Why Costa Rica Real Estate?
Common and Avoidable Problems
Liens & Encumbrances
Liens and encumbrances are legal terms that generally relate to a stake of claim or ownership to a parcel of real estate belonging to some one other than the individual to which that property is registered.
These types of situations can severely affect the ability of the owner to sell for a reasonable price. As the owner of a property like this, you are at a serious disadvantage. It is important to make sure that you do not become the owner of a property like this without knowing it. At the National Registry, you can look up any property by owner and region to find any liens and encumbrances. If you can realize that a parcel of real estate has some type of dispute before the sale, this can be used as a leveraging tool for you to use to get a great deal on a piece of Costa Rican real estate.
When at the National Registry you can find any other annotations against the property. Meaning, a legal notification regarding the property was submitted. Easements should also be listed such as: interference with underground piping or electrical lines, or pieces of the real estate allow for public use.
The most common type of lien is, as one would expect, a creditor such as a bank has placed an unpaid security or collateral on the property. Defaulted or late bank mortgages are typically the lien you would find on a property. Costa Rican law does allow for outstanding debt to be paid with the sale of a property so this type of lien, while it should be recognized by the buyer, is not prohibitive within a Costa Rican real estate transaction.
A consensual mortgage is a mortgage where the land or property was used as security for a loan. In this case, the real estate can be sold in this manner to pay off the debt.
When a bond is secured by the mortgage on a property, the property can still be sold. However, the debtor is not personally liable for any balance unpaid. The bond holder can collect the principal plus interest at the rate designated to the bond at its inception. So this bond, unlike the consensual mortgage, can be passed through to the next owner by endorsing it.
Tax or public utility mortgages are created when there are back taxes for the land, municipality or public utilities. In this case, whoever owns the property at a given time is responsible for payment. So if you purchase a property with this type of lien, you are "left holding the bag!"
Easements, as mentioned earlier, are a common type of lien where there is ownership interference between the registered owner and total legal ownership. After ten years, easements expire much like in the U.S. Costa Rican law deems that exclusive usage for this long converts something to private ownership if there is no documented dispute in the National Registry.