During the early twentieth century, Costa Rica leasing law heavily favored tenants over landlords. The laws still provide favor to tenant rights; however, modern legislation has reduced the gap between tenant and landlord rights.

Original Costa Rica Leasing Legislation
Ley # 6: Ley de Subsistencias e Inquilinato (1939) was the first law which governed leasing in Costa Rica and was designed to protect tenant rights during a time of global economic uncertainty with war waging throughout the world. The law allowed tenants to possess a “derecho de llave” or “key right” which was a right for compensation used for commercial properties in which the tenant could claim indemnification for loss of this intangible right which was gained by the tenants occupation and activity in the property. In addition, many tenants would sell this “key right” to new tenants in cases where they operated a business. The owner would be in a difficult position if he/she needed to terminate the contract in order to sell the property, rebuild it, or remodel. In some cases, “key rights” were sold for large sums of money.

An Attempt for New Legislation
Legislation governing leasing rights remained the same for many years until in the late ‘80s when legislators began to respond to the need to update the rights of all parties involved. In 1988, legislators attempted to update leasing laws and passed Ley No 7101 Ley de Inquilinato which was deemed to be unconstitutional by the Sala IV (Costa Rica’s Supreme Court) in 1990. The Constitutional Court based its decision on several issues including the form of passage by the National Assembly and language in several articles of the law. Local leasing laws returned to the original law and legislators went back to the drawing board proposing a successful new law in 1995 which is the current law of the land governing leasing. Continue reading →