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Expats lose their bid to get back $300,000 condo

by Garland M Baker on June 23, 2008

Their hopes hang on an appeal

The retired Gringos lost round one in a criminal court case. They are in shock along with their lawyer. They purchased a condominium in August 2001 in Flamingo. In December 2003, the same company that sold them their condominium sold it again without their knowledge to another party. Shortly thereafter, a court evicted them and sent all their belongings to storage in San José. They have fought over four years just to get a court hearing of their case.

The trial lasted almost two weeks. The evidence supporting the double sale was overwhelming. The court agreed. The original owner of the property, a corporation, sold it twice, but the officers are not guilty. How is this possible? How can one sell something twice and not be guilty?

This is how:

The owner of the condominium was a Costa Rican company called a sociedad anónima not a physical person. The law looks at a company as a judicial person or a persona jurídica. The judicial person does not buy or sell anything. Its representatives do such activity.

In August 2001, a representative of the company sold the condominium to the retired expats. The lawyer representing the couple made a critical mistake at this point. He created a transfer deed selling the property to a company he tried to form in the same document. This is not at all correct. The process to form a company correctly takes several weeks in Costa Rica. The correct way to do so is by filing a constitution with the mercantile department of the Registro Nacional. The department approves the entity and registers the name and other data in a computer.

Because the company did not exist when the property deed was filed, the Registro Nacional correctly rejected the document but did annotate the property as sold on its property computers.

At this point — no one knows if these acts were intentional or unintentional — the lawyer jockeyed around for two years in the registration of the property. He kept telling his clients — the buyers — he needed more money and more time to register the condominium correctly, according to testimony. This was partially the case. He never paid the correct amount to the Registro Nacional, testimony showed.

Every time the retired couple questioned the lawyer, they got one excuse after another why the property was not properly registered. The bottom line, the lawyer never correctly registered the property, setting up the expat couple to lose their $300,000 condominium, the court was told.

The Registro Nacional deletes an annotation of a property transfer if the paperwork is not completed after a period of time. The property registry deleted the annotation for this property in June of 2003, one year and nine months after the expat couple purchased it.

During the period from August 2001 to December 2003, the company owning the property changed its board of directors including the president. This person was the one who sold the condominium for a second time, according to court testimony. His representative told the court he did not know the old board of directors sold the property in August of 2001 and it was not his responsibly to know this.

His representative further testified that the president’s wife’s father was a lawyer and that the father-in-law checked out the property and it was still in the name of the company so the president sold it. At the trial, the father-in-law represented the two accused, the president and a former president.

This is how one sells a property twice in Costa Rica with apparently no legal consequences. Here is the scenario again in baby steps: 1.) have the property in the name of a company, 2.) have one board of directors sell it the first time, 3.) incorrectly attempt to put the sale in the Registro Nacional, 4.) change the board of directors of the company, and 5.) have the new board sell the property to someone else while officers claim ignorance of the first sale.

Viola, this is the formula for a double property transfer. Now to improve the recipe, add unsuspecting expats to the mix — it is even better if they are older and preferably retired — and pick a high ticket item to make the winnings that much sweeter.

This story happens more than most people believe. More importantly, those who do so knowlingly get away with their crimes more often than not, too, according to recent news stories.

The principle, in dubio pro reo, “when in doubt, favor the accused,” rules in the criminal court system in Costa Rica. Prosecutors spend much of their time determining all the reasons an accused is not guilty instead looking for evidence of wrongdoing. Because of this, many cases just expire.

Is there hope for the expat couple? Yes there is. The whole trial was videotaped and put on DVD. The video system is impressive and the court provided all the videotaped material within two days after the end of the trial. There is an appeal process in Costa Rica, and new judges will look at the facts.

Obviously, there is something wrong with the lower court’s ruling: The company owning the condominium sold it twice, and it is illegal to sell something twice. But no one is guilty, according to the court, and more importantly, the expats do not get their condo back — for now.

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