Title registration in Costa Rica is based on a Registry System.
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This system applies to the entire territory and therefore all properties must be registered in it. Notwithstanding the above, not all properties have been registered to this date. In order to be able to register this unregistered land, a Civil or Agricultural Adverse Possession Proceeding must be implemented.
What does it guarantee? There is no state guarantee of title per se.
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What if any is the consequence of non-registration? In general, all rights in land are compulsorily registrable to have legal effect against third parties. Article of the Civil Code establishes the following rights in land as compulsorily registrable: a titles of dominion over property; b all liens, encumbrances or rights that limit property, such as usufruct rights, easements and any other real estate rights or limitations that affect land; c lease agreements may be registered ; d condominium or co-property rights; and e mortgages.
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Possession rights are not required to be registered, unless they need to be enforced before third parties. Please give details. First registration means the occasion upon which unregistered land or rights are first registered in the registries. Yes, there is a probationary period following first registration, provided in Article 16 of the Adverse Possession Law, which is of three years, meaning that during this period any affected party can oppose and challenge such registration in front of the same Judge that handled such registration. Our Civil Code establishes that ownership of land is transferred upon the execution of the purchase and sales deed granted by both seller and buyer before a Costa Rican Notary Public in Costa Rica, Notaries Public must be registered attorneys-at-law and fulfil a much more complex function than what Notaries Public usually fulfil in common law countries.
For example, only Notaries Public can execute the purchase and sales deed required to formally transfer the real estate property at the Property Registry. This purchase and sales deed shall be filed and registered before the National Registry in order for it to be valid, effective and enforceable against third parties. However, upon execution of the purchase and sales deed, the transfer of ownership is enforceable by both parties. Do earlier rights defeat later rights? Notwithstanding the above, acts which obtain a first priority over others subsequent acts or contracts may be challenged during an established statutory period which will depend on the act or contract being granted and registered.
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If more than one please specify their differing rules and requirements. As established in question 4. Owners of registered real estate prove their title by means of a certification that can be issued either by the Real Property Registry or by a Notary Public.
A certification consultation document issued by the Real Property Registry of the real estate number will provide all the information pertaining to the property, such as, but not limited to location, current owner, boundaries, registered area, cadastre plat number, as well as all rights and liens affecting the property. Based on the above, the Real Property Registry does not issue a physical title document to the owners of a registered real estate; however, upon request, it can issue a real estate number certification together with the above-indicated information, including the owner and relevant information and this is how owners prove their title.
What documents need to be provided to the land registry for the registration of ownership right? Can information on ownership of registered real estate be accessed electronically? Unfortunately, at this moment in time, transactions relating to the registration of real estate cannot be completed electronically. However, this is expected to become a reality soon. A pilot programme was recently conducted in which, a selection of notaries were allowed to electronically file and electronically complete some transactions related to the registration of real estate.
Some areas of the National Registry are exclusively working with electronic documents already. In order to register ownership rights before the National Registry, a true first copy of the purchase and sales deed executed by and between the parties before a Notary Public should be filed, along with confirmation of payment of the applicable transfer tax and registration fees. Court rulings or resolutions which grant ownership to a specific party are documents that also have to be filed for real estate-related rights to be recorded.
As indicated above, information on ownership of registered real estate can be obtained both physically and electronically. Yes, compensation can be claimed from the National Registry if it makes a mistake. All compensation claims need to be filed through an Administrative Law Suit against the National Registry. Can a buyer obtain all the information he might reasonably need regarding encumbrances and other rights affecting real estate and is this achieved by a search of the register?
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There are no restrictions on public access to the information in the National Registry. A buyer can in fact obtain all the information they might reasonably need regarding encumbrances and other rights affecting real estate by a search of the Register. Other parties involved in real estate transactions are: a Notaries Public which are, as indicated above, registered attorneys-at-law : responsible to execute the purchase and sales deed which is registered before the National Registry; b attorneys-at-law: execute the due diligence process and provide legal advice on legal matters and make disclosures that may affect the transaction.
What are the main sources of capital you see active in your market? There is no change in the sources or the availability of capital to finance real estate transactions. In general terms, the main sources for real estate financing are: a Public and Private Banks and other supervised financial institutions; b Private Lenders not registered as banks or financial entities ; and c Private Funds or Investors.
The main source of capital in our market is without a doubt our banking system Public and Private Banks along with other supervised financial institutions ; however, in some areas where the predominant buyers are foreigners, that source is Private Lenders, who offer loans to buyers or developers in order to acquire the land or finance part of the acquisition of real estate. Please give examples. Commercial and rental property has been more likely to sell due to a section of the population, jointly with an important foreign investment component, looking to expand their real estate portfolio abroad.
The current economy encourages taking risks, turning markets like ours into a very appealing alternative. As well as Costa Rica having been known worldwide mainly for its stable democracy that abolished its army in , the country has welcomed foreigners, is located three to five hours away from most major U.
