Legal Advices for Nosara Expats

The Most Common Legal Dilemmas for Nosara Expats –

Interview with Andres Gonzalez of IBL Consultores

Tell me if you’ve heard this one before: A foreigner steps off the plane onto Costa Rican soil, heads to Nosara, has the time of their life in “Pura Vida Paradise,” and decides then and there that Playa Guiones is to become there new home. Yes, it happens all the time, and understandably so. Considering the waves, the people, the parties, and the lifestyle why wouldn’t any sane person wish to live here? In many cases the transition may involve buying property, and maybe even setting up a business. It’s at this point that  newcomers need to get practical, and momentarily overlook their excitement while they deal with the realities of setting up a new life in Costa Rica. And for this, you’re going to need a lawyer. When it comes to the legal issues most commonly encountered by foreigners in Nosara Andres Gonzalez of IBL Consultores has just about seen them all. Listed below is a list of the legal issues that people bring to Andres to help them resolve. Before going full steam ahead with your plans it would be advisable to take note from his experience. It may save you a lot of time, money, and stress in the long run.

Land disputes:

This is a simple case of people owning properties where the survey maps and boundaries set down in the plano don’t match the documents in the National Registry. Although this is a nationwide problem the times it has occurred in Nosara is particularly high. The most  commonly affected group is usually older people who purchased land and property in Nosara decades ago. Back in the eighties there was no GPS. Additionally, when topographers were hired to do a survey they were sometimes lazy, happy to guess, and sorry to say but in some cases corrupt. The advent of modern technology has forced some property owners to accept the fact that their lots may not be as big as they once thought. After that they have to have the documents rectified. If the land discrepancy is less than 10% then the process can be done through a notary. In cases where the discrepancy is larger than 10% then they must apply to the national registry to make the necessary alterations. Either way they’ll need to hire a new topographer. All of this combined amounts to time, money and headache.

Although the frequency of such problems has fallen in recent years they still occur. The only way to avoid this is to hire a topographer before they sign. They need to remember that this investigation is not the the responsibility of the real estate company, nor their attorney. It’s also worth remembering that even if the seller has a legal responsibility to swear under oath that the land sizes are correct there’s been cases where they’ve flat out lied to sell their property. It’s the responsibility of the buyer to ensure that everything is measured and that all property measurements tally up.

AWOL board members:

Again, this one is only really a problem for individuals who arrived in Nosara a long time ago and realizing much later on that it is a problem to be dealt with. When these people first arrived and decided to set up a corporation they went to a lawyer who didn’t speak English and could therefore not properly convey some of the standard practices employed back then. One such standard practice was employed when setting up corporations for foreign clients looking to establish themselves in Costa Rica. Back then the lawyers granted power of attorney to their legal assistants, which gave those assistants the right to sell and mortgage their properties. This was done purely out of convenience and there has never been a problem where the legal assistants abused this power. The problem is much simpler. The problem is that these assistants have since moved locations, changed companies, or simply disappeared. The issue come to light when the individuals who formed these corporations wish to change their corporation status and the individuals needed to complete these changes can’t be tracked down. In cases where the shares belong in full to the corporation or it’s members then this issue is fairly straightforward. Other cases can require a long, drawn out search for the persons holding power of attorney.

Labor laws:

Many foreigners who come here and decide to open a business are completely unaware of Costa Rican labor laws, and in some cases vastly underestimate the degree to which they are legally enforced. Although the process is complex the short version goes like this: Worker social security funds (CAJA) must be made monthly via two payments. The first is payment amounts to 9% of the workers salary which should be deducted from the employees paycheck by the employer. The second is 23% over and above the worker salary which is paid by the employer. However, there’s a second option, which although may sound to the employer like a cheaper, more convenient method is often a choice which comes back to bite them. This option involves the employee invoking their legal right to say that they will make the CAJA contribution themselves from their salary. This often makes the employer trust that the employee will do this, and leads them to believe they can avoid paying the 23%. Technically this is correct IF the employee sticks to their part of the deal. However, many of the employees understand the Costa Rican labor law system better than their employers. They know that if and when the working relationship ends they can go to court and sue the employer. In court the employer will say “we had a deal” – a statement which carries zero weight in the eyes of the law. In such cases the employee wins every time. The employer will receive a bill for both the 9% and the 23% to be back paid. Meanwhile the employee isn’t obligated to reimburse a single cent of the extra money they received on their paychecks. If this sounds complicated that’s because it is, and is best explained by your lawyer when setting up a company.

The simplest advice is this: pay the CAJA, all of it – the 9% and the 23% each month every month directly to the CAJA office. If you’re employee opts to pay the voluntary contribution themselves then respond with a firm “no”.

The taxman:

Although the issue of taxes is a huge one I think it’s worth highlighting some of the more common problems I see occurring. Basically these problems arise when people either misunderstand what they should be paying, or simply forget to pay them.

The first is land tax. This amounts a quarter of a percent of the price paid for the land. If you don’t own a Costa Rican corporation then this is the only tax you have to worry about Although this is a relatively small tax it’s one that people occasionally forget to pay which leads to problems down the line.

The second is corporation tax. In 2015 the Costa Rican Congress abolished this tax. Although it’s not been widely publicized this tax has recently been reinstated and applies to both active and inactive corporations. Inactive corporations are expected to pay around 60,000 colones a year. Active corporations can expect to pay around 200 dollars per year. If these taxes remain unpaid then eventually the government can, and will, come after the legal representatives of the corporation. Finally, active corporation owners need to remember there’s two types of taxes in Costa Rica – sales tax and income tax. Even if the company happens to be making zero income the owner needs to present regular tax declarations that clearly state this. Tax issue is an important one to remember, and vital to stay on top of. If in doubt speak to your accountant or lawyer.

It´s always interesting to find out some fun facts about your new country! Check out some Costa Rican phrases that will help you blend in!

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