Renting in Costa Rica
We all have experiences we can share regarding landlords. Some are good and we have had no complaints during our tenancy, and yet we also have experience of, or know of, the landlord from hell.
We all have experiences we can share regarding landlords. Some are good and we have had no complaints during our tenancy, and yet we also have experience of, or know of, the landlord from hell. The good news in Costa Rica is that the law favors the tenant over the landlord. A tenant is better protected by the law and their contract document than in many other countries. Tenancy agreements are regulated by Law 7527 (aka-Ley General de Arrendamientos Urbanos y Suburbanos). The law covers all lease or renting agreements related to houses and apartments. That’s the good news.
The bad news is, there are some landlords who will try to circumvent the law (as a proportion of them do in every country) and if you are unfamiliar with Costa Rican law, you may find yourself disadvantaged. However, this won’t be the case if you are clear about your rights as a tenant. Below I’ve set out some important advice which will help you when choosing a rented property and also in your rights when living there.
Translated rental agreements
If you don’t speak Spanish, or enough Spanish to understand a lengthy and complex rental agreement, ask the landlord for a translated copy. This should be identical to the original document in Spanish. If you have any doubts, ask a bilingual lawyer to assess both documents. You don’t want to sign a favourable English-language version of your tenancy agreement, only to later find that the Spanish version has stringent rules or penalty clauses that favor the landlord. Perhaps your landlord is willing to provide only an English-language document that is agreeable to both parties which you will both sign. Ask about this as it’s vital to be clear on what you are signing.
Although there are fixed rents in Costa Rica, there is also scope for negotiation with private landlords. For example, if the advertised rate is c200,000 per month with utilities separate, ask if one of those utilities, (or all of them) can be included in the asking price, or whether, without the inclusion of utilities, the monthly rent price can be reduced by an equivalent amount. Some landlords are amenable to this kind of negotiating as they are keen to have their property earning money rather than sitting dormant. Remember that for many landlords in Costa Rica, the property they rent out can be a significant portion of their annual income. Empty apartments and houses earn no money. If you’re looking for a longer-term stay, you have a better hand to play as the number of tenancies occupied in Costa Rica falls significantly in the rainy season and you may be able to find reductions of 60% or more.
Any rent increase should be set out in the contract. In any case, the rent increase in any one year cannot exceed 15% by law if the rent is in colones. However, a revision instituted in 2016 lowered this percentage, creating a very complicated formula to calculate the annual increase based on inflation indexes published monthly by the Ministry of Housing. Be warned, this is not easily understood, not even by landlords!
Alternatively, if the rent is paid in a foreign currency, such as US dollars, the landlord may not increase your rent. Something worth considering! The rent is always due within seven days of the first day of the month. If this is exceeded by one day, the landlord will have the right to begin eviction proceedings, although this is extremely unlikely. An eviction takes a landlord approximately three months to complete and costs him. They are unlikely to do this unless there are other, more serious reasons to have a tenant out of the property. Also, unless the landlord has notified you of this after the first late payment and allows the situation to continue, it is deemed by law to be an acceptable renegotiation of the contract and the landlord may not evict. It’s unlikely that he wants to if he hasn’t brought this to your attention.
If you intend to rent an apartment in a condominium, it’s crucial to establish who is responsible for paying the Homeowner’s (HOA) Fee, which is used to maintain the upkeep of the property. If it is the tenant, find out whether the rent includes them or whether this is an additional payment. A friend of mine didn’t check this out and had to find another 12% to add to the already high price he was paying in rent. “If I’d known about this, there were other apartments within that extra budget which were much nicer than the one I ended up in. I was angry, but I should have gone in with my eyes open!”
As you would in the States, Australia, or Europe, you will need to pay a deposit, which is also negotiable. However, this is usually the equivalent of a month’s rent. The deposit will cover outstanding rent payments or other debts of the tenant. They can be freely agreed between the parties. Some landlords, including that of a teacher friend of mine, will even let you pay the deposit in instalments over your first few months living in the property.