Since the crisis of , the real estate market in Costa Rica has been undergoing a slow but steady recovery process. In most market sub sectors, we have seen important growth in the past few years. This is particularly true with regards to the commercial, office and retail submarkets. Nevertheless, there is still a mild appetite for these sub sectors, but with a higher dose of caution.
Nonetheless, this slowdown has not been due to excessive supply or lack of appetite but instead due to a lack of new products because of a lack of infrastructure such as roads, water and aqueduct systems. Thus, there is still an increase of investors from abroad looking for these products, both for investment purposes and for retirement purposes.
The government is investing important resources in a long-term solution for the water issues that have been affecting some of most attractive areas in the North Pacific. The Daniel Oduber International Airport located in Liberia, Guanacaste has been expanded and is receiving more international flights than last year. The minimum formalities for the sale and purchase of real estate are: both buyer and seller should have sufficient power of attorney to sell and buy, respectively; and they must execute a transfer deed before a Notary Public.
Once the transfer deed is executed, the Notary Public shall file a copy before the National Registry. All transfer taxes and registration fees must be duly paid in order for the transfer to be recorded. What matters must be disclosed? The seller is not under a duty of disclosure. What would be the scope of these? What is the function of any such guarantee or warranties e. Would any such guarantee or warranties act as a substitute for the buyer carrying out his own diligence? Sellers do not usually give contractual warranties to the buyer. Based on our civil law legal system, warranties are usually found in the law.
Nevertheless, these warranties are never a substitute for the buyer to carry out their own due diligence, which begins by retaining the services of a reputable real estate attorney before entering into an agreement. The seller warrants that the buyer will enjoy legal possession of the property in an undisturbed and unpossessed way. The seller also warrants that the property is sold and transferred free of hidden effects. These are warranties that are found in the Costa Rican Civil Code.
Those funds must come from a legal source and must present documentary evidence of source of funds. The buyer also needs to execute an affidavit in front of a Notary Public indicating under oath where those funds come from. The main regulation concerning lending money to third parties for real estate purposes is the Civil Code of Costa Rica. There is no legislation that regulates lending specifically to finance real estate.
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Basic lending guidelines and regulations that SUGEF applies to financial institutions are going to apply to any type of financing. In addition, there are no specific differences in these lending guidelines between residents and foreigners even though during the last few years, lending institutions have tightened their internal procedures to lend to foreigners as a result of the economic crisis and increasing compliance rules and regulations. This will also apply to individual and corporate entities. There are several ways in which a lender can take securities or collateral in Costa Rica in order to guarantee a loan.
Some of the most common securities or collaterals are described as follows:. The mortgage lien imposed over a registered property is also recorded before the National Registry in the Mortgage Section of the Real Property Registry. The Real Property Registry issues the mortgage certificate that identifies the amount for which the certificate is issued and unlike the Common Mortgage where there is an established lender, these certificates may be transferred by mere endorsement.
It is important to note that mortgage certificates have a year statute of limitations, which needs to be reviewed in time in order to avoid a non-payment from the borrower. There is no limit as to the amount on a Common Mortgage or a mortgage certificate. Before agreeing to this type of guarantee, the lender usually requests a formal appraisal on the property, in order to identify the approximate value of the property.
Once the lender has this information, he will be able to determine in accordance with loan politics the amount that he should lend. In any of the above-indicated securities, the lender is not allowed to take automatic possession on the assets mortgaged or pledged if the borrower is at default. In such cases, the lender has to execute the guarantee through an established judicial process.
Under this structure, a third-party Trustee shall hold the title of the assets placed in trust and shall execute the Trust Agreement according to the instructions expressly indicated in such document. There are new legal guidelines that apply for Trust Guarantees, which will affect if these could be used as a guarantee on behalf of a Private Lender. Are there any options for a mortgagee to realise a mortgaged property without involving court proceedings or the contribution of the mortgagor?
Once the lender has secured securities such as a Common Mortgage, a mortgage certificate, or a pledge over registered assets and the borrower breaches the terms and conditions established in the loan agreement, the lender shall then execute each collateral or security according to the established procedure in the Collection Law Ley de Cobro Judicial. This law establishes a summary proceeding for these types of securities in which the lender will not have the right to take direct or automatic possession over the assets given as collateral.
Instead, they will have to request the execution of a public auction and shall obtain payment from the funds obtained at the auction s. With regards to Guarantee Trusts, the trust agreement itself shall create the enforcement procedure in case a borrower breaches the terms of the loan agreement.
For this purpose, the Guarantee Trust shall validly create an execution proceeding similar to that established in the Costa Rican Collection Law; however, it being executed directly by the same Trustee. This procedure shall take less time than the regular enforcement of a registered security.
As mentioned above, there are recently approved legislations and guidelines that prevent all lending transactions from using Guarantee Trusts as a security. This would require further analysis in order to verify who is the lender, who is the creditor and who is the borrower.