Legal Project proposes to regulate Costa Rica real estate agents

Source: César Brenes Quirós for La Nación on Monday 18th of October 2010.

The Informality in the practice of Costa Rica real estate brokerage and lack of clarity that exists in the real estate contracts could come to an end if Congress passes a bill that would regulate the sector.

The draft of the law regulating Costa Rica real estate contracts and real estate brokerage seeks to establish clear rules of contractual and property leasing, trust, security and title insurance.The intent is to require real estate brokers to register with the Directorate General of Taxation and the Financial Intelligence Unit of the Costa Rican Drug Institute (ICD) to prevent abuse of trust and money laundering through property sales.

Weak controls. According to the Minister of Justice and Peace and promoter of the project, Hernando Paris, today the sector is weakly controlled by outdated rules in the Code of Commerce and the Civil Code.

This has led, in some cases, for domestic and foreign investors to have been victims of overpriced properties and scams, to acquire properties that do not belong to the seller or are in a precarious state.

Another common problem, according to Paris, is the performance of professionals and non professionals such as brokers and custodians guarantee (an impartial third party who receives money (escrow) and documents delivered after the close of business), raising conflict of interest.

In the project proposed by the Program for the Regularization of the Cadastre of Real Estate in Costa Rica, provides that the escrow agent could not be both broker, lawyer or notary in the same transaction.

In addition, in order to appease the informality between brokers would be required to have an insurance policy or guarantee and obliges the real estate agent to belong to at least one association of licensed real estate brokers.

Likewise, brokers would be prohibited from charging for a property a sum greater than that agreed upon with the seller.

"The bill would improve the country's international image is now known as a tax haven for the laundering of money of dubious origin and a transit zone for drugs," said Francisco Barquero, president of the Costa Rican Chamber of Realtors ( CCCBR).

For Emilia Pizza, president of "Association of Realtors", is a clear incentive for the law to catch up with international systems.

For now, the proposal has no clear opposition. However, the date of presentation is uncertain despite the priority status on the real estate commission.