Commercial rent increase costa rica | Landager

Governed by the Ley General de Arrendamientos Urbanos y Suburbanos (Law No. 7527), which became effective on 17 August 1995, commercial rent increases represent the biggest area of "contractual freedom" in the Costa Rican rental market. While residential landlords are tied to the inflation cap (IPC) under Article 67, commercial property owners (including industrial and professional uses) are governed by Article 68, which allows the parties to agree on any increase structure. Most sophisticated commercial tenants in Costa Rica will push for a "ceiling" on increases. Common structures include the "Greater of IPC or X%" or a fixed step-up every year. In these cases, it is vital to specify that the rent increase is valid even in foreign currency. Clear language stating "This is a commercial lease governed by the contractual freedom of Article 68" can save you from a legal headache later.

Commercial Rent Escalations and Strategy

In the commercial sector, the 10% inflation cap found in Article 67 does not apply. Under Article 68, you have the freedom to design a rent structure that works for your business model. However, if the contract is silent on the increase rate, Article 68 stipulates that the rent will adjust annually by a percentage equal to the cumulative inflation (IPC) of the previous 12 months.

Fixed vs. Variable Increases

Commercial leases often use fixed step-ups (e.g., "Rent increases by 5% every year"). This provides predictability for both the landlord's projections and the tenant's budget. Another common method is tying the increase to the US CPI or the Libor/SOFR rates if the lease is a complex financial arrangement. While Article 18 generally suggests foreign currency leases remain fixed, Article 68 allows commercial parties to validly contract annual percentage increases in USD leases.

CAM (Common Area Maintenance) Adjustments

In a shopping center or office park, the "CAM fee" is usually more volatile than the base rent. It should be disclosed that this fee will change based on actual electricity, security, and cleaning costs. Most commercial leases allow the landlord to adjust this monthly or quarterly based on these "pass-through" expenses.

Right of First Refusal and Renewals

Commercial tenants often invest heavily in their location (the "Derecho de Llave"). Under Law 7527 (Articles 70 & 71), all commercial leases have a mandatory minimum term of 3 years. The lease automatically renews for an additional 3-year period under the same conditions—including the same rent increase formula—unless the landlord provides notice of non-renewal 3 months in advance based on specific legal grounds (such as reconstruction or personal use). A "market reset" of the rent cannot be forced unilaterally by the landlord upon renewal; it requires mutual agreement or the signing of a new contract at the end of the term.

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