Costa Rica Real Estate Informations

One of the modern figures of contracting is without doubt the Trust, the opening with which parties can reach agrement, the low registry cost and the security that it offers make it one of the figures of most interest currently.

There are various types of trusts: testamentary, guaranty, shares, administrative, etc.
Here I have undertaken the task of explaining in a simple manner one of the most commonly used:

The Guaranty Trust
•    Transmission of property for the obtaining of a determined end that justifies the normal faculties of the “owner” be subordinated to the terms and obligations contained in the contract.
The norm would be to sign a mortgage for the amount that the buyer has left to pay, nevertheless, this has serious implications for both parties for which the contract of trust takes the same effect, without the secondary effects of a mortgage.
Subjects:
- Trustor: The party that has the intent of selling (the seller).
-Trustee: Thir party who has in his power the property during the length of the contract.  A bank or a trust third party
-Beneficiary: The beneficiary (buyer).
TRUSTOR: Person who transfers the properties of his personal assets, in fiduciary property. In the example, it would be the seller.
BENEFICIARY: Person for whose benefit the trust is constituted, obliging the trustee to turn over the properties at the moment that the contract establishes.  This would be in the seller in the example.
TRUSTEE: Has a restricted right to the property destined exclusively to the end foreseen in the contract (transfer of the property at the moment of completion of the contract).  Trusted third party who will have the property registered in his name during the period of the contract.
Principal function of the trustee: Administration of the property for the benefit of the trustor and beneficiary.  Responsibilities of father of household with own property.
A neutral and impartial figure.
Gives accounts of this management.
Follows instructions according to the contract without interpreting it.
Can not dispose of the property (sell, mortgage or put a lien on it).

Autonomous Personal Assets
•    Separated from the assets of any other subject.
It is untouchable and can’t be interevened with judicially even in the case of bankruptcy.
During the period of the contract the property would belong to the trust.

Advantages:
•    Avoids for the creditor in case of non-fulfilment by the debtor, the thorny judicial execution that must be had in the case of traditional guarantees. (Auction).
In case of disagreement it signals beforehand that all conflict will be resolved via arbitration.
Reduction of costs: exempt from payments of rights of registration and registration taxes as long as the properties remain in the trust or return to the trustor.
To Be Considered:
In those cases in which the buyer of the property can not pay the entire totality of the price, instead of establishing a mortgage for the remainder, subscribes to a trust contract, to the effect that until the buyer hasn’t paid the totality the property will not be transferred to his name.
It is here where the trust contract lends ittself to adjustments for the contractual reality, incorporating clauses such as:
•    The estate remains in the hands of the trustor (buyer) as holder assuming the obligations of a depository, which is translated in a position of “owner”, for which he assumes rights to “productive use and user”.
The trustor takes advantage of the fruits of the estate and participates actively and unilaterally in its administration, management, and exploitation.
The trustee supervises to prevent damage.
Property taxes are still paid by the trustor.
The possession of the property is obtained by the “buyers” until the entirety of the payments has been achieved.
In case of non-fulfilment, all previous payments are property of the seller, without any arrangements.
The management of permits is managed by the buyer without alleging nullification by the inability to acquire one.
All of this without it being necessary to establish a mortgage on the property, which carries along with it from the point of view of taxes an increase in the fiscal value of the property and the resulting increase in the payment of taxes on the property.

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In accordance with the Law of Taxes on Real Estate and its Regulations, this tax was established for the sake of the local government where it is kept  localized.  This tax has a rate of 0.25% of the registered value.
In those cases in which the property is the “only property” of the passive subject (the owner of the real estate that must pay the tax), and if it is not included as part of a company, then it is exempt up to ¢12,141,000.00 (twelve million, one hundred and forty-one thousand colones net).  This value is fixed according to the law to the equivalent of 45 base salaries, the base salary being fixed at the sum of ¢269,800.00 (two hundred sixty nine thousand, eight hundred colones net).  This is in accordance with the resolution made by the Technical Normalization Agency of the General Headship of Taxation, Resolution #01-2009 – San Jose, at ten o’clock of the 15th of January of 2009.  Published in La Gaceta #28 of the 10th of February of 2009.
In those cases where the value of the property is above this amount, the tax will be paid on the part that is in excess of the amount.

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Annualy our Tax Administration of Costa Rica, establishes sectors or economic activities that can be subject to tax supervision.

