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There are Now 16 Real Estate Frauds in Nosara

By Javier F. Chaverri Ross
with the collaboration of Melissa Ramos Ross and Johnnathan Elizondo Reyes

Currently a criminal band is stealing or buying the properties they hire someone else to steal, pretending to be the legitimate owners. Only this year, by the end of the month of October, we learned of 10 cases, which give us an average of one per month.

The Nosara American Project was conceived in the early 70ss by a group of entrepreneurs and their collaborators. From the original estates, an endless number of properties were segregated, which have been object of repeated sales and re-sales. The aforementioned has caused these lands to be highly sought and well appraised, not only by investors and expatriates, but by unscrupulous people who purchase them illegally to be immediately sold (fortunately they are a small group, a minority that have their time borrowed, as these cases are well documented in the hands of the Administration of Justice).

The global economic crisis seems to exacerbate the number of crimes, and real estate frauds are no exception. As lawyers we have noticed the increase because we have been linked to real estate traffic for more than ten years. For example, between the years 2005 and 2006, I had three cases of property theft. Up to this date our office is actively involved in 16 criminal cases.

I must say that the different types of frauds with which I have had to deal come in all kinds of colors and flavors. The way of committing the crime varies according to the skills, sophistication and resources of the scam artist; in this article the intention is not to mention all of them because the list is long, but only a few of the most common ones. The main targets of the scam artists are the lots that have not been built on; in fact there is no registry of stolen lots with houses.

Different ways of committing crimes that were performed with properties at the American Project

Illegal Change of the Board of Directors (Fraud with Legal Books)
A group of criminals illegally obtains a duplicate of the legal books of a company that owns a land.  With this action and after having obtained the legal books of the company that have the overall appearance of being unique, the criminals start introducing false information in these, indicating who the owners of all the shares are, and with that, they proceed to perform a protocolization of the assembly where they managed to make the change of the Board of Directors and to grant a power of attorney to another person.

 
Fake Passport
   
 
Real Passport

Thus, the person who was appointed as proxy of the company will subsequently go before a Notary Public to grant the sale, leaving its rightful owners with no land.

Impersonation

In a particular case, four persons identified themselves with a false passport in the name of the legal representative of the company, and they appeared before four different notaries, leading each of them to an error, in order to proceed with the sale of three of the properties, and to grant a mortgage in the amount of $50,000 against the other property. These counterfeited passports were so convincing that they were even used to cash a check at a national bank. To date, the true owner was stripped of the properties, in addition to the falsification of the owner’s identification document.

Resurrect deceased persons

Unfortunately, in our country there are notaries that agree to be used for these cases, in which they attest to the appearance of persons that have died in a country abroad; therefore, the National Register is unable to verify it, registering the purchases for unscrupulous persons.

Moreover, there are also cases in which people that are not in the national territory allegedly “appear” before notaries to sell their properties. But it is clearly demonstrated through the records of migrations of the National Migration Directorate that they did not enter the country for the date of execution of the deed.  Currently, we have three cases known by the Prosecutor’s Office.

Falsehood with non-existent people

Usually, the criminals have a person in their group who knows the area very well and use the person to carry out the “search” of properties that have not been visited, maintained or serviced.  Once that information is verified, the deed of sale is made with the help of a notary public, who is an integrant of this network of criminals.

Use of False Documents and Deception to Judicial Authorities

Another way of illegally appropriating a land is through the preparation of false documents such as promissory notes or bills of exchange, among others, raising the possibility of a legal charge against the owner of the property, and therefore, possible foreclosure.

The myth of publicity registration and registered broker service

Some persons (including lawyers, unfortunately) use registration publicity as the only way to comply with due diligence. The truth is that it is one step, but not the only one. Legal safety for a real estate transaction based only on the information of the Register is a myth.

It is important to bear in mind that many relevant details do not reach the surface of an effective and responsible due diligence, based on the information of the Public Register only, such as false signatures, precariousness, rights of heirs, powers badly made, unregistered leases, overlaps or double titles, among others. Buyers should hire the services of topographers and registered brokers or inspect in situ the land of interest and should not leave the responsibility only to the lawyer.

Time to recover the property
The time it takes the illegally stripped owner to recover the property varies according to the circumstances, but experience indicates that a legal proceeding can last from two to eight years, depending on the complexity of the case. Often due to loss of patience, the stripped owner reaches a settlement in exchange for the return of the land. Unfortunately, this decision to stop pursuing the scam artist promotes impunity.

Javier F. Chaverri Ross, Attorney-at-Law
Founding Partner of
NCC Lawyers

Trial lawyer, real estate lawyer, recognized by the Company Stewart Title as “STAR Attorney” for successfully participating in the greatest number of legal real estate transactions during the years 2004, 2005, 2006, 2008.

How to be aware? Is Costa Rica safe to invest?

Yes, the coasts of Costa Rica continue to be, just as the interior of the country, a safe place to invest. We consider that the number of successful sales of properties versus the number of robberies is overwhelming. Registry thefts are a minority that are insignificant in percentage terms. However, it is also true that in that small number of cases, the effects can be avoided; what has to be done is to avoid common mistakes and always consider at least the following:

Due Diligence: Reducing the budget in a responsible due diligence causes an increase in the probability of a negative surprise in the future. Unfortunately, this process is considered by some persons as an expense rather than as an investment.

Mortgage Certificate: Taxing the property with a mortgage certificate whose beneficiaries are the same owners, discourages corrupt scam artists to set their sight in this type of property. Once this property is acquired, this simple way is the best guarantee to keep scam artists away from the property.

Title Assurance: Although it is true that the mortgage certificate helps to keep scam artists away from the properties, it is also true that it is no guarantee for possible defects that the title may have had before the property was acquired. This requires the purchase of the title assurance, whose issuer will pay for the defense and indemnity.

A circumstance that calls the attention of scam artists is unattended properties. Unfortunately, the absence of the owners suggests that these have no interest in the land, or that they are not alive and the heirs do nothing about it. This would make sense in those cases in which the owners bought the property in the 70’s or 80’s, which could indicate that they would probably be older people.

Having permanent legal representation should be considered. It is also convenient to use a corporate system with local attorneys. It is recommended to grant a power to the attorney that limits selling or encumbering the property of the company without written authorization of the president or its shareholders.


 

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“They want to kick us out when we’ve lived here all our lives,”
Oscar Chavarría, resident of Garza

“I’ve lived here for 30 years and now they tell us that they want to annul our property titles and kick us out of our homes,” commented Oscar Chavarria indignantly. He lives in Playa Garza with his wife and daughter.

 

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