Ensure a Clear Title to the Property Exists

   Costa Rican law requires all documents relating to a title to real property be registered in the property section of the Public Registry (Article 460 of the Civil Code). Most properties have a titled registration number known as the "folio real", and the records database can be searched with this number or by name index. The Public Registry report provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title.

   Since Costa Rica follows the doctrine of "first in time, first in right", recorded instruments presented to the Public Registry are given priority according to the date and time in which they are recorded. Obviously, every situation differs and in some cases a review of the Public Registry record will not be enough to uncover all encumbrances.  It is important that the Buyer have his own attorney conduct an independent title search and investigation rather than rely on the Seller's attorney.

The Public Registry

   Once all fees have been paid, it is the obligation of the notary who drafted the transfer deed to ensure that the deed is presented and registered in the Property Section of the Public Registry.  Although presentation guarantees priority (first in time, first in right), it does not automatically guarantee registration. The Public Registry will not register a transfer deed unless all taxes and registration fees are included; a certified copy from the Municipality where the property is located certifying that the Seller's property tax and municipal assessments have been paid through the date of closing. Likewise, any prior instruments that encumber the property (mortgages, liens, judgments, etc.) must be lifted before transfer deed will be registered.

   Once a transfer deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry within 45 to 60 days after presentation. It is important to follow up with the notary to ensure registration, otherwise there will be problems in the future when reselling the property.

Title Insurance

   Title insurance is not necessary in Costa Rica due to the laws of the civil code. The Buyer’ attorney should make a thorough title search prior to closing.  When a property is transferred to a new owner in Costa Rica, all previous claims that were not properly registered in the National Registry, can not be placed on the new owner. Many properties are held by Costa Rican corporations. In these cases, a more thorough research is required if the Buyer wishes to assume the existing corporation, which can save on closing costs.

And Finally . . .

   After the sale, the Buyer should verify, through his broker or attorney, that the property was properly registered in the National Registry, and receive originals or copies of the documents showing all the proper stamps from the transfer process.