By Allan Garro

Attorney at Law & Notary Public

The most valuable asset in Costa Rica’s is still its own land. A number of persons and corporations have found that land development, lot segregation and construction of buildings and houses are a rout to obtain good profits.

There is a wide range of investing options in this field: houses, apartments, lots, farms, raw land, commercial buildings and beach areas just to name a few. However, there are also risks involved in land investments. Some people are dedicated to trying invading properties with absent owners, in order to generate squatter rights.

A type of land investment where extreme caution is necessary is UNTITLED LAND. Many untitled properties still exist all around the country, especially in rural areas.

The existing law that governs the title generating procedure is the LEY DE INFORMACIONES POSESORIAS or Possession Information Act. The attraction for this type of property is that prices are often low due to the lack of a title. The way to obtain legal rights over an untitled property is to have exercised possession in a public ad continuous way for more than 10 years.

For decades, the basic procedure to get the title was simple: submit a request in front of a Court, declaring possession has been held publicly, peacefully and continuously as the legitimate owner for more than ten years.

Also, present a registered Plot Map, publish and advertisement in the official Gazette, produce three witnesses to confirm possession and inform the owners of the adjoining properties.

Once completed, the Judge would deliver an order to the Property Land Records Department or Registro Inmobiliario to create a title to the petitioner, providing the property with a registration number.

The procedure used to last less than one year to be completed. However, new requirements appeared over time, to name a few:

1. The Plot Map needs to have a stamp from the environmental Ministry, acknowledging that the property is outside any protected area.

2. A soil study must be performed by the Agricultural and Cattle Ministry, to prove the property has been used properly. This means that if they recommend trees to be planted and crops eliminated such recommendations must be carried out.

3. If the property has streams or water sources AYA needs to inform if a water easement is required. 

There could be more requirements depending upon the petitions received by the Government’s Attorney, who has to be part of the process. So, even when all requirements are met, the process might take at least three years or more to complete. It’s never a simple court matter as most sellers of untitled land will try to advertise. Even once the title is finally created, the property will carry a special lien named Validation Term for three years, meaning any party who feels they have a claim can fight and get the title voided. 

Being victim of a scam is another possibility. Plot maps showing untitled land have been registered over actual titled properties through a move called “Traslape” or Overlap. Plot maps can also show in-existent properties with the help of dishonest topographers. With a false or inaccurate registered plot map showing untitled land it’s easy to take any interested buyer and show any raw land and inform that is the land that matches the plot map. You can see that even for honest attorneys it is complicated to perform title research with such informal documents.

The worst scenario is when a squatter invades the property while the title approval is still in process. The legitimate owner will not have a recorded title to defend its rights; the only tools will be to show the Judge the mentioned papers and produce witnesses, things that the squatter will likely offer in support of claimed ownership as well.

What will likely happen is that the judge will allow the squatter to stay on the property until the conflict is decided in a 5 to 10 year court process, time enough to cause serious damage to any investment plan or even to have the real owner desisting from fighting for the land.

If temptation is great, or the opportunity seems to be exceptionally good, some techniques should be adopted: 1. Seller should be obligated to get the title in Court before full payment is made. The purchase price can be deposited in escrow with an escrow agent or similar or a guaranty trust can be created.

Remember that due diligence is very important, especially on hiring a good topographer or engineer that can look for any overlapping plot map or other possible scam. Talk to the owners and neighbors of adjoining properties and obtain a note from them stating the have no problems or claims with that piece of land.

Being extremely cautious, preferring titled land without Validation Term liens, hiring qualified professionals and having lots of patience is a must if one is to avoid a fantasy becoming a shattered dream. 

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