Title Insurance in Costa Rica

The concept of Title Insurance is not so common in other countries and is predominantly present in the United States of America. Title Insurance acts as a buffer and protects the interest of both the buyers and the sellers. Costa Rica differs little with other countries with respect to law, it is not a common law nation and it follows a codex form of legal system.

While buying a title in Costa Rica, the customer must ensure that the insurance papers of the land are up to date. They must know for sure the legal issues so that they can protect their claim. In Costa Rica, a title guarantee is actually a legal binding as well as a “bond of fulfillment” and not merely papers of identification. Buying or selling of title in Costa Rica is not very difficult if the legal papers are up to date and the insurance has been paid properly. While buying property in Costa Rica, one must read all documents relating to the property carefully. Many a time foreigners wanting to buy land in Costa Rica face language problems. The documents are sometimes written in Spanish, posing a problem for people not familiar with the language.

In Costa Rica, all property has a unique registration number thereby making each property distinguishable from the other and all land or title transfers must be done in the presence of a Notary Public. The Notary Public has extensive legal powers like he can sign legal documents like affidavits with an endorsement or endorse and sign a certificate on behalf of a magistrate (limited to certain obligations).  The onus of interpreting and drafting of any legal documents rests primarily with the attorney attached to the Notary Public. “Land is the fountainhead of wealth”, hence ownership of land in a fast developing nation like Costa Rica has suddenly become a trend amongst the residents of North America.

The transfer of the title or deed will only be completed if the Notary or the attorney attached to the Notary Public registers the sale in the Public Registry (Registro Nacional). Normally it is the customer who decides the notary or the attorney who will make the transfer deed, draft it and complete the entire transfer.

It is mandatory under Costa Rican law that a title or deed must be registered under the property section of the Public Registry (Article 460 of the Civil Code). This registration will have detailed information about the title holder and details about the property under consideration. It will give a detailed description of the geographical location, boundary of the land in question, tax details, mortgage details and any other legal details required during the transfer of a title or property.

Despite that, one must have his own attorney to look into the matter and research about it and find out all the details of the title before finally purchasing it. This independent private search must be carried out by an independent attorney at the behest of the buyer of the title. Once all the legal formalities have been completed, it is the obligatory duty of the notary to draft the final document and register the deed under a new title. The transfer can be completed if all the registration fees and the taxes have been paid. All payments have to be made with regard to the present tax rate and the current interest rates.

Considering that all the requirements have been met, the transfer is carried out. But the transfer can be registered only after 45 to 60 days since the presentation. On the completion of all this, the notary now ensures that the registration is carried out keeping all the legal formalities in mind.

Although this process is apparently very cumbersome and complicated, one will not face any undue problem if one follows the legal procedure diligently. Costa Rica has a very sound legal system. Thus legal procedures, although seemingly lengthy, are actually instrumental in safeguarding the interests of both the buyer and the seller of the title deed.