Tenancy law is pro-tenant
June 10, 2015
The law on landlord and tenant in Costa Rica is PRO-TENANT.
Rents: Can landlord and tenant freely agree rents in Costa Rica?
The rents can initially be freely negotiated between landlord and tenant. To increase the rent, the parties should agree upon the annual rent increase in the agreement. If there is no agreement a claim can be filled by the landlord to increase the rent on a yearly basis.
For housing, the yearly increase cannot be higher than a 15% of the fixed rent. To increase more than a 15%, the country’s inflation must be higher than 15%, and the rent increase must be based on a certification of the inflation issued by the State.
If the rent for housing is agreed in US dollars or other foreign currency, no yearly increase is allowed. A rent increase is allowed only in cases of agreements in colones, the Costa Rican currency.
Security deposits to cover pending rent payments or any other obligations of the tenant can be freely agreed between the parties with no legal maximum, but in practice, landlords request one month as security deposit. Advance payments of rentals are in contrast limited to just one month’s rent (an exception applies to social housing).
What rights do landlords and tenants have in Costa Rica, especially as to duration of contract, and eviction?
The minimum term of a lease agreement in Costa Rica is three years. If the tenant wants to terminate the lease before this time expires, he must send the landlord a three month prior notice, unless the parties agree otherwise. The Parties may agree on a penalty for early termination by the tenant.
If the term of the agreement expires, it is automatically renewed for three years more, unless the landlord gives the tenant a three month period prior notice, stating he will not renew the agreement.
No indefinite term of lease is allowed.
How effective is the Costa Rican legal system?
An eviction process should not take more than one year. In the same process, the collection of unpaid rent can be attempted. In practice, the collection of unpaid rents is normally difficult, since the tenant does not have any assets or money to attach.
EVICTION FOR NON-PAYMENT OF RENT
|Duration until completion of service of process||20|
|Duration of trial||90|
|Duration of enforcement||30|
|Total Days to Evict Tenant||140|
|Courts: The Lex Mundi Project|
Landlord and Tenant relations are regulated in Costa Rica by Law 7527, called “Ley General de Arrendamientos Urbanos y Suburbanos”. This law covers all lease or renting agreements related to houses and other constructions as commercial establishments. Law 7527 does not cover or regulate hotel rooms or bungalows, car parking, or company housing for employees. The Civil Code regulates farms and tourism leases.
Brief history: Recent changes in Costa Rican landlord and tenant law
Law 7527 has been effective and enforceable since August 17, 1995. Before then, there was another law that did not fully cover many of the issues that arise in a tenant-landlord relationship. Case law helped to regulate many of the aspects and issues not covered by such legislation. No change is expected in the near future.