Costa Rica Real Estate Buyers Guide Part 3 – Purchase Process Legal Vocabulary
Reposted By: Jesse Montgomery, from The Costa Rica News
Feeling comfortable with the purchase process begins with understanding the most common terminology. While the purchase process may seem very simple, there are some keys ideas a buyer should be familiar with. The following are the most common terms used in real estate transactions in Costa Rica.
Folio Real: Properties in Costa Rica are registered in a computer system called “Folio Real”. This system is centralized at the offices of the Public Registry in San Jose. A Costa Rica property is assigned a “social security” number. It is the number assigned to each property to identify it and distinguish it from other properties. This number is comprised of three parts: the first number indicates the province, the second group of six numbers is the number of the property itself and the last group of numbers indicates how many co-owners the property has. All titled properties MUST have this number in order for clear title to be obtained.
Transfer or Conveyance Deed: (escritura de traspaso): This document contains all of the stipulations regarding the transfer of real estate including basic information about the buyer, seller, the property, and any special terms of sale, such as easements or mortgages. An attorney who is also a Public Notary must prepare this document and the deed must be recorded in his/her Notary Book as well as at the Public Registry of Property. Once the deed has been prepared and signed at the close, it is the attorney’s responsibility to record the deed immediately at the Public Registry. The recording process consists of two phases.
In the first phase, the notary presents the deed to the public registry for its annotation; from this moment the property is protected against any third party interest. After the registry verifies the deed is structurally correct, the second phase of registration begins and the property is recorded in the name of the new owner. Because Costa Rica operates on a “first in time, first in right” system, registering the deed immediately is critical to ensuring that the new buyer’s rights to the property are ahead of any other claims by third parties.
Public Registry of Properties: Costa Rican government entity in charge of holding and compiling all property deeds, as well as protecting the rights of the legal property owners.
Notary Public: Attorney licensed by law to perform legal acts with Public Faith. All transactions performed by a Notary are recorded in his/her Notary Book. A public notary is necessary in order to purchase a property. Most attorneys in Costa Rica are also Public Notaries.
Power of Attorney (Poder): This document authorizes a person to act on behalf of another to perform specific actions such as the purchase of a property. This tool is especially useful for clients that wish to close on their property without returning to Costa Rica. It is best to sign the power of attorney before leaving the country because the law requires that the power of attorney be signed in the presence of a Costa Rica lawyer. Otherwise, a visit to a Costa Rican consulate in the US is necessary. One exception to this rule is when the property is purchased through a corporation. In this case, a signed proxy letter will suffice and there is no need to visit a consulate. Powers of Attorneys come in two forms:
• General power of attorney: Allows a representative to sign on behalf of an individual for multiple transactions and must be recorded at the Public Registry.
• Specific or special power of attorney: Allows the representative to sign ONLY for the item specified in the power of attorney contract and under the conditions specified there. It is highly recommended that on a specific power of attorney be granted for property purchases to limit the rights of the representative to sign only for the property in question and nothing else. Additionally, the specific power of attorney does not have to be recorded at the Public Registry; however it should be granted before a Notary Public.
Survey Plan (Cadastral Department): In addition to the Public Registry of Properties, which holds all property deeds, Costa Rica also has a Cadastral Office that holds all of the property surveys. In order to transfer a mortgage or acquire a property, a survey must be recorded at the Public Registry. When dealing with property segregations, a municipality authorization is also required on the survey.
The official drawing of the property is validated through an approval process by the Public Registry of Properties as well as by the municipality in which the property is located. Because the Public Registry and Cadastral Office are separate entities, it is not uncommon for old property surveys to be on file at the Cadastral Office. If this is the case, it is recommended that a new survey plan be registered with the Cadastral Office so that there can be dispute over boundary lines.