Acquisition of Property along the Nicaraguan Border

Apr 15, 2016 | English Blog

Over the last couple of years, Nicaragua has become an important destination for many foreigners who visit, not only with the intention of vacationing in Nicaragua but also to purchase property to be used either as a residence or investment.

Often times, foreigners are unaware of our legislation and the limitations this may impose on them when acquiring property within our territory. We will be addressing this important issue in this article, in particular the provisions contained in Law 749, Law Regime Border law, published in La Gaceta Diario Oficial No. 244 of December 13, 2010 and its regulations Decree 06-2011.

The aforementioned Law 749, is intended to establish a special legal regime on the border, land, sea and air territory, to guarantee the sovereignty, independence, territorial integrity, internal security, environmental protection and natural resources as well as inalienable public property and allow the impulse and implementation of a comprehensive development policy, and also rule the acquisition of properties in this border territory and imposes limitations for such acquisition. This law is of public order and national interest, and considered an integral part of the Political Security and National Defense.

According to Law 749 border territory has three classifications of border areas: 1. Border Area of Development and Integration, being that which ranges from the conventional border limit and fifteen kilometers into the country; 2. border Area of security that ranges from the conventional border limit and five kilometers into the national territory and 3. Special Border Zone Protection being that which that ranges from the conventional border limit and fifteen kilometers into the national territory, which are equally protected areas, indigenous peoples, ethnic communities and Afro-descendants, etc. These areas according to the Law are compatible, and can belong to more than one category at the same time.

The Law provides that, no person whether natural or legal can acquire by prescription any real right over a property of the State and municipalities within those areas established as “border territory”, and those properties shall be dedicated to public service and on these goods may only be granted concessions for reasons of social or public interest, for which it must comply with the process that the above mentioned law indicates.

According to the law, in the area of border security they are only transferable, either for free or through payment, a real estate of private domain located in the area of border security, and this transmission can be carried out only for Nicaraguans, as long as the property is registered or reinscribed in the corresponding Public Registry.

In the case of foreign persons whether natural or legal, the law clearly states that they cannot in fact or law, acquire real estate in the area of border security under any title and grants conces- sions because of social or public interest as an exception.

It is also important to note that regarding the acquisition of property in the Area Border Security the Law goes further and prohibits that national companies with registered shares with Nicaraguan partners, duly registered endorse or transfer their shares to foreigners, this is done in order to guarantee that a company cannot be used as a vehicle for a foreigner to purchase a property within the border Security area.

In addition the Law obligates the Public Land Registry to not register the deeds in which intends to transfer, any kind of real estate that are in border territory according to the prohibitions in the law, also the law provides that any transfer of any rights in contravention of the provisions con- tained in the law 749 is null. Given the above, the Supreme Court issued a circular on February 6, 2013 recalling the mandate to Public Land Registries.

Therefore, it is important for foreigners and their advisors to take this law into account when purchasing real estate in order to make sure that the property being acquired is not within the aforementioned areas, since any property located within those areas cannot be purchased by a foreigner.