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Isn’t there only one legally authorized insurance company in Costa Rica?
According to the CR constitution the government guarantees the accuracy of a certified copy of a property title extract, issued by the Registry.
The particular law that states this is Article 73 of the Public Registry Regulation. (Reglamento del Registro Publico, Artículo 73, Responsabilidad del Registro por la información contenida en las certificaciones. El Registro dará fe de la información contenida en una certificación hasta el momento de su expedición. Las variaciones ocurridas con posterioridad a la hora de su expedición no acarrearán responsabilidad alguna al Registro).If a Notary/Lawyer conducts the correct due diligence for the property title research, no Title Insurance would be necessary, as the true state of a properties history will be revealed.
I have heard that if a Notary/Lawyer is negligent in such a title search, there is an insurance fund administered by the Dirrecion Nacional Notariado (Notary College), which all Notaries are bound to pay into, which would pay proven claims for negligence arising in this instance.
In case the seller attorney is conducting fraud, the buyer should have their attorney also do a title investigation. Also, follow up not only that the deed has been presented to the registry, but also that it was recorded. If taxes haven’t been paid or not enough fees collected with the deed, it will not get recorded, even though it was presented for recording.
I was wondering for anyone who did use Stewart title for example, do they really provide title insurance against fraud, like back in the states, or are they just verifying what the attorney has done and give you a piece of mind for the fee. What does their policy cover ?
Title Insurance in Costa Rica does not cover acts of fraud. The Notary who handles the transfer of the title, is charged with the conduct of the necessary due diligence to determine the state of the property title. The Costa Rica Notary Directorate manages an insurance fund, paid into by all practising Notaties, which is used to pay proven claims of negilgence arising from these circumstances. A Notary is personally liable for any shortfall, in settling such a claim. About the only thing Title Insurance is good for, is encroachment/lot boundary problems arising from a faulty land survey. If a person had any doubts about the reliability of an existing survey, a new one could be obtained from a professional land survey for less than $500.00 US, for a regular building lot.
Ref. Title co. information.
Tomasino, the question I have with your responce is this… you begin the paragraph Ïf an attorney……
and ¨I have heard……First I have been a Realtor for 30 plus years in the U.S. and in Texas one almost always get a title policy, infact you can not get a new loan unless you get one covering the mortgage company and yourself. Having said that I think when a property is traded again and again and a title policy must be bought, that, is stupid. They could charge a much smaller fee than the sliding scale that costs $1000 up for updating the policys. But of course they are in the business of making big bucks so that will never fly. Unless the current owner/seller has messed up the title Or if someone has unknowing put a lein on the property you should be good to go. However I have seen countless times when the Seller had no idea there had been a lien placed on the property and the title company saved the day.
NOW the question really is in Costa Rica if there is a goof of ANY kind including fraud is not the purpose of the title insurance to pay off the person whom they have charged a fee for a Guarenteed title. They are HUGE companies making big bucks and you do not have to mess with if an Attorney overlooked something…something was or was not filed just before closing etc.
Somewhere it was suggested on this site that someone Maybe Scott THE MAN could contact Stewart title or whom ever and get real quotes as to what they do and what it means to us, the buyers. That would answer this line for good.
Terry From Costa RicaSince I am not a legal expert my original questions were presented to open discussion about Title Insurance in CR. I never give legal advice other than to contact an experienced attorney who is knowledgeable in his or hers legal specialty. I have received responses from legal experts who have offered the following information however do not want to be quoted. Apparently the Title Insurance companies carry a lot of weight in this town.
1. The CR Government does guarantee the accuracy of a certified copy of a property title extract, issued by the Registry.
The particular law that states this is Article 73 of the Public Registry Regulation. (Reglamento del Registro Publico, Artículo 73, Responsabilidad del Registro por la información contenida en las certificaciones. El Registro dará fe de la información contenida en una certificación hasta el momento de su expedición. Las variaciones ocurridas con posterioridad a la hora de su expedición no acarrearán responsabilidad alguna al Registro).
2. The law surrounding the registration of property titles in the National Registry, is based upon the presumption of accuracy of what is registered, by third parties relying on the Registry process. This principal is known as “legitimacion registral”. Article 449 of the Civil Code (ARTÍCULO 449.- El Registro es público y puede ser consultado por cualquier persona. Corresponde a la Dirección de cada Registro determinar la forma y los medios en que la información puede ser consultada, sin riesgo de adulterarse, perderse ni deteriorarse).
3. It has been interpreted by the Courts to mean that there is a presumption of accuracy of the Public Registry’s records. Likewise, in Article 34 of the Public Registry Regulation, the qualifying process in accepting Registry information is such, that only title information which is “valid and exact” in nature is accepted for registration purposes, by the Public Registry. (Artículo 34.—La Calificación. Control de Legalidad. La función Calificadora consiste en realizar un examen previo y la verificación de los títulos que se presentan para su registración, con el objeto de que se registren únicamente los títulos válidos y perfectos, porque los asientos deben ser exactos y concordantes con la realidad jurídica que de ellos se tiende. La calificación de los títulos consiste en el examen, censura, o comprobación que de la legalidad de los títulos presentados debe hacer el Registrador antes de proceder a la inscripción, con la facultad de suspender o denegar los que no se ajustan a las disposiciones de nuestro ordenamiento jurídico. Al momento de calificar, el funcionario asignado al efecto se atendrá tan solo a lo que resulte del título y en general a toda la información que conste en el Registro y sus resoluciones no impedirán ni prejuzgarán sobre la validez de éste, o de la obligación que contenga)
4. If a Notary/Lawyer conducts the correct due diligence for the property title research, no Title Insurance is necessary, as the true state of affairs will be revealed.
