Costa Rica Coffee Guide

Proposed border law worries foreign investors

December 9, 2010

The proposed Border Law, which establishes a state-controlled border region of 15 kilometers, could have a seriously negative effect on millions of dollars in foreign real-estate development in the southern department of Rivas, from Playa Ostional to the border.

The working draft of the bill would limit foreigners’ land rights in the border region, and – in worst case scenario, according to some legal interpretations – could be used to force sales or confiscate land (TT, Dec. 3).

According to the bill, which may go to vote Dec. 13, the 15-km border region would include a 5-km “Border Security Zone” (the first five kms from the border towards the interior of the country) that would be “inalienable” state land to which no foreigners can claim title.

Foreign ownership and land usage would also be seriously limited with in the 15-km zone. The preamble to the law states that border-zone property “should be in the hands of nationals” and that the state of Nicaragua has “preferential right to buy land for sale not only by foreigners but also by Nicaraguans.”

That might not sit too well with foreigners who have bought tracks of land to divide and sell for tourism or residential development projects, says lawyer Sergio Corrales, who represents the Association of Nicaraguan Investors and Developers (ANID).

Corrales said several projects that belong to ANID members would be affected by the new legislation. The border area from Ostional to the border is known for its impressive cliff views of the Pacific Ocean, which have made the land prime real estate for foreign developers.

“I don’t think it will be confiscatory but it will restrict property rights,” Corrales said. “The law is excessive – 15 kms is too much area for a border zone.”

Corrales said ANID is waiting to see what see what the final text of the law says once it’s approved, to see what legal alternatives to pursue next.

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