VZCZCXYZ0001
RR RUEHWEB

DE RUEHMU #1265/01 1352228
ZNR UUUUU ZZH
R 152228Z MAY 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 0219
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MANAGUA 001265 
 
SIPDIS 
 
STATE FOR WHA/CEN GSCHIFFER, EB/IFD/OIA, L/CID AND WHA/EPSC 
TREASURY FOR INL MDONOVAN AND GCHRISTOPOLUS, OWH/ASCHWARTZMAN 
STATE PASS TO USTR 
 
USDOC FOR 4332/ITA/MAC/WH/MSIEGLEMAN 
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV ECON EWWT USTR KIDE NU
SUBJECT: NICARAGUA: NICARAGUA'S COASTAL LAND LEGISLATION 
 
¶1. (SBU) SUMMARY:  In the last decade, there has been a significant 
increase in Nicaraguan beachfront property investments, including 
many investments by American citizens.  Land laws do not 
discriminate between foreign and domestic owners, but investor 
uncertainty in the face of a history of tangled land tenure and 
questionable leasing and sub-leasing practices suggests the need for 
clarity in legislation.  A recent effort to regulate beachfront 
property, known as the Coastal Bill (Ley de Costas), was defeated in 
the National Assembly in mid 2006 after intense lobbying by the 
tourism and construction sectors.  Although no revised bill is 
likely to pass soon, the National Assembly continues to debate 
issues related to coastal law.  END SUMMARY. 
 
¶2. (U) In the last decade, there has been a significant increase in 
Nicaraguan beachfront property investments, including many 
investments by American citizens.  Contributing to what some labeled 
"a boom" during the past few years has been a major increase in 
property values in neighboring Costa Rica; Nicaraguan land prices 
seem attractively low by comparison.  Most investments and 
developments have centered around Tola and San Juan del Sur in the 
southern Pacific Department of Rivas. 
 
¶3. (SBU) Property investment in Nicaragua has been far from worry 
free.  A history of tangled land tenure was exacerbated by the 1980s 
Sandinista-era confiscations, subsequent land invasions, and 
competing legal claims in the 1990s and new millennium. 
Complicating the situation has been more than a century of improper 
mapping, registration irregularities, as well as a variety of 
leasing anomalies.  Accusations of wrongful behavior in real estate 
transactions are rife; corrupt municipal officials only make matters 
worse.  The result is a climate of insecurity for the average U.S. 
investor. 
 
What the Law Says 
----------------- 
 
¶4. (U) The 1917 Agrarian Law is the primary legislation governing 
beachfront property ownership.  All titles and leases issued after 
that date abide by this law.  The legislation states that property 
situated within two kilometers of an ocean and/or 800 meters from a 
lake or river, that was not privately owned in 1917 (verified by a 
registered title), belongs to the state and cannot be sold.  Common 
practice is to measure distances from the high tide mark.  For the 
San Juan River and protected areas, such as natural parks, the limit 
is 3,500 meters.  As no laws are retroactive in Nicaragua, all 
titles issued prior to 1917 were unaffected.  They are, therefore, 
perfectly valid and can be sold without restriction.  In addition to 
the 1917 Agrarian law, municipal laws proscribe construction located 
within the first 100 meters from high tide.  There is no difference 
in the treatment of foreigners or locals when it comes to land 
ownership or leases. 
 
¶5. (U) Municipalities are responsible for managing land assigned to 
the state by the 1917 Agrarian Law.  Private parties may contract 
land use leases via grants that are available for up to 99 years. 
This represents the conventional means of gaining possession of the 
land.  The leases constitute a legally binding contract between an 
individual and the municipality.  Any construction on the property 
belongs to the party responsible for building it.  The lease and 
improvements on the land can be registered in the local Public 
Registry for Real Estate Property to provide more legal certainty. 
Sub-leasing is prohibited by Nicaraguan law, unless approved by the 
landlord.  Therefore, legal transfers from one investor to another 
require a reassignment of rights (Cesisn de Derechos) in which all 
lease rights are transferred to the new investor.  One of the main 
problems in dealing with municipalities has been corruption.  For a 
price, some municipal officials will issue multiple leases on the 
same property, and illegally create municipal leases for land titled 
before 1917. 
 
New Regulations 
--------------- 
 
¶6. (U) The most recent effort to regulate beachfront property is the 
Coastal Bill (Ley de Costas) introduced to the National Assembly in 
¶2005.  This legislation would have increased the prohibition on 
construction from 100 meters to 200 meters at high tide.  Lease 
terms would be limited to a maximum of 25 years, instead of 99 
years, and there would be no automatic renewals.  After strenuous 
lobbying by tourism and construction companies, voting on the bill 
in the National Assembly was postponed in mid-2006 until further 
notice. 

¶7. (U) The idea of a comprehensive law regulating coastal lands has 
resurfaced in recent months as a reaction against private developers 
fencing in large tracts of beachfront land to obstruct public 
access.  The Nicaraguan constitution states that all beaches should 
be open to the public.  Although no revised bill is likely to pass 
soon, the National Assembly continues to debate issues related to 
coastal law. 
 
Comment 
------- 
 
¶7. (SBU) Given U.S. and foreign investment along the coast, 
especially for vacation homes, a new coastal law will likely attract 
considerable attention overseas.  While clarification of the law 
governing coastal lands is needed, there is no guarantee that new 
legislation will fulfill this purpose.  It may well be that, as has 
often been the case in Nicaragua, party politics and personal 
interests will determine the essential content of the law. 
 
TRIVELLI