Third in a three-part series on the national cadastre project
For all of the country’s abundant charms, things can get pretty ugly in Costa Rica – especially when buying property. For foreigners caught in land swindles and fraudulent property schemes, the dream of owning their own little slice of Tiquicia can become a nightmare of drawn-out legal wrangling in Costa Rican courts.
It doesn’t take much to steal property here – corrupt lawyers and notaries can create false property transfers and turn over your land to another individual. Notaries are the gatekeepers of properties registered in Costa Rica’s National Registry. Anyone who wants to make a property transfer has to go through one.
In another scheme, a fraudster creates a false identification document to dupe a notary into transferring somebody else’s land for them. In both cases, criminals can then turn around and sell off their ill-gotten lands to another unsuspecting victim.
Roger Peterson, a real estate lawyer and notary in Escazú, said cases of property theft are hard to prove, costly to fight and tough to win. He said he’s seen three cases of these types of property frauds in the last 4 to 5 years.
“And that’s where people get victimized the second time,” said Peterson, who writes about Costa Rican law on his website CostaRicaLaw.com. “Because the justice system is unable to resolve these cases quickly, they can drag out for years.”
Peterson suspects rings of land swindlers, often comprised of a number of lawyers, real estate brokers and notaries, run these schemes regularly in the country.
The Cadastre and Registry Regularization Project is an attempt by the Costa Rican government to begin addressing issues with property and land ownership in Costa Rica and to fortify the legal rights of landowners. The project involves mapping of every property in public and privately held lands in the country, and integrating a database of physical property descriptions with the National Registry’s system of land titles and deeds. In the long run, this project can help protect potential land buyers in Costa Rica by offering them an official, go-to reference for all the legal and physical information about a property.
But that’s preventive medicine. The project won’t solve the problem of corrupt notaries and the immense power they have to control property titles.
“It is a matter of public faith,” Peterson said. “Notaries, and to be a notary in Costa Rica you have to be a lawyer, but notaries have public faith, which means that when a notary sends a deed to the National Registry, he is swearing that the people named on the deed signed his protocol book.”
That matter of “public faith” means the National Registry has to accept the notary’s declaration as true and legally binding.
“It’s very hard to prove a case against a notary,” Peterson said. “And to get your property back, depending on the complexity of the case, can run you $20,000 $25,000 or $35,000.”
Steve Katz knows what Peterson is talking about. In 2005, he found the property he wanted to retire to in the mountains around the Central Valley. Since 2006, he has been fighting to recover the property or some of the almost $80,000 dollars he paid to a real estate broker who, Katz alleges, hid the fact that the property had a $60,000 mortgage on it. Katz is accusing the broker of hiding information about the mortgage from him and unlawfully declaring Katz in breach of a sales contract, after Katz had already paid about $79,000 on the property.
A judge will review the criminal complaint in court in San José on Friday.
“It’s frustrating the way the system is,” he said. “I thought there would be some kind of justice within two years or so of filing the case, but it’s taken five and a half years to even get a judge to hear the criminal charges.”
Katz said he’s probably spent another $13,000 in lawyer’s fees and other expenses just getting the case to this point.
Peterson said there’s no easy solutions for someone caught up in any type of land scheme. To avoid problems on the front end of land transactions, like Katz encountered, Peterson recommends “extreme due diligence” when thinking about buying a property in Costa Rica. That means checking titles on the property for at least 10 to 15 years back and having an attorney represent you in any transaction “before you shell out one dime.”
For people who already own property, he recommends staying vigilant about checking titles regularly at the National Registry. He said it is also possible to ask the National Registry to put a warning on a property title to avoid unauthorized transfers. Some private companies, including Private Property Registry (www.propiedadsegura.com) offer registry-monitoring services to automatically check the daily status of a property in the National Registry.
“This land fraud is something that has to stop if we want to instill confidence in investing in Costa Rica,” Peterson said, adding, “especially now when the real estate market is down.”