“I just said I wouldn’t be able to take the apartment, because I hadn’t taken into consideration the deposit. Rather than lose a tenant, he suggested breaking the deposit down into three monthly instalments, which was manageable from my new salary. They are always very keen to have people from the United States, Europe, and Australia renting their apartments and will be flexible to get you to move in”.
Remember, by avoiding agents and solicitors and dealing directly with a landlord, you will save on third-party fees, possibly an extra month’s deposit. Estate agents may also insist on a pointless contract renewal break whereby you pay for them to inspect the apartment after six months and then, adding insult to injury, be charged an administration fee for a new contract.
Check the contract to find out what can be deducted from your deposit. I have had experience whereby a landlord thinks its perfectly acceptable to deduct the cost of a new coat of paint for the apartment due to wear and tear. Make sure that the deposit only covers damages and not natural depreciation. It’s also wise to take some photos of the rooms and store them on Google Drive before you sign the contract. This way you have evidence of the state of the apartment when you first occupied. And check with the landlord about hanging pictures and other uses of nails. Don’t get into the position wherein the landlord states that “those holes will have to be covered up, of course.” If it’s your home for a period of time, hanging pictures (within reason) should be an acceptable part of home-making and not considered property damage.
Also, show consideration. For example, if you want a pet, first ask the landlord if this is permissible.
The standard length of a Costa Rican tenancy contract is three years. As a tenant, you have a right to a term of three years under Costa Rican contract law. Of course, if it’s your intention not to stay that long, you may be able to negotiate a contract break. However, this may require a portion of your deposit to be retained by the landlord upon departure (which is not unreasonable when you consider potential lost revenue). Tico landlords, anyway, are usually willing to negotiate this as they know a prospective tenant who may not have a residency visa is unlikely to sign a three-year contract whereby, they will lose their deposit if they have to vacate the property to leave the country. If you do negotiate a contract break, make sure that it’s included in the contract that you sign. If you do stay for the full three years, the tenancy will automatically renew for a further three years unless the landlord gives the tenant a three-month notice starting that the tenancy agreement will not be renewed.
Fixtures, fittings, and appliances
Not all Costa Rican apartments come with running hot water, so it’s important to ask, and even run your hand under a faucet. Also, remember to check any inventory mentioned in the lease agreement before renting an apartment. Check that all items in the inventory are in working order. This includes curtains and all appliances. A friend of mine had problems with a landlord who wanted to charge him for curtain rings because several were missing. If anything isn’t in the condition that is mentioned in the contract inventory, have it recorded in the agreement or insist that the landlord have it replaced before signing the tenancy agreement.
It’s also important to note that many apartments come unfurnished. While this is the case in apartments around the world, here that often means that no appliances are provided either so you’d have to buy your own oven, refrigerator, microwave oven, etc. Make sure you check to make sure exactly what you would need to provide in an unfurnished apartment and if you aren’t planning on staying longer term, the higher price of a fully furnished apartment may be worth it.
Obligations of the landlord
Other than the commitments of the contract, the landlord has other obligations. For example, they are required to be registered with the Tax Ministry (aka- Hacienda) and provide electronic invoices to the tenant. Not complying with this requirement can result in tax fines for the landlord. However, if you have a private arrangement with a landlord, it may be that neither of you wish an electronic invoice and prefer to make a “gentleman’s agreement.”
As mentioned above, all depreciation and wear and tear are the responsibility of the landlord and cannot be passed on to the tenant or deducted from the deposit. If your landlord attempts this, suggest you will take legal advice. They are likely to reconsider.
Also, find out the prices of similar apartments in the neighbourhood. If the apartment you’re looking at is significantly higher or lower in price, there may be a very good reason for that.
As anywhere, there are good and bad landlords. Choosing a good landlord can be as simple as word-of-mouth or checking with new colleagues or friends. And lastly, having a lawyer review any contracts you are about to sign, particularly if you don’t speak the language, is never a bad idea. They may spot items that are against the law and/or wording that is beneficial to the landlord and at your expense. Doing a little due diligence ahead of time can save a number of financial headaches later on.
Also, if you wish to learn about Real Estate markets during the pandemic click here.