5. Any issue arising involving an irregularity with the title, can be dealt with by the Notary/Lawyer involved prior to a purchase of the property completing, or alternatively, the purchase offer can be rescinded.
6. If the Notary/Lawyer is negligent in such a title search, there is an insurance fund administered by the Dirrecion Nacional Notariado (Notary College), which all Notaries are bound to pay into, which would pay proven claims for negligence arising in this instance.Here is a copy of a article written by Garland Baker on Title Insurance. Thought it may be of help for some of you. One piece of advise he gave me is don’t buy title insurance unless you want to throw your money away. I was already in the process of getting insurance through Stewart Title but decided against it. One question to ask is what has title insurance done for anyone on CR? Has it protected anyone in the past? If the answer is no then you have your answer
11/27/06
Categories: Property and Real Estate, Property Protection
Title Insurance Here Can Cause MisunderstandingsSkeptic’s view of title insurance – an insurance policy stating not allowed, not covered, no way, no how
By Garland M. Baker
Special to A.M. Costa RicaIs title insurance legal in Costa Rica?
An Instituto Nacional de Seguros ruling Sept. 29 says that title insurance was not legal in this country but that now it is and has been since July of 1997. However, insurance officials say the legality could change in the future.
The decree from the legal department of the insurance monopoly explains title insurance is not insurance but a guarantee or a bond. This finding is a flip flop of the insurance monopoly’s last ruling in 1976 that said title insurance is an insurance and that no company in Costa Rica can sell it except for the monopoly known as INS.
The national insurance company became a monopoly with law No. 12 of Oct. 30, 1924. Only INS can sell insurance.
INS further stated that title insurance is an Anglo-Saxon creation and is not necessary in Latin America or Costa Rica because Roman law governs Latin countries. According to INS, the Registro Nacional and licensed public notaries make property transactions safer than in the Anglo world like the United States.
In 1997, a representative of a Stewart Title Guarantee Co. asked INS for a new analysis because the company wanted to sell a product called “Guaranty of title for land located in the territory of the Republic of Costa Rica.”
The legal department of INS ruled in a decree dated July 30, 1997, that a title guarantee is not regulated by the monopoly.
The legal opinion said Article One of the Law of Fidelity Insurance of 1931 precludes fidelity guarantees, also referred to as fidelity insurance, from the insurance monopoly.
In other words, warranties and guarantees of all types are insurance but excluded by definition from the domain of the national insurance monopoly.
The fine print goes on to explain that a title guarantee is really a bond of fulfillment and not an indemnification.
Most people in Costa Rica believe title insurance is an indemnification. This is incorrect because indemnifications cover unknown futures losses where title insurance is to cover something from the past.
The cornerstone of title insurance in the United States is the chain-of-title. Chain-of-title means the history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Different variations of title insurance exist around the world. However, it is principally a product developed and sold in the United States. Title insurance protects an owner or a lender against a financial loss in real property due to title defects and other issues.
Title insurance gets a bad rap in the United States because creditors require it to protect lending interests and force borrowers to purchase it even if they do not want it. Many believe it is overpriced.
Legal regulators criticize the market because it is full of commission schemes and kickbacks. The industry mimics other business structures paying high commission to brokers and/or resellers. Affiliated business arrangements attempt to legitimize kickbacks or commissions to brokers, real estate agencies and attorneys.
Affiliated business arrangements exist in Costa Rica too, and that is why almost everyone is hit with the “buy title insurance” spiel when purchasing property here.
In Costa Rica, title insurance is not necessarily insurance over the title of a property but legal insurance to help pay the legal bills to protect the title of a property.
In theory, title insurance according to the INS ruling guarantees one’s right under Article 1038 of the country’s civil code. Many factors can limit a payoff. Knowing the “what is not covered” is more important than knowing “what is covered” with any policy.
Is it worth it? Title insurance is full of hype and it is not the same kind of policy as most North Americans purchase in the United States. Read the fine print and understand what the warranty truly guarantees in Costa Rica. Good homework and due diligence can save buyers the additional expense.
Garland M. Baker has been a resident of Costa Rica since 1972 and is now a naturalized citizen. He provides multidisciplinary professional services to the international community. Lic. Allan Garro provides the legal review. Reach them at info@crexpertise.com Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica. Copyright 2006, use without permission prohibited.
Ripple33…..What a great and informative article. I for one thank you very much for clearing up this topic. As a Realtor in Texas for 30 years I always thought the insurance tied to the mortgage company demand a unnessary huge expense that could be made cheap if it only charged for Up-dates to old policy. Title insurance is Very expensive and when considering it covers most sales in some fashion and Huge profit margin business.
Again this is a great article and an example of why (in my opionion) this site is so valuable. Thanks Thanks Thanks
Terry From Texas (for now Costa Rica)
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