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Costa Rica To Tighten Property Transfer Rules

by Mike Godfrey, Tax-News.com, Washington

24 November 2005


Costa Rica's National Registry, the Registro Nacional, is taking steps to cut down on fraud after several recent cases have highlighted its vulnerability to deception by dishonest lawyers and notaries who forge deeds in order to steal properties, a crime to which expatriates are particularly susceptible, according to A.M. Costa Rica, an English language news source.

The new rules come after the recent arrest of 13 individuals, 5 of whom were lawyers, based on allegations made by the Judicial Investigating Organization. However, this is by no means an isolated incident with the case just one of several currently being investigated by the authorities or being heard in the courts. Indeed, Justice Minister Patrica Vega Herrera has stated that 161 complaints against notaries have been lodged this year alone.

The registry had become vulnerable to fraud because it is based on a declaration of "public faith" by notaries and lawyers, a system which is easily abused. A.M. Costa Rica, which has campaigned for a change in the law to protect expats, who often leave their properties vacant for long periods while they spend time overseas, observed that: "A notary can lie and swear that a property holder signed away his ownership rights to a third party. Then the third party can legally transfer the property to an innocent fourth party."

However, even when these cases are brought to court, judges have been known to award the property to the "innocent fourth party", leaving the former owner empty handed.

In an effort to tighten up procedures, a database of fingerprints belonging to notaries is being gathered and in future, documents presented for registering will bear the fingerprint of the notary who prepared the paperwork. Also, digital signatures will be used to verify documents which are being filed electronically, while property owners will be notified by e-mail when somebody presents papers involving their land.

A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

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