Urban and Suburban Leasing Law (Law 7527)

Important Considerations

• What is leasing?

Leasing or rental happens when two parties are mutually obligated to temporarily grant use of something and pay a certain price for it. The party that grants use of the thing is called the landlord or lessor, and the party that pays the price is called the tenant or lessee. The price is called rent.

• When does a verbal agreement exist and how is rent payment proven?

In absence of a written contract, a verbal agreement and the characteristic features of a leasing relationship can be proven through all civil law methods. The receipt or proof of payment, issued by the landlord, will serve as proof of existence of the leasing agreement and rent price, when clearly stated in said document.

• When renting a condominium, what are the tenant’s rights?

The tenant must exercise his or her right to use the property or thing with strict adherence to faculties and obligations established by the Horizontal Property Law and the condominium’s set of rules. Also, he or she must abide by the general agreements set in the owners’ assembly, as set by the landlord in the contract.

Both parties can agree that the expenses concerning the leased property or its accessories will be covered by the tenant and be absorbed in rent.
The tenant has a right to participate, but not vote in the owners’ assemblies’ discussions. If the landlord is absent, he or she may authorize the tenant, in writing, to vote in directly related aspects to the use of the house or property in rent and the services related to it.

• How is the price of rent adjusted?

In housing rentals, the price is adjusted at the end of each year under contract. The adjustment shall be governed under these rules, unless a more favorable agreement for the tenant is reached:

a) When the accumulated inflation rate of the prior twelve months before each year of contract is equal or less than ten per cent (10%), the landlord is entitled to adjust the rent price in an equal or lesser percentage than said inflation rate. Inflation will be calculated according to the official consumer price index, from the National Institute of Statistics and Census (INEC).
b) When the accumulated inflation rate of the prior twelve months before each year of contract is more than ten per cent (10%), the Housing Ministry (Ministerio de Vivienda y Asentamientos Humanos) will establish the increase percentage that will apply to house leasing, based on the development of the construction sector and a balance of needs and services between landlord and tenant, as long as it isn’t less than 10% or more than the annual inflation rate.

The adjustment will go into effect the next payment period after the landlord has notified the tenant, along with an INEC certification, or a true copy of its publication in the official newspaper. If the tenant does not agree with the adjustment, judicially, he or she can pay the previous price, but the discharge payment shall be subject to the result of the eviction process initiated by the landlord. Any readjustments higher than what is stated in this article will be considered null.

An agreement between both parties that results in a lower price adjustment than the one expressed in INEC’s official consumer price index is valid. When rent price is expressed in foreign currency, the rent amount will remain unchanged during the whole contract term, with no right to readjustments.

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Ley de arrendamiento en Costa Rica