Revised Rent Law Gives Tenants Added Protection

October 1, 2004

BUYING a house or business locationjust isn’t an option for many foreignresidents, let alone Ticos. Renting helpsspread the financial load and providesflexibility. Foreigners have the samerights as nationals to rent or buy property,but just what are the ins and outs of rentingproperty in Costa Rica?The revised Rent Law was introducedin 1995, replacing an older law that gavealmost total protection to tenants andmade eviction virtually impossible. Withthe new law allowing landlords to issuenotice on non-paying or undesirable tenantsonce other mandated conditions weremet by 2003, many owners rushed toevict their unwanted tenants.Have you wonderedwhy downtown San Joséhas so many small, informalcar parks on emptylots? Many appeared as aresult of evictions anddemolition of untenableproperties. Nowadays,landlords must give atleast three months’ noticebut at least they can getrid of unscrupulous tenants.What’s being offered?THE choice for renting is bewildering.Imposing condominiums tower overtraditional adobe single-story homes inEscazú. Office and apartment blockscluster downtown. Sumptuous mansionsnestle in the hills and students crowd intosingle bedsits with shared kitchen andbath. But your rights are similar in allcases. The exceptions are fully equippedapart-hotel units offering mid-term dealsthat don’t come under the rent law, andcondominiums that have shared maintenancefees as determined by the GeneralAssembly of Owners.Many residential rentals are offeredfurnished, which is not always ideal ifyou have moved to Costa Rica with allyour worldly belongings and of coursethe landlord’s taste might not quite reflectyours! It can sometimes be possible towork a deal to have furniture removedand pay less rent but be very clear about‘wear and tear’ on furnished accommodationand have any special conditions stipulatedin the tenancy agreement.Be aware that the currency you use topay your rent affects your rights. Payingin colones allows for a 15% annualadjustment on your rent. If you agree topay in dollars, the contract is yours forthree years without a rise but once itcomes up for renewal, that’s when troublecan start if the owner decides to push fora an unfair price hike.SO what if you and your landlordcan’t agree on the rent increase?If you want to stay on in the propertybut think that the rent increase is unfair,you have recourse to the law initiallywithout hiring a lawyer. Proceedings canbe started in the SmallClaims Court (Juzgadode Menor Cuantía) byone or other partyinvolved registeringtheir disagreement.The court determineswhat an acceptablerent adjustmentshould be but it onlydeals with values of¢600,000 ($1,350) orless. For higheramounts, you will haveto go to Court (Tribunal es de Justicia).The landlord usually requests that thecourt agree to a rise of more than the 15%per year established in colón-based rentalcontracts and if this is ratified, the tenantmust pay that amount to continue renting.If the tenant contests the decision, anappraisal expert named from the court’sofficial list visits the property and calculatesits rental worth based on quality andage of construction, current condition,neighborhood and inflation rate.ONCE this report is presented, eitherside can accept or reject its findings. Asmight seem logical, the landlord usuallycomplains that the estimate is too low andthe tenant that it is too high.Litigation can continue by appointinglawyers who can demand further justificationfrom the expert. Although stalematecan ensue, many landlords acceptthe final ruling and adjust their rentsaccordingly.Know your renting rightsThe law protects both sides but this is what you should know before signing on the dottedline of a rental contract:• Contracts can be written or verbal.• Contracts are valid for three years minimum if all rental conditions are met.• Contracts automatically renew for a further three years unless the landlord gives atleast three months notice before the contract expires.• If the rent is paid in colones, an annual increment of 15% applies. Rent adjustmentsin other currencies only apply when the contract is to be renewed and both partiesagree. Rents requested in dollars, can be paid in colones at the current rate ofexchange.• Unless otherwise agreed, public services and utilities are paid by the tenant, andproperty taxes by the landlord.• Necessary repairs with due access by workmen must be allowed by the tenant.• If sold, the property’s new owners must respect any existing rental contract.• Any improvements made by a tenant become the landlord’s property.• The use of a property cannot be changed – for example, a residence cannot becomea shop.• Landlords may inspect their property every month.• Tenants can pay rents up to seven days after the agreed due date.• The landlord can ask for a maximum deposit of guarantee equivalent to one month’srent.• Tenants cannot sublet the property.Be careful of rental accommodations (two or fewer units) located within the landlord’sown compound. This is fairly common here but tenants have reduced rights in theseinstances and the landlord can evict tenants with just 30 days’ written notification.Make sure you understand the contract. If not, have it translated into your languageand notarized. It might seem like an unnecessary expense but it could save troublelater on.

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