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How to lose your property to title theft in Costa Rica

[vc_row][vc_column][vc_column_text] A client recently came to us with a fairly complicated problem. While she was in the U.S. during Covid, the land she owned, which was a gift from her father in Costa Rica, was illegally

How to lose your property to title theft in Costa Rica

A client recently came to us with a fairly complicated problem. While she was in the U.S. during Covid, the land she owned, which was a gift from her father in Costa Rica, was illegally transferred to someone else. She found out about this while trying to pay her annual property taxes. The municipality informed her that there were no taxes to pay as the property was no longer hers.

This started a long chain reaction of court filings, hearings, international travel back and forth, tens of thousands of dollars spent in legal fees, translations, legalization of documents, visits to the Costa Rican consulate, etc. At the end of the day, the property will come back to her, but the process will take multiple years and many thousands of dollars before it does.

This is a sensitive topic, and we want to preface this by saying – title theft happens all over the globe and is not just a Costa Rican issue. While we don’t want to make you panic and think this happens all the time, the truth is, it happens in Costa Rica due to the setup of the way notaries are licensed, and because of the lack of foresight on the part of the property owners. We’d like to help you avoid this issue by telling you how a problem like this is created.

Imagine you had a shovel in front of your door for two whole days and you didn’t take it inside. Someone could think “you clearly do not want to take care of this shovel and I will take it off your hands so I can find a better use for it“. These very dishonest individuals think the same thing of an unattended property. If it is not taken care of, it is left ripe for the picking.

So how does this happen?

Example: Mr. and Mrs. Smith buy a lot in Atenas, planning for their eventual retirement in 10 years. The property is gorgeous – 20 acres, views for ages, it already has water and electricity and no neighbors around – this is their ultimate dream. They plan to visit Costa Rica in the next few years and move down permanently once the home is built. The couple puts up a large chunk of their life savings, close on the property, and fly home to Canada, hand-in-hand, joyful for the next phase of their lives that will eventually lead to Pura Vida.

The lot, with all its luscious jungle, is overgrown. As there is no home on it, the Smiths do not hire a landscaper to mow or trim back anything. They believe there’s no need for a caretaker yet, so they do not hire one. They check municipality taxes annually and while a photo of the lot remains on their fridge, held with a Costa Rican heart-shaped flag magnet, they really do not keep it at the forefront of their minds as work and life takes over.

A couple of years later, Mr. Smith checks their annual property taxes and is surprised to find out that the municipality of Alajuela does not have a bill for him under his passport number. He tries his wife’s. Also nothing. He calls the municipality, but they can’t find anything either. He calls the attorney who helped in the closing.

The attorney looks up the property in the National Registry and finds it’s no longer owned by Mr. and Mrs. Smith, but by a person no one knows. He finds the transfer deed, carried out months before. While the names of Mr. and Mrs. Smith are listed as the sellers, their address and passport numbers are incorrect. There is a falsified Power of Attorney given to an unknown third party, and the transaction is carried out by a notary, making it legally binding. This is how the owners lost their property to theft.

How to lose your property to title theft in Costa Rica

The only recourse available is to start a criminal complaint (denuncia) against the buyer(s), the attorney who was given the POA and the Notary who carried out the transfer. They are quoted $10,000 USD for legal fees and an approximate timeline of 5-6 years to get their property back. It is important to note that there is very little to no hope of recuperating any of the victims’ costs in the process of making things right.

Costa Rica has really created the perfect storm between their licensing of Notaries, the power given to the National Registry, the turtle-like speed of the Judicial system, and a cultural acceptance (of some) of unused property being better used elsewhere.

To start with, a Notary Public in Costa Rica is being entrusted with Public Faith. This is part of the reason Notary fees are so astronomically high when dealing with a property transfer, and part of the reason it takes so long to become a Notary. (It is important to note that any of the 30.000 Costa Rican attorneys who also want to become notaries can do so upon completion of the Notary course and a wait of 2 years). What this means is, if a NotaryPublic created a transfer deed and signed off on a transaction, the Public Faith entrusted to them makes the document true. The only way to prove this was a falsified document is through a Judicial process.

Each Costa Rican Notary has a book called “protocolo” (protocol), where they are entrusted with keeping a detailed record of every transaction. This book remains with the notary, but can be audited by the Board. All parties to the transaction are required to sign the transfer deed to be put into the protocolo. The Notary is not required to file the protocolo pages with the actual signatures in the National Registry, but certify it as a “testimonio” (testimony), stating they have the actual signatures in the protocolo in hand, and by the nature of the “Public Faith” entrusted to them, this is enough for the National Registry to trust their word. The National Registry will not notify the sellers that their property was transferred. These oversights in process create ample opportunity for dishonest individuals from both the Notaries and the National Registry to commit fraud.

At times, properties change hands several times before the rightful owner notices, and second and third-line buyers are unaware that they bought a property that wasn’t meant to be sold in the first place. In instances like this, the property is returned to the primary owner and all parties lose money in the process. We even know of cases where the rightful owner passed away and the fraudulent Notary claimed they were physically present to sign off on the sale.

Sadly, Costa Rican courts are inundated with work and the wait time for resolve is painfully slow. It is not uncommon to hear of criminal cases taking many years to solve, and while the property will eventually be returned to its rightful owner, the time and heartache lost to this process will not.

So what can you do?

There are several steps you can take if you intend to purchase a property and not be there full-time.

Put up a sign with a Costa Rican phone number reading “not for sale” on the property  and fence it. That way, if an unsuspecting buyer comes to take a look at a property they believe is on the market, they will think twice before making an offer, or, at the very least, will have their own attorney check the validity of the information they are being given.

If at all possible, purchase in a well-guarded development where there are not random passerby’s. Make friends, or at least bring some pie to your new neighbors and let them know you are real people who will be abroad and ask for their assistance in case someone comes taking a look around the property.

Sign up for Outlier’s Safe and Sound Property Monitoring Service, where we will be entrusted with not only notifying you if any property transfer is happening, but will immediately act on your behalf to stop the transfer from being sealed in the National Registry. Safe and Sound also provides an hour of free legal advice per month (not just limited to Real Estate), and ensures your property is kept up to date with municipality and luxury tax authorities.

For all real estate closings until April 30th, 2023 we will gladly gift you the Safe and Sound Property Monitoring service for an entire year.

If you have not used us for a closing, please contact us so we can help get your investment protected.

Our ultimate goal is to utilize preventative legal care in our work with the community we serve. We don’t want to see this happening to anyone else. Outlier Legal is here to help you move, invest and live in Costa Rica. Contact us today.



Nataliya Bari serves as the Real Estate and Business Development Director. Her educational background is in Communications and Real Estate. Prior to joining Outlier Legal, Nataliya spent over a decade running a successful Real Estate Brokerage practice in New York City and planned global events for the International Federation of Accountants. Nataliya is fluent in Russian, is a Certified Master Negotiator and approaches leadership with a sense of humor and humility.

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