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Registro Nacional Nears Meltdown Over Fraud

by Garland M Baker on June 5, 2006

Officials decline to act on suspect document

The supposedly secure property records at the Registro Nacional are under daily attack. Computers make up what amounts to a virtual vault, securely holding titles to trillions of dollars of Costa Rican properties. Paperwork and other computers are the attackers commanded by crooks stealing the assets of others.

The thieves are smart and know how to beat the honest out of assets in a fell swoop. They use the weaknesses of the registro to their advantage. The over-burdened organization’s computers collapse under pressure almost on a daily basis. There are those who work there willing to risk their career for a fast buck.

In the past few weeks, registro officials sloughed off obvious fraudulent activity as unimportant when a suspicious case was presented at the institution because the officials said to the filer, “We have too many of these fraud cases to work on.”

This case involves a stolen property, and the records at the registro are supposed to be annotated to show that a court action is in progress. This annotation, signed by a judge, is supposed to freeze any transfers of the property to other persons.

In this case, the bad guys have greased the wheels of the registry machine to clean off most the annotations of the courts so they can sell the property off quickly to an innocent party, robbing them of their money by selling them something dirty.

The Sala IV in vote 29-2001 requires the Registro Nacional to immobilize a registered asset when a properly filed complaint, suggesting improper or potentially illicit movement, signals an alert.

In this case, for three weeks Registro workers inexplicably have failed to freeze a certain property record despite daily urgings and valid legal paperwork. They claim they are too far behind in their work.

To understand how the system is vulnerable to fraud. it is important to understand how the system works:

Notaries obtain a notary book, official security paper, security tickets and a crimping metal seal upon graduation. People making contracts meet in front of a notary. The notary transcribes the agreement in his or her official book, and the parties sign it under the textual representation of the facts. This makes the contract legal but not registered.

The notary, who in Costa Rica has fé pública, or public faith, must make a written testimony identical to the content in the notary book on his or her security paper and attest that everything is correct. The professional glues a security ticket to the testimony, signs the document and seals it with the crimping seal.

Filing this official document at the Registro Nacional starts a registration process. The process begins by running the paper through a computerized stamping machine giving it a number with two parts, a “tomo,” a volume number, and an “asiento,” or entry number.

A registrar gets the document next and checks the details of the content. At this point, which can take days, weeks or even months, the paperwork is registered or returned as defective. If it is registered, the paperwork is microfilmed and returned to the notary as a deed of the transaction. If it is defective, the document is returned to the notary where the professional fixes the defects and resubmits the documentation when corrected.

The registro records all registered documents in a history of movements. The result of all movements make up a single record of the asset.

This is how the system breaks down.

First, dishonesty pays more these days. It was not that many years ago when, a fraudulent transaction, forged signature, or fictitious paperwork might have brought a few hundred dollars. This is when land values were not gold.

Today, foreigners are driving property values skyward.

Now this same kind of activity can reap thousands upon thousands of dollars. Most dishonest professionals never go to jail because they know their way around the law.

Second, the dishonest know more about how the registro works than do the honest, and they know most people never do their homework to check or follow-up on transactions. So a fake document can be filed and not be noticed for years. Or a document can say something much different than the contract in the notary’s book.

Third, but not last, the Costa Rican culture has an “anything goes if you can get away with it attitude.” Two ex-Presidents being arrested reflect poorly on the country’s social ethics.

Many legal leaders are screaming for digital signatures because they say it will curb the stealing of property. The country now has a digital signature law, but it is years away from implementation. A digital signature would show who filed a document that turns out later to have been a fake or a misrepresentation.

Costa Rican property owners — especially absentee owners — must watch their property using their computers as well as other resources until and if the Registro Nacional improves its security and efficiency. Mortgage certificates remain a great protective measure. One cannot be too cautious.

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