So, aside from the list contained in the Regulations on objective criteria for the selection of contributors for supervision DECREE NO. 25925-H from the 13th of March of 1997 and modified by the DECREE NO. 27651-H of the 5th of February of 1999, and

In  accordance with the Resolution #DGT-27-2008 General Headship of Taxation, taken at eleven o’lock of the 10th of December of 2008.  And published in La Gaceta #27 of the 9th of February of 2009, were the following activities chosen or added:
1.    IMPORTATION OR COMMERCIALIZATION OF NEW AND USED AUTOMOTIVE VEHICLES, OR THEIR SPARE PARTS, OR BOTH.
Real estate activity.  This includes the concept of preparation of lands, the construction, promotion, and sale of housing, building and commercial real estate and the renting thereof.
Lending of educational services.
Free exercise of professions, including professional activity societies.
Services related to tourism such as hotels, transport, tour operators, travel agencies, excursions, leisure activities and so on.
Centers for betting, games of chance, virtual casinos, or the use of slot machines.
Passive subjects of any sector or economic activity, whose relation by quotient between the net income and the declared gross income of end results over uses, being less than this same average relation of the economic activity that is undertaken.
Vehicle workshops (repairs, maintenance, alignment, and paint)
Passive subjects of any sector or economic activity, who as a consecuence of being the object of performance actions, or initiating said proceedings, would have presented the tax declarations or would have initially rectified those present.
Related services with auxiliary activities of finance or markets, etc.
Paid transport service of people, both public and private.
Production and commercialization of pineapple and its derivates.

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There are many established forms of declaring bankruptcy in our laws, amongst those are included the application of the very manager or administrator of the company that is in the process of bankruptcy or including a creditor that can prove that the has stopped paying, amongst others, (these being the most common).
When the debotr applies for bankruptcy the application should be accompanied by various requirements which include the balance dated and signed, the facts that led to the bankruptcy, general state of the business, amongst others, any inexact data will be a motive to declare the bankruptcy as fraudulent.
After the bankruptcy has been decreed by the judge, it will be decreed that no act be inscribed, whether it be a sale, mortgage, forfeitures, etc. in the Public Registry, communication to banks and lending institutions that they abstain from handing over to the debtor stock issues, any curator (who is the representative in this case of the bankrupt company)and not to the bankrupt company, an embargo on real property of the bankrupt organization.
The Public Ministry must determine if the bankruptcy was applied for in a fraudulent or guilty manner.

Refer to aspects such as fulfilling existing contracts, severance pay, notice, rental contract for the buidling, etc.
Our regulations establish an order of priority of payments, that is, of all the property that the company has at the moment of bankruptcy, they must pay in the following manner:

- Mortgage Creditors and Lendros
- Payment to Workers. The workers enjoy the very special privilege above all creditors, and the curator will be obligated to pay a notice, severance pay, and indeminizations of damage and prejudices if they exist, within 30 days following the formal recognition of the credit. The bankruptcy of the owner is included in the causes for termination of the work contract without responsibility for the worker, but in no moment does he lose the right to be paid corresponding amounts.
- Credit to landlords and renters. In the bankruptcy or insolvency of the renter, the curator is responsible for the representation of the bankruptcy amongst the competition of creditors, exercising the rights and fulfilling obligations derived from the rental contract.  The landlord will have the status of privileged creditor, in any pending process or action that must be exercised against the renter or against the bankruptcy or in competition from other creditors.
Mass creditors (expenses that come from judicial expenses such as stamps, honorariums to lawyers, personal costs, taxes, medical assistance expenses, provisions used during the execution of the bankruptcy, amongst others).
- Common credits (the creditors that never legalized their credits)

Is there somewhere on the internet where the pertinent law can be consulted?
Various laws in Costa Rica regulate related issues to bankruptcy, some more special than other in the matter that they regulate.  Nevertheless, the Commercial Code, the Civil Process Code, and the Labor Code regulate the established norms for the material.  All of it can be found at: http://www.pgr.go.cr/Scij/
What is the equivalent of Chapter 13 in Costa Rica?
Chapter 13 refers to the intervention undertaken by the government of the United States with the purpose of reorganization for the bankruptcy of companies or the insolvency of a physical person.  In Costa Rica, although it is unusual and few companies have choses this treatment, there exists what is known as “administration and reorganization with judicial intervention”, which is a process in which the physical person or company that find itself in a difficult economic situation with an end of payments or without them altogether, that is still solvable as long as bankruptcy as not been declared.  Very formal requirements must be satisfied, being that beneficiaries must be companies whose disappearance can provoke pernicious social effects, without possibility of substitution.

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