Attorney Conflict of Interest- Don’t Make This Common Mistake!

In Costa Rica there are no Conflict of Interest laws that prevent an attorney from representing both parties in a real estate transaction. This is illegal in the US but is common in Costa Rica. WE STRONGLY RECOMMEND THAT YOU HIRE YOUR OWN ATTORNEY TO REPRESENT YOUR INTERESTS AND ONLY YOUR INTERESTS.

Here is what happened to us. We located the property we wanted to buy and were advised by our real estate agent that there is no need to involve two attorneys - “it was a waste of money.” Since we were paying 100% of the legal fees, we made a presumptuous  mistake of thinking that our “Attorney,” was representing and protecting our interests.  He prepared and fully explained in English and Spanish the option to buy the property and we signed it. Sometime between the time we signed the purchase contract and were presented the final documents, a clause was inserted giving the neighbors certain rights to our property that were not in the original contract.

Even though we thought he was representing our interests, he never explained that the clause he inserted or what the ramifications were for our development.  Our “Attorney” was fully aware of what we intended to do with the property yet he never told us that this clause would negatively impact what we want to do.

At the time of the closing, our “Attorney” specifically told us that nothing had changed from the original contract and then proceeded to read the document to all parties present. Those that were present included Isabel, myself, our real estate agent, his interpreter, the Seller and his son (another attorney).  Amazingly nobody present at the closing has any recollection of hearing anything about this clause except the seller and his son.

A few months later, we asked our neighbor to meet us at the property so we could work out an agreement to allow him access to the lower part of his property to harvest his coffee for this year.  We wanted to tell him that he needs to make other plans for the future years because we were going to close off the property in order to sell the lots.  He arrived wearing a machete and brought his three sons, two attorneys his brother and nephew and immediately went in to a tirade on how they were going to file a pleito (a lawsuit) and tie up our property for up to 10 years if we interfered with their ability to use the roads on our property.

We have since talked to two other attorneys, and a topographer, a judge and a magistrate.  We are basically screwed because the escritura prepared by our “Attorney” says we will give the neighbor a servidumbre.

What was interesting is that both of the attorneys we talked to said the clause is written in what we in he US would call “attorney speak” which would be difficult if not impossible for a common person to understand.

After it was all said and done, we discovered that our attorney, the one that our agent recommended we use, has been practically life long friends with the family of the property owner. So who was “Our Attorney” working for? The person paying the bill (me) or the person that he has known for 30 years? Form your own opinion.

The moral is make sure what ever attorney you employ understands that she or he is to work for your interests and has to fully explain in plain English or Spanish anything that could adversely affect your use of the property.