Costa Rica Property Types
Private / Untitled / Possession Property
The great majority of land in Santa Teresa, Mal Pais and Manzanillo is titled. Throughout Costa Rica, however, there is a lot of untitled land, that may qualify for title.
In such a possession scenario, it is the recording of the legal transaction that establishes possession or ownership rights to the property – not a title. The reason is that for many years, farmers and settlers never applied for their title but possessed them in a legal manner, established boundaries and transferred rights through private documentation. When properly recorded, these rights are completely legal, fully transferable and can qualify for inscription in the National Registry as fee simple title.
Legitimate possession rights to real estate can be demonstrated by researching the history of ownership recorded through private documentation. This is done through a properly recorded bill of sale in a notary‘s protocol book. The bill of sale (carta de venta) shows transfer of ownership and describes the property in words relating to the surrounding properties and well-defined landmarks. Pages from the notary‘s protocol book are then registered in the National Registry.
The darker side of the possession issue involves land occupied and claimed by illegitimate settlers or “squatters” – someone claiming rights of ownership to real estate, by virtue of their occupation, but having no ownership documentation. Costa Rica does have a homestead law (precario) that sets guidelines vis-à-vis squatting, however the law is outdated and needs modification. Sometimes there is a clear distinction between “legitimate possession” and “illegitimate possession” and sometimes there is not. In 1941, a titling procedure called Ley de Informacion Posesoria was created by the government as a means for landholders to register their land that has been “held in possession”. Lots of real estate has been registered using this procedure.
Minimum requirements to qualify for a registered title to possession land are a registered survey and verifiable history of legitimate possession “passively and publicly” for a minimum of 10 years with no disputes. The remaining parts to complete the title process are notarized statements from adjacent property owners and 3 witnesses along with a judge’s inspection and review of all documents. This process, done with the help of a lawyer, can take several years and cost between $1,500 and $3,000 depending on the size of the land. The process, like any legal proceeding in Costa Rica, is quite lengthy, opaque and frustrating, but justice is usually meted out, albeit in a time frame that was not remotely anticipated. When an attorney says something will take x years, it is usually best to double or triple that estimate to temper your expectations.
Possession land cannot be mortgaged, or liened, as it has not yet been recorded in the National Registry. In some cases, a buyer will pay for the title process after the sale or even make it a condition of the sale or escrow. In general terms, it is a safe rule to not buy untitled property if you are not clear about how it works. Although the price may be more attractive for posession land, the concomitant legal process will bring much confusion and uncertainty. However, considering that much of the land in the country is untitled, especially in rural inland areas, it is logical that many of the land transactions involve untitled land.