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Now that Costa Rica’s MINAET officials are stealing land from foreign investors can anyone safely invest there???
Before you invest in Costa Rica real estate you should be forewarned about the hazards of the Costa Rica’s agrarian laws. They are often abused by Costa Rican citizens and a major threat to foreign investment. National government authorities presumably responsible for protecting foreign investors have shown notable reluctance to interfere with local attempts to strip foreign investors of their properties.
It has become all too common that some unscrupulous Costa Rican entities are using what many people understand as squatter’s law to legally steal land. It has now become so commonplace that even national law enforcement officials of the Ministry of Environment, Electricity and Telecommunications (MINAET) appear to be getting in on the action.
A recent example of this abuse is the attempted confiscation of a 30 acre beach front property on the Caribbean coast near Manzanillo owned by Costa Rican-U.S. partners. This land–valued at approx. USD $6-8million–was an investment they made together and have held for 23 years. During that time, the investors maintained the natural beauty of the property and took measures to ensure its ecological integrity, while awaiting the opportunity to responsibly develop this tropical paradise of Costa Rica. It also maintained a security guard living on the property.
For the past 10 years this land has been under attack by officials of the MINAET who are using their authority to simply steal the land. At first these officials attempted to sell the land to unsuspecting Europeans via the Internet. Since the agency has access to land records and concessions, it would be easy to dupe unsuspecting investors into thinking that transparently created “façade corporations” had clear title. This ruse was discovered and legal proceedings were brought against them both criminally and civilly.
This natural beach front rain forest is located inside the Gondoca National Forest and is under the direct control of the MINAET. The usurpers appear to be lead by Jorge Hudson Chollette, a law enforcement ranger of the South Eastern MINAET offices, and may involve municipal authorities. Apparently motivated by personal interest, the group has employed scare tactics and personal threats to the security guard and his family, who were forced to flee their home ???In 2002, Civil & Criminal cases were brought against officers of the MINAET. Despite the fact that the legitimate owners had clear title and had maintained appropriate security on the property since 1987 the local courts in the Talamanca region sided with the MINAET officials. The culprits brought no factual evidence to support their claims and the national court of appeals overturned the ruling in favor of the rightful owners.??Although both the criminal and civil cases were won against Chollette and other officers of the MINAET, there was neither disciplinary action taken nor penalties for their criminal behavior. Without concern of retribution these same law enforcement officials continued harassment of the property owners even after the National Court of Appeals ruled against them. They refused to reinstate the Maritime Concession which they control. They instigated felonious law suits in the local courts that had previously sided with them. In the end extortion seemed to be the best option so they simply demanded to be paid USD $150,000 to stop harassing the property. The partners, exhausted with their long legal battle, agreed to a negotiated “settlement.
At some point in 2009 these same officers, now joined by additional officers of the MINAET and directors of the local municipality threatened the security guard living on the property again causing him to permanently leave the property. They then proceeded to build houses, a road and a bridge across a small river to the property on the other side which is owned by Jorge Hudson Chollette. All of this was done without filing permits in a nature reserve which they as officials are sworn to protect. In defiance of the National Court of Appeals they removed the court ordered documents from the public record and replaced them with documents that they conveniently generated themselves.
The legal representatives of the owners visited the property and were physically threatened by the guards hired by the MINAET officials. The partners had no choice but to once again pursue legal action against these officials. A surveyor who had been hired to prepare records for the court came to the property to survey the damages but was also physically threatened and he returned without completing his task, refusing to note the changes done on the land out of fear for his life.
Imagine the despair of the North American partner who can do little but hope there will eventually be law and order in Costa Rica. The partners can’t even visit their property due to the fear of retribution by local law enforcement officials of the MINAET. Fortunately, one partner is Costa Rican attorney José Pablo Fernandez who is a founder and partner of the prestigious law firm Asesores Jurídicos Económicos in San Jose. These days Mr. Fernández works almost exclusively on solving this issue. But how do you win a court battle that you already have won at the highest levels of Costa Rican justice?
Mr. Fernández is aggressively negotiating with Minaet officials in San José in an attempt to resolve this matter without further legal process, but his task is far more than simply returning the property to its rightful owners. This issue is much more complicated than that. In its present condition, the property cannot be transferred, sold, or developed. It has a 10 year history of litigation with the national authorities whose responsibility it is to protect the rights of property owners. The only likely buyers of a property this size (approximate value USD $6-8 million) would be a foreign investor. Any serious review of the legal status of the property would discourage potential buyers.??Costa Rica relies heavily on the USD$2 billion in revenue spent by tourism and foreign residence each year. Before he left office, former President Oscar Arias Sanchez declared it a national priority to attract North American retirees to purchase land and seek a better and more affordable retirement lifestyle in Costa Rica. Now many North Americans are finding their retirement investments stolen or in serious jeopardy. Litigation in Costa Rica is a long and expensive process.??Unscrupulous officials and common thieves are taking advantage of outdated agrarian laws that were originally intended to protect the indigenous population and are now used as a legal sword against unsuspecting foreigners. ??In a ranking of countries that protect foreign investors, Costa Rica ranks near the bottom: 164 out of 181 next to Iran, Senegal and Haiti.?Neighboring countries such as Panama and Nicaragua are looking more attractive as they rate considerably higher in protecting foreign investors. ??Foreigners are becoming better educated to the weaknesses of Costa Rican law and seek safer heavens for their investment despite the beauty of the environment and the friendly nature of the Costa Rican people.
To these criminals it appears to be open season on gringos but it is the shame of the honest Costa Rican people to endure this behavior and lack of due process in their country.??Central America has become a destination for North Americans looking for a better-less costly lifestyle in their retirement years. If there is hope for Costa Rica to enjoy foreign investment of this nature perhaps it lies with the popular new Costa Rican, President Laura Chinchilla, the first female president. Her challenge would be to make real change in the legal system and to enforce protection of foreign investors and tourists who make up the bulk of their gross national product.
Otherwise, it is clear that foreign investors and retirees will seek alternatives where the risk/investment potential is more favorable.Robert Johnson
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