Choosing the Right Power of Attorney Is Key

February 15, 2008
Whether you are acquiring land or already have a real estate investment in Costa Rica, if you do not live in the country or spend considerable time abroad, you can establish power of attorney to allow an agent of your choice to take broad or limited actions related to your property on your behalf.
This can facilitate the actual transfer of property (which is very formal and would otherwise require your presence to sign, since transfer documents cannot be sent for execution) as well as post-purchase administration of things such as utilities hook-up, leases, construction permits, etc.
Whether you are a citizen, a resident or a nonresident foreigner, you can purchase property here through power of attorney, with the acquisition either in your personal name or that of a corporation used to hold the land.
In Costa Rica, powers of attorney can be special (especiales), general (generales, which in this country means for management purposes) or full (generalísimos).
Special powers of attorney are established, as their name suggests, for a specific action or series of actions; if they are too broad, they become invalid and are easily challenged.
In most cases, this type of power of attorney does not have to be entered into the protocolo book of a Costa Rican notary public, and never has to be registered at the Public Registry; thus it is usually a more expeditious alternative when fast action is required.
However, special powers of attorney may be treated with suspicion, as their less formal nature can lend itself to fraudulent actions.
Though legally, if drafted correctly and if the applicable formalities are followed, they should be as good as any other type of power of attorney, from a practical standpoint they are often not effective.
I usually try to avoid general (for management purposes) powers of attorney, since their implementation is much more formal and requires registration at the Public Registry.
Also, the authorities they grant to the appointees can be confusing and not fully understood by third parties.
Full powers of attorney are also registered at the Public Registry. In the case of a company, they can be granted either by a legal representative of the company (already registered in a previous action) with the authority to do so appearing before a Costa Rican notary public; or through a shareholders’ meeting in which a resolution is passed granting the power of attorney. In the case of a person, he or she must appear before a notary public.
Though full powers of attorney require more formalities and time to be established, they have the advantage of being clearer, more credible and widely accepted as instruments for representation. Once full powers of attorney are registered, any notary public or the Public Registry itself can issue certificates acknowledging the powers and their scope.
Full powers of attorney do not have to be absolute, as their name might suggest to some. Depending on how much trust the granter affords the appointee, they can be limited in many ways: establishing a maximum value for transactions; prohibiting certain actions, such as selling or mortgaging the land or offering it as security; and requiring double or more signatures in certain cases.
All powers of attorney can be revoked or modified by the granter or, in the case of companies, any legal representative with the authority to do so. Nevertheless, cancellations of special powers of attorney, because of their more informal nature (they need not be recorded in the Public Registry), are less evident for third parties; thus, when special powers of attorney are established for actions that will not expire with time or that are particularly sensitive, it is recommendable to specify an expiration date.
As a rule of thumb, the specifics of the property and what will be done with it in the  short to medium term must be taken into account and carefully reviewed in order to establish the right kind of power of attorney and limitations for each particular case.
For more legal advice, contact Lang & Asociados at 204-7871 or visit www.langcr.com.
 
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