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When Laws Collide, Projects Can Be Big Losers

by Garland M Baker on January 16, 2006

Condo easement situation is example

When laws collide, the fallout can hurt the little guy — or in this case, keep the little guy from getting full title to his new condo.

A simple pyramid can explain the legal system in Costa Rica. Sources are the Constitution, legislated laws, presidential and executive decrees along with the rules and regulations that give instructions on how to apply law.

The order of importance of law is from top to bottom. The Constitution is the supreme law, specific laws carry more weight than presidential decrees, and rules are just regulations on applying a law in different situations.

Costa Rican law is always under the watchful eye of the world. Treaties with other nations can change law in the country but only after an evolutionary process where individuals have to fight for specific rights in an international court.

Some laws and rules are confusing, and others clash. One example important to coastal developers is the Reglamento a la Ley Reguladora de la Propiedad en Condominio, or the Regulation to the Law of Condominium Property.

Article 43 of the reglamento states that a condominium built with access via an easement to public roads is legal. However, the people who approve the paperwork at the Instituto Nacional de Vivienda y Urbanismo or the National Institute of Housing and Urbanism will not sign plans for condominium projects that do not sit right next to a public road.

Developers rushed to develop master plans for incredible condo projects up and down the Pacific coast when the regulation to the condo law was published in La Gaceta at the beginning of last year, only to find their plans quashed by the institute.

The Instituto Nacional de Vivienda says the regulation to the condominium law is illegal and bureaucrats there want no part of it. Their position is that the rule conflicts with Article 40 of the Ley De Planificacion Urbana, Law of Urban Planning. This article states the following:

“Subdividing lots outside the city limits and all urban development will donate all roads corresponding to communal facilities to the municipality making them public.”

This Costa Rican battle between regulatory agencies in an election period has caught developers with their proverbial pants at their knees. Many of them have taken significant deposits from buyers promising them a beautiful condo on a hilltop with access via an easement as part of the condominium plan. Buyers may get something less than full title to their property when it is finished because the project will not qualify under the condominium law.

The dilemma is that the Urban Planning Law contemplated mostly houses on lots in urban developments. Written 30 years ago, it did not envision condo towers overlooking the beautiful oceans of Costa Rica. The law of Property in Condominium is a modern law for the Costa Rica of today.

The old cronies that make the decisions at the Instituto Nacional de Vivienda do not know who the next President will be. Their jobs are on the line. They do not want to take a position one way or the other.

The members of the current political administration will surely not solve this predicament. They are on their way out the door. Each of the new parties have their own philosophies for the country, ranging from “Let’s kick all the foreigners out of Costa Rica” to “Let’s sell all our beaches to the foreigners and make ourselves rich.”

What will really happen is something in between. What does this mean for the condo tower developers? Probably something in between, too. It is the way of the country. Never really white or black, always in the “gray area.”

Some lawyers say the whole discourse is unconstitutional. The constitutional court interprets Article 28 of the Constitution to mean everything not expressly forbidden as permitted. There is no law forbidding private access to condominiums. Article 28 also states private matters that do not affect moral or public order are out of the action of law. These both are interesting constitutional points.

Developers are scurrying to find solutions to this legal problem as they are with the freezing of beach concessions.

One thing for sure, nothing will happen on either front until after the election and even then, there is always a “honeymoon” period that needs to wear off before any new President gets down to solving the modern day problems of the country.

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