You Don’t have to leave your computer to get scammed in Costa Rica real estate!

This one goes under the category of a fool and his money are soon parted.

A potential client wrote me asking to buy as existing corporation to hold title to his his newly purchased property in Costa Rica.  This happens about once a week but this case is the most bizarre yet and I don’t know how it will turn out.

As far as we can figure out here is what happened:

The client somehow encountered an advertisement for ocean view property in Costa Rica. He decided to buy it without ever seeing it, using a Costa Rican Attorney, or meeting the owner. The client sent me a plano from 1971 and a supposed lot division of the property. The client appears to simply have purchased the property over the internet but he won’t tell me what happened as he is embarrassed.

The “owner” supposedly lives in the United States. After being paid, the owner sent the client a “Quit Claim Deed¹” describing the property.  To make it look official it was stamped “FROM PROPERTY TRANSFER DEPARTMENT” and was notarized. It stated that COMPANY A (named changed to protect me!) issued the Quit Claim Deed.  He included a printout from the Registro Nacional showing that COMPANY A owns the property and claims that he is the President and owner of COMPANY A without providing any documentation.

When we did a search on the property we found that the real owner is “COMPANY B” but we cannot find out who the owner of “COMPANY B” really is.  To us, it appears that at one time COMPANY A owned the property, they made a print out of the document from the Registro Nacional and then transferred the property to “COMPANY B”.

Although the “owner” claims that his cousin, a Costa Rican attorney, has divided other lots and obtained permission for other buyers to build, there are no records that show any type of subdivision of the property.  It is possible that he prepared the paperwork to appease the other buyers and never submitted it to the Registro.

We also discovered that the 1971 plano is out of date as a new plano was issued in 2002 and that no lots were ever divided off of this property.  The property further describes it as being mountain property along the border with one of the indigenous reserves. We seriously doubt whether the lot division will be allowed, or whether any building will be allowed. Costa Rica tries to maintain a natural border area around the indigenous reserves.

The “Quit Claim Deed” is a worthless piece of paper as far as Costa Rica is concerned. The transfer of property must be signed by a legal representative of the company that has a Power of Attorney to sign on behalf of the corporation.

In this case, we don’t know who owns the property, who their legal representative is, whether the subdivision is legal or whether anyone can build there.

Before you buy property, do your homework and remember the basics:

• Use an attorney that is working only for you.
• ^{Never buy property sight unseen.}

¹ A “Quit Claim Deed” is a document that says that the issuer is transferring any rights that he or she has to a property to another person.  It does not mean that they own the property or that the property even exists.  It is perfectly legal for anyone to give a Quit Claim Deed over any property to anyone.  For example, there is nothing wrong or illegal if I issue a Quit Claim Deed to you for the Golden Gate Bridge.  If you paid me, you would be a fool because I don’t own it but I did transfer “all of my rights to the property” to you, I just don’t happen to have any rights to it.