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Property Liens in Costa Rica

In Costa Rica, most of the properties are registered, and the titles are registered and centralized in the offices of the Public Registry in San José.The property transfers require the buyer and seller to sign

In Costa Rica, most of the properties are registered, and the titles are registered and centralized in the offices of the Public Registry in San José.

The property transfers require the buyer and seller to sign a deed before a Costa Rican notary public (the responsibilities of notary publics in Costa Rica are different from many other countries such as the United States, Canada or the United Kingdom). The notary public in Costa Rica is essential to formalize all transactions related to real estate and to register the transfer in the Public Registry. You can read more about the difference between notary publics and attorneys in Costa Rica here.

All titled lands in the country can be safely and accurately researched to determine the relevant factors, such as ownership, liens, annotations, or other matters that may affect it.

Most of the property titles are currently organized by means of a computer system called “Folio Real.” An example of the most common format is “1-123456-000” where the first number designates the province in which the property is located (1= San José, 2 = Alajuela, 3 = Cartago, 4 = Heredia, 5 = Guanacaste, 6 = Puntarenas, 7 = Limón).

Folio Real distribution by province.

 

Then there is the farm number (in Spanish, finca means farm, but for registry purposes a farm or finca refers to the lot number). All Folio Real numbers require this 6 -digit number to differentiate one property from another. At this moment, there is no province in Costa Rica that has more than 1 million registered properties, so a six-digit number is sufficient for this task. The farm number will always be 6 digits. There are no exceptions.

Title research for “Folio Real” properties can be started in the computer system, which is accessible online, but will most likely need to be continued in the volume / folio / seat system, especially when online searches yield liens or make evident other traits of the property from older transactions that date from before it was transferred to the “Folio Real” system.

Additionally, although the computer system provides a list of encumbrances, in most cases a complete title research will require the review of microfilmed or scanned documents which are not accessible on the Internet and can only be obtained at the offices of the Public Registry.

Although, as previously indicated, the “Folio Real” system is accessible online, the average user does not have the legal training required to interpret the information accurately nor to determine and pursue any additional diligence that is required, which is why we recommend that a trained professional be in charge of researching and reporting on it.

In addition to researching the title, when the property belongs to a corporate entity it is essential to carry out research in the Mercantile Section of the Public Registry, since this is the only way to find out if the entity that is transferring the property is compliant and whether the person who has proposed to sign the deed of transfer has the authority to do so.

The liens will show a reference number that can then be used in the microfilm system to examine the records, in many cases directly related to the data of the original document.

If the title indicates the existence of “Encumbrances” or “Liens,” the most common findings are:

  • Mortgages, which will show their term, amount, creditor and debtor. More information on the terms of the mortgage should be sought out in microfilmed or scanned documents at the Public Registry.
  • Easements that could be for or against the property and could consist of rights of way, rights to water pipes, etc.
  • The conditions and limitations that normally arose when the property was originally titled and that generally refer to public roads, bodies of water, limitations for the sale or use, etc. and that expire after a certain period of time.

Example of the result of a folio search. “Encumbrances” or “Liens” can be found at the end of the document.

 

Annotations:

These are documents presented to the Public Registry but pending registration. They are usually transactions related to property, legal proceedings, etc.

The pending registration may be due to the presentation of incomplete or erroneous documents, the lack of payment of taxes, etc. A document presented on a property that has annotations will not be registered until the annotated document(s) are registered or are withdrawn without registration following a special procedure.

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kbaldioceda@outlierlegal.com

Paralegal Assistant with customer service certificate. More than 3 years of experience in Real Estate and Paralegal Services. Has worked as an International Customer Service Agent for Delta Airlines USA.

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