rent forthe life of the contract.Security Deposit. It is common for thelandlord to request a security deposit tosafeguard against damages to the property,unpaid utility bills and, in some cases,unpaid rent. This deposit is usually equalto one or two months’ rent. In general,higher deposit amounts should be avoided,and it is advisable to establish provisionsfor the prompt return of the depositafter termination of the lease and anobjective definition of its use.Condition of Premises. Leases in CostaRica usually describe the condition inwhich the premises are received by thetenant. It is extremely important to ensurethat the condition described reflects theactual state of the property, since the tenantis obligated to return it as receivedupon termination of the lease, with theexception of normal wear and tear.Notices. Although the tenant usuallyreceives notices at the leased premises,there is rarely an indication of where thelandlord will receive the same. It is advisableto establish a specific deliveryaddress for the landlord so that correspondencerelevant to the lease can be effectivelycarried out.Many other issues and provisionsshould be taken into account when negotiatingleases here. It is important for thetenant to know his or her legal rights,especially with regard to what provisionscan be negotiated and to what extent. Thiswill produce a much more advantageous,long-lasting and profitable relationship.For more legal advice, contact Lang& Asociados at 204-7871 or visitwww.langcr.com.
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