Suspected property fraud

Reported in AM Costa Rica by Garland M. Baker
An amazing scam unfolded in Costa Rica in the past two weeks. Events surprised the buyer as well as the owner of a unique beach view property.

Quick thinking and a nearly unknown legal maneuver locked and saved the property before the Registro Nacional closed Friday even though the institution again refused to take immediate administrative action in a suspected property fraud case.

The purchasers did not know they were buying something the true owner had no intention of selling. The intermediaries involved would have received millions in the transaction. Where the money would have gone is anyone’s guess. Scammers are scheming, crafty, aggressive and malicious people.

The intermediaries involved may not have even been aware of the manipulation in the property registry — thus they could have been innocent third parties. They were asking enough money for the excellent parcel not to send up warning flags. However, they were anxious to close the deal and wanted their money. In itself, this is not strange. Most agents and brokers push hard. They were constantly warning that other buyers were interested in the deal.

However, a California consultant to the would-be buyers with many years experience in Costa Rica did his due diligences at the national registry and read between the lines.

The paperwork looked corrrect, but there were some filings over the past months regarding powers of attorneys that led the consultant to ask the intermediaries for original documents. They agreed but did not produce them.

Powers of attorneys end with the death of the maker, unless given by stockholders in a corporation or shareholders in a limited company.

This beating around the bush lead the consultant to find the name of the owner of the property so he could make personal contact via telephone and ask for an explanation.

The buyer needed to leave the country. The consultant needed answers. What he found floored him. The owner, shocked by the phone call, explained a spouse recently died and the family company holding the land was in an updating process. The owner knew nothing more except that people had been walking on the property.

The property had been put on the market by persons who claimed to have powers of attorney enabling them to sell the land.

Studying the national registry documents in more detail showed that people knowing of the death of the spouse hurried to take advantage of some of the language in the corporate documents to make the powers of attorney for the brokers. Again, possibly the brokers were innocent to the swindle. There is no way of telling. It does appear someone in the national registry was helping the scammer or scammers.

A.M. Costa Rica regularly reports that crooks read obituaries to find properties to steal. The crooks usually look for foreign individuals who held property — not people who have died leaving legal holes in a corporation or limited company. This is a new twist.

The long-time lawyer to the family scurried all last week trying to find a solution to lock up the property before the thieves could sell to someone, anyone. The national registry sent him to the Judicial Investigating

Organization to file a complaint. Registry workers said they would not look at his paperwork without one.

The attorney got all his paperwork in order and presented it again to the national registry. The workers told him it would take days to review the documents before there would be any action to freeze the property.

Desperate for a solution, he remembered a conversation regarding freezing one’s own property in the national registry in case of an emergency. Some deep research pointed to articles 266, 267 and 268 of the Civil Code, articles 49C and 51A of the national registry rules along with Article 41F of Law 3883 of 1967 regarding registering property.

He put together a voluntary immobilization of his client’s property and filed it at 1:36 p.m. on Friday, one hour and twenty-four minutes before the institution closed. His diligence saved his client’s property, which could have been sold over the weekend.

The initial buyer went home, not leery of investing in Costa Rica but well aware of the potential pitfalls created by stealthy scam artists and the importance of his consultant’s due diligence. The consultant felt vindicated because he fought his own property fraud case for many years and satisfied that he had helped both his client and buyer avoid a long legal battle that would have left a buyer “in good faith” and an unaware owner battling for years. Both are safe after being alerted to the fraud.

The lessons here: Education, experience, and a healthy dose of skepticism are the best defenses against becoming a victim of fraud. Property owners and buyers need to know who corporate officers are. If they buy an off-the-shelf company, they have to make the needed changes in the corporate makeup. They also need to know what the rules are regarding what corporate officers can do and what they cannot. If someone dies, they need to get professional assistance to eliminate any legal loopholes.

And they can use the voluntary immobilization of a property as a legal tool to freeze real estate assets in emergencies.