Costa Rica Real Estate – Fraud in National Registry.

In early November 2007 the real estate supplement of La Nación the main heading is Fraude Inmobiliario (Real Estate Fraud). As a Costa Rica Realtor I read a lot on fraud matters in newspapers, on websites, and heard only one direct story from a client fighting for over 8 years in court to get property back.

In the USA, “Real estate fraud has now firmly emerged on the FBI’s radar as the country’s fastest-growing white collar crime – all, in essence, polite forms of bank robbery.”

“If the downturn continues past 2007, experts say the implications for the economy could be dire.”Real estate fraud is going to make the S&L crash look like two cars in the parking lot that bumped into each other at five miles an hour,” predicts Ralph Roberts, the author of “Flipping Houses for Dummies,” in Warren, Mich.”

What is the Real Scope of the Real Estate Fraud Problem in Costa Rica?

For sure it is safer to buy and own property in Costa Rica than in other Central American countries. And the legal system offers a great foundation to property owners. Big or small problem, reality does not allow to wave away that fraud exists.

Here’s a summary of what I found in the Nacion:

The somewhat alarming article states that the National Registry has it’s hands tied in trying to protect real estate ownership rights. The institute can’t control nor prevent fraud. Actually they don’t have a system to prevent fraud as it does not take place within the Registry. This crime appears when a person is robbed illicitly of his/her property and presents a serious problem affecting the Registry. Since 2004 over 250 of these fraud reports have been filed.

How can a property illegally pass to another owner? In most fraudulent cases, a public notary, already deceived or part of the scam, modifies the registry data of a property by presenting false testimonies to modify a registered title. The property changes hands and the “new” owner can sell the property to a third party in good faith or, mortgage the property.

The National Registry claims that the real problem is the fraudulent notaries. The Registry only checks that paperwork is properly forwarded.

The National Direction of Notary Professionals is responsible for monitoring the 9,000 Notaries that work in Costa Rica however, they do not have the tools, the resources nor the logistical support to carry out this work.

This situation was the subject of an inter-institutional commission in which the Ministry of Justice, The National Direction of Notaries, the Costa Rican Institute of Notarial law, the college of lawyers, the College of Topographical engineers and the National Registry are seated.

The commission checks the “modus operandi” of various scams and measurements are taken to resolve the fraud problem. One of the actions taken is to check if registered property owners are among the living. Another one is that a property will be frozen when fraud is detected.

Taken measurements are not enough and if changes are dependent on politicians, fraud in real estate will be problem to deal with for quite some more years.

What Can You Do To Prevent a Real Estate Nightmare?

As a property owner you can do a simple title check online yourself at the National Registry website here.

Check this information regularly and consult your lawyer/notary whenever you notice a change in data.

When you are looking to buy a property, please take extra precautions dealing with following property characteristics (have property history thoroughly checked):

1. When the property is located in zones with high appreciation in real estate like Escazú, Curridabat, Santa Ana and coastal areas in Guanacaste.
2. Properties completely free of liens.
3. Properties with a very long clean history; p.e. belonging to the same person for decades
4. When a property looks abandoned or not taken care of. These properties would be “attractive” for fraud as the owners are not checking their property situation.

When you are victim of a scam, find a lawyer with experience in fraud cases. To file a lawsuit correctly is essential.

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Written by Bart ten Kate.

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.