By Garland M. Baker
Special to A.M. Costa Rica
Most people are unaware of the changes to the property registration laws at the Registro Nacional or National Registry which were modified last year. However, these changes have opened the doors to shysters preying on the innocent.
Costa Rica’s registry laws are over 100 years old. This means they were written before computers existed. Because of this, no registration was ever deleted even if it was full of mistakes.
To fix this, on Nov. 22, 1998, a corrective measure was passed by the Asamblea Nacional. Everyone was given up to five years to correct the property registration errors, filling up the National Registry’s data banks. If they did not, the inscription and placement as a public record would be lost forever. The five years was up Nov. 22.
Now the incorrect filings are purged automatically by the registry’s computers after one year. However, if the error is taxes due on the property transfer or the document has the incorrect amount of fiscal stamps affixed to it, the record will be deleted after three months.
Filed paperwork can be wrong for the simplest of reasons: The text contains misspelling or transposition, the wrong glue was used to paste the bank receipts to the forms and they are loose, the papers are in the wrong order, a document is missing a fiscal stamp worth less than a cent, and the list goes on.
Once a document transferring a property is not registered and is canceled, the property reverts back to its original state and owner. This is when the unscrupulous jump into the game.
They file false liens or other paperwork, like simple but powerful letras, which means letters of credit in Costa Rica, against the property. Letras can be executed quickly, catching honest people off guard. Other scams include selling the property again to someone else or just not abiding by the original sale terms.
There are things that can be done to protect an investment, even if it is removed from the public record, but these legal procedures are little known by the legal community or even by the best of attorneys. Also, the statute of limitations is very short to correct an error, usually three months in most cases.
The worst part is most of these property transfer errors are either premeditated or due to sheer negligence. Attorneys in Costa Rica are notorious for playing with their clients money and filing paperwork months after real estate property closings. They also do not follow up to see if everything is registered correctly.
To protect property, owners need to be proactive and not reactive in buying and selling property in this country. They should learn how to use the great Internet interface provided by the National Registry.
They should check their property transfer often. If there are errors, they should bug their attorney until they are fixed. If a property owner is unhappy with a professional, they can make an official complaint to the Colegio de Abogados, the organization policing attorneys and their practices.