Nicaragua Real Estate Transactions (2 of 3)

What to Avoid in Property Titles

Last article we discussed what to request from the seller in order to perform due diligence on your pending transaction.  Today, we will look at some of the tings to look out for that could be a "red flag".
 Keep in mind that this is only a list of items to look for, but ever situation is different.  It is highly suggested to hire an attorney for document review before making an offer on anything.

What to look for:

Some properties are more prone to complications than others.  Title which fall under these 3 categories can be trouble:

1. Agrarian Reform Titles.
2. Municipal Property
3. Supplemental Titles Issued by Court Order

In addition, you will need to check the title to see how the property was purchased or acquired. Acquisition through different initiatives can lead to various complications down the road. Look for these:

1. Acquisition through "Law 85". This law distributed luxury homes and properties larger than 100 square meters.
2. Aquisition through "Law 86". This law distributed smaller homes in popular neighborhoods.
3. Acquisition through "Law 88". This law distributed land to poor people through agrarian reform.
4. Aquisition through "Law 209". This law was part of modifications to agrarian reform.

If your property was acquired through one of these laws, you will need to have a settlement statement issued by the territorial ordinance office (OOT) and will also need to verify that the ordinance itself is registered in the Real Estate Property Registry.

Don't Forget the Basics

1. Check that the Title and Deed meet all legal requirements
2. Make sure you do a review of the title and check for registration errors. Make sure the Title is properly registered in the real estate section of the Property Registry Office in the city where the property is located.
3. Study the details and history of the property for the last 25 years in the Real Estate Property Office. See if there are any inconsistencies.
4. Verify that the owner is in full possession of the property.

Finally, ask around.  Approach your potential neighbors or others in the community.  See if they have ever had problems or know of anyone in the area who has. You can find out a lot just by asking around.

Next Article, we will take a look at title insurance.