When purchasing property in Costa Rica, proper registration of the property, and not the deed itself, is of the utmost importance (Carballo, 1995). Simply because an individual may have a seemingly "legal" title to a property in his/her name, does not necessarily mean that he/she is the legal owner. Like anywhere else in the world, there are scam artists who attempt (sometimes successfully) to sell the same property numerous times. It is therefore necessary to conduct a thorough investigation of a prospective piece of property as outlined below.

Costa Rica has a Civil Law system rather than a Common Law system. The practical differentiation between the two systems is that Civil Law is much more rigid than Common Law, making the procedure frequently more important than the substance. Such a distinction is of utmost concern when purchasing property, for the letter of the law must be followed precisely when registering property in order to obtain the full legal title (Carballo, 1993).

All property is registered at a central depository called the Registro Puiblico, and it is there that one should begin the title search for a parcel of land. The title must be checked for any liens or encumbrances, of which there are often scores. Alvaro Carballo, a Costa Rican real estate attorney, has compiled a comprehensive check list of items that should be verified before a purchase.

This list is published in his book, Purchasing Real Estate in Costa Rica: A Guidebook (Carballo, 1993). If the initial background check is flawed and a problem later arises, one could unwittingly lose possession of property thought to be legally owned. Title guaranty services are now available through Stewart Title Guaranty Company, based in San Jose.

Stewart Title advertises escrow and title guaranty services to protect the consumer throughout the process of acquiring land, and to indemnify him/her for losses that may be incurred. Stewart Title is a 105-year-old U.S. company based in Houston, Texas, with over 3,500 offices in the U.S. and abroad.

The trick to buying property in Costa Rica is to reconcile the actual property with the two documents that legally define a property. The first is the escritura, which is the title document that describes how the property is recorded in the Registro in words; the second is the catastro map, which is the actual map of the property that is on file.

The problem with defining a property arises from the fact that the escrititra may not correspond with either the catastro or a physical survey of the property. Such a discrepancy is due to the fact that when a transfer of property takes place, the transaction may not have been recorded on the catastro, since a change in one does not automatically require a change in the other (McMerty, 1995). It should also not be assumed that the catastro map accurately depicts the property itself. It is therefore necessary that an independent topographical study be conducted in order to verify the property boundaries.
 
Any discrepancies within the two legal documents and the land itself must be resolved before purchasing. Such investigations may be a bit daunting, not to mention confusing, for the foreign investor. Due to the intricacies of resolving such issues, retired Brigadier General McMerty and Alvaro Carballo founded PropData, a companv that offers property title investigations, legal support and financial information. PropData is to date the only known company of its kind of Costa Rica (McMerty, 1995).

A reputable, diligent attorney should take care of the technical procedures involved with a title transfer, but such attentiveness must not be taken for granted. Prospective buyers should beware. They must monitor and understand what is being done, as well as what is not being done. It is therefore worth mentioning the documentation needed for the closing:

• A copy of the tax receipt (impuesto territorial) proving that all taxes and registration fees are paid as of the date of purchase (Puleo, 1995)
• A certificate (constancia municipal) issued by the municipal authority of the Municipality where the property is located (Carballo, 1993)
• Sufficient funds to pay all necessary taxes and registration fees, including notary fees. Usually one half is paid by the seller and one half is paid by the purchaser (Carballo, 1993)
• Evidence that all prior mortgages, liens and judgments have been lifted (Puleo, 1995)

A notary must be present at the closing. In Costa Rica, notaries are attorneys accepted by the Supreme Court.

Many single-home investors will be faced with the choice of whether to buy a pre-existing structure or a plot of land on which to build a house. While there are a myriad of minor impediments that must be scrupulously attended to, most of which are outside the scope of this paper, a few points are worth mentioning as they may alter a buyer's decision.

The law requires that all applications for construction permits be presented by an architect licensed by the Costa Rican Association of Engineers and Architects. Utilizing a certified architect can be extremely costly as well as cumbersome (Puleo, 1995).

Furthermore, construction companies in Costa Rica are not bonded, thereby greatly increasing an investor's risk.

Before building a house one would be well advised to speak to numerous individuals who have previously built in order to gain an understanding of the reality of the construction process, such as constant delays, necessary personal supervision, and cost overruns.

More useful information:
Purchasing Property
Building a Home in Costa Rica
Establishing Residency
Oceanfront Property
Squatters
Expropriation