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Curve Ball From Registro Makes This Man a Hostage

by Garland M Baker on October 1, 2007

In more and more cases, buying property in Costa Rica can hold an innocent property buyer hostage for years, bankrupt them and even kill them with stress and strain.

Only a few years ago, it was rare to read about property fraud in the local press. Nowadays, it is probably one of the most important topics of the news. Sometimes even a legally perfect property can carry hidden problems. Costa Ricans and savvy expats can use these complications to sour even the best and honest real estate transaction.

Some years back an American moved his family to Costa Rica. They thought living here would be full of excitement and a new and fruitful life. They got more than they bargained for. Buying a couple of parcels of land on the Pacific coast, they divided the property into a couple of other lots as many expats do and sold off one of the lots to another expat. The buyer of the segregated lot requested financing, and the seller agreed, securing the deal with a first mortgage.

Much to the surprise of the American, the Registro Nacional put administrative alerts on his properties along with those of everyone who bought lots in the area. Someone with contacts complained to a representative of the legislature that some of the lots sold were in the maritime zone.

The Registro Nacional will not put an alert on an obviously stolen property, but in this case, they added the warning without question. In Costa Rica, it is who you know not what you know that counts and, obviously, the person who sent in the complaint knew the right people. They may have had ulterior motives too.

The buyer of the American’s lot used the Registro Nacional’s annotation as an excuse not to pay the mortgage even though the parcel is not even close to the zona marítimo terrestre. The mortgage holder went to court to collect the mortgage, as any normal person would do in this situation.

This fact miffed the debtor who filed a criminal case against the seller and holder of the mortgage alleging he knew all along of the national registry’s action.

It is sure interesting that the debtor did not file anything with any authority before the court went forward with collection proceedings. In Costa Rica, the rule of thumb is to fight as dirty as possible in court and to use this strategy whenever it is convenient. This scheme bogs down the court system and wears down opponents. Almost every lawyer who litigates states the judicial system is in complete disarray and is disintegrating.

The Registro didn’t help either. Last year the land registration department of the Registro Nacional requested the Catrastro Nacional –— the property map or plat section — to go to the Pacific coast and clear up the dilemma regarding the properties to clarify once and for all whether they werein the maritime zone or not so the landowners could get on with their lives.

One year later the administrative file shows that the Catrastro Nacional has done nothing. Two weeks ago, the Registro responded to a letter of complaint sent to it by the property owner held hostage by these events. The Registro officials said they cannot dictate to the catrastro office and that everyone will just have to wait until that office gets around to the job.

Amazing but true. A property that looked clean as a whistle harbored unforeseen difficulties that are now allowing others to pounce on an honest property deal, using the lethargic Registro Nacional and broken down court system to do so.

There is probably nothing this American could have done to protect himself and his family from these events. He did his homework and paid others to do due diligence on the properties before he bought them. Everything checked out to the letter.

Neither title insurance nor the new fangled company advertising everywhere that they protect a property would have helped this expat. Title insurance is not insurance for these kinds of cases, and the property protection company  reports property movements after the fact.

The American moved back to the United States with his family. He visits less and less often. However, he is still hostage to the country and will be for some time to come.

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