Attorney in Costa Rica

Debt recovery: Mortgage loans.

Debt recovery in Costa Rica is an important legal service that I can help you with.  If you made a loan or requested one, chances are you will need a debt attorney at some point to help you with debt collection.  This is especially true in cases with a payment default.  You should know that debtor´s prison is unconstitutional in Costa Rica.  Article 38 of our Constitution bans jail for debt.  The only exception, however, is a breach of child support.  With this in mind, it´s essential to have sufficient guarantees when making a loan, such as a mortgage or an executive title. 

If you sign a contract with all types of clauses, you are closing yourself to a future ordinary civil litigation process, in which you will have to argue breach of contract in a lengthy trial.  This is why an executive title, a mortgage, or a pledge (a mortgage is to real estate as a pledge is to cars), become necessary.  In addition, the law establishes specific routes for debt collections, which are more straightforward, secure, and shorter in terms and time, depending on the type of guarantee you procured with the loan. 

A legal route for each type of debt: 

If you are the creditor of a mortgage (hipoteca) or a pledge (prenda), then you will have a specific debt-collecting process called a “Pure Execution.”  If you have an executive title, a “Monitory Process” will be the legal route for debt collection.  I usually recommend a pre-trial debt recovery if possible; this may end in extra judicial satisfaction for both parties, which is an alternate way of conflict resolution.  The monitory and the pure execution process are a legal service I can provide for you.  They are both examples of civil litigation.  

debt legal service attorney in Costa Rica

Click on the types of debt recovery in Costa Rica:

Debt recovery prior to a lawsuit in Costa Rica
Pre-Trial Debt Recovery:

A good idea to avoid litigation.

Pure Executions

To execute mortgages and pledges.

The Monitory Process

To claim all other titled dinerary obligations.

Types of mortgages in Costa Rica

What is a simple mortgage?

A common mortgage is a right over someone else real estate property or real right.  The owner of the property constitutes the mortgage.  It must be constituted in a public scripture, by a notary public, and as part of the legal service, then registered in the Public Registry.  A mortgage is a contract that guarantees a loan.  The registered mortgage is a privileged execution title.  This means that it has a privilege over executive titles that are collected through the monitory process.  If the debtor breaches his payment obligation, the creditor can execute the mortgage.  As stated, the judicial process is the “Pure Execution Process.”  Once the lawsuit is established, the Judge will provide three dates on which the property will be executed to the highest bidder in a public auction.   This is why it´s called a “pure execution.”

What is a mortgage bond?

A mortgage bond is a curious form of a mortgage.  To guarantee a loan obligation, a real estate property is encumbered with the mortgage.   

However, there is no debtor, just bonds guaranteed with a property.  The only right in this type of loan is against the property, as established in the bond.  The bonds are transmitted by endorsement, as per the rules of title bonds.

Loan and debt legal service in Costa Rica

What are "Legal Mortgages"?

Legal mortgages are those that are created by law.  The owner´s consent is unnecessary, as these types of mortgages arise when the situation specified by law manifests itself.  A few legal mortgages are the HOA quotas, the ones established by territorial taxes and water works.  If the owner does not pay, these specific debts will have a privileged position for debt collecting.  The property will be auctioned.  

Important things to know:

Most loans in Costa Rica are commercial, and thus, civil law does not apply. They have a statute of limitations of four years.  For example, if you signed a promissory note, the creditor would have four years after the deadline to file the lawsuit and serve you.  If the fatal time-lapse passes, that statute of limitations on the principal occurs.  

However, mortgages are different.  Mortgages have a statute of limitations of ten years that begin when the payment deadline passes.  It´s worth noting that the statute of limitations on interest has a smaller time frame of just one year.  

loan and debt legal service in Costa Rica

Contact Chris now.