Before buying property in Puerto Rico, it is essential to understand the local real estate laws and process to obtain a clear title.

Posted by & filed under Title Clearing.

Many people that look to buy property don’t even know that they need title clearing services, much less what these essential professionals provide.  However, if you discover that the previous owners had debt that resulted in a lien against the property, and that you may now be on the hook to pay if you want to close the deal, then you’re going to wish you did your homework.

Before you buy real estate in Puerto Rico, you want to make sure the title is clear.  This is especially true if you are a buyer from the U.S. or another country and don’t understand the differences inherent to Puerto Rico real estate law. Here are a few things you need to know about how title clearing works in Puerto Rico before you lay down your dough and purchase a home.

Loans are Liens

In the U.S., a lien is a judgment granted to a lender by the courts that allows the lender to gain repayment based on an asset (often real estate) owned by the borrower. Judgment liens may be sought to repay credit card debt or pretty much any other type of money the borrower has agreed to pay.

Those seeking loans may also use their property as collateral. They can use this asset to purchase a car, buy another property, or start a business, just for example.  In these cases they basically enter into a lien agreement. In any case, their inability to pay debts could result in creditors taking possession of the property for repayment.

This is not exactly how liens work in Puerto Rico. Instead, Puerto Rico considers your mortgage loan a lien. You must pay the mortgage off in full.  At that time the bank will transfer the note to the buyer and release the lien.

Problems with Lien Release

An issue commonly seen in Vieques real estate law is a failure to release a lien. This sometimes happens even after the lender pays the mortgage off in full. The lender may also repossess the property because of failure on the part of the owner to pay.

A proper title search can uncover such circumstances.  However, it is in the new buyers’ interest to hire an experienced real estate lawyer.  These professionals will ensure that lenders release liens when appropriate.  They can also ensure that the sale involves repayment of the lender so you can obtain a clear title.

Buyers that fail to release liens prior to the sale may not be able to purchase property.  Alternatively, they may find themselves facing repossession of the property or a demand to repay the original lien after the sale has gone through.