The issue of real estate theft has been occupying headlines for several years in Costa Rica.
Though the fear of losing your land cannot be considered unfounded in the face of this reality, it is important to state that these cases constitute a very small percentage in the whole.
Of course, if you narrow it down by category, such as land owned by foreign citizens – especially if the land has seen no movement for a long period of time – the odds are higher, but, in my opinion, still not so high as to justify ruling out investing in real estate in Costa Rica.
What real estate owners and purchasers need to know is that the risk exists and, though low in probability, has to be taken seriously, as do the measures to protect yourself.
If you already own property in Costa Rica, you should check that ownership was recorded properly and that it remains so. An attorney can easily verify this. After this step has been completed, and assuming everything is in order, it is recommendable to periodically check the property section of the National Registry, which is available online at www.registronacional.go.cr, and confirm that there have been no transfers – registered or filed – on your land.
The attorney that performed the initial search can easily explain how to perform this verification and what to look for (mainly, the ownership and the annotations lines on the online report). Although the site is in Spanish only, once you know what you are doing and what you are looking for, it should be an easy task.
In addition to the services of an attorney, landowners have a new option to protect themselves against property fraud. The recently launched Private Property Registry carries out nightly checks of National Registry activity for its customers, notifies them immediately of requests for changes and can dispute registry changes on behalf of its clients (TT, Aug. 31).
If you have become the unfortunate victim of land theft, all is not lost. The biggest problem in such cases is that in most situations there are at least two parties who acted in good faith and got involved in real estate transactions trusting the country’s property system and National Registry: the original owner (in this case, the one who suffered the theft) who held his land under a system he or she considered safe, and the current owner,who purchased based on title searches that determined the true ownership of the seller.
The above situation puts the court authorities that rule on this type of case in a controversial situation: which of the two parties should be favored? The answer is not always consistent, and case law has been conflictive with regard to this subject, though it generally leans toward protection of the original owner, especially in criminal courts.
What is clear is that the state and its property registration system have shown to be vulnerable in these cases and, theoretically, the losing party should be able to sue the state for damages resulting from flaws in the system.
The good news is that in these cases the fraudulent actions of the criminals stealing property are usually documented and even recorded as public documents. This makes it somewhat easier to obtain evidence and prove that one has been the victim of fraud.
Of course, not all cases are the same, but this is what usually happens.
For a landowner who has suffered property theft, there are many mechanisms that can be put into action that in most cases are more effective the sooner the problem has been detected.
National Registry annotations and property freezes are the first line of action, and are usually a quick way to stop further movements on the land. However, these are only precautionary measures to avoid further damages to the victim and to third parties, as well as to secure the property; to recover the property, criminal and civil filings are necessary.
If you are not yet a landowner but are considering purchasing a piece of land, a thorough title search should be sufficient to rule out the most common forms of property fraud.
Your search, in addition to typical titlesearch items such as ownership, liens, encumbrances and characteristics of the land, should include special attention to the historical patterns on the piece of land in question, specifically a chain of property transfers and/ or securities, or a combination thereof, often within a short period of time and not necessarily recent, starting with the title being transferred or in some other form compromised by a foreign party or foreign-controlled company. This type of pattern is usually put in place by the perpetrators to create a situation in which the fraud is diluted within the chain, ending up with a good-faith party.
This is not to say that all historical transactions following the abovementioned pattern are fraudulent, but a red flag must be raised and further confirmations must be made if such a pattern is found.
In conclusion, the issue of property theft in Costa Rica should not be a deterrent to purchasing real estate. Though no one can deny it occurs, statistically it does not affect a significant number of properties. Nevertheless, both landowners and prospective purchasers must be aware of the situation and take specific actions to reduce their exposure to risk.
For more legal advice, contact Lang & Asociados at 204-7871 or visit www.langcr.com.