The Puerto Rico Property Registry – How does it work?
I will not attempt to comment fully on how the Puerto Rico Property Registry works, but I will try to give you a glimpse on the subject and then expand more as the discussion develops. The purpose of the Registry is simple: to provide citizens with a public and reliable registry of transactions pertaining real estate properties in Puerto Rico.
The organization within the Registry appears to be simple enough. Properties are identified by township and by a number assigned by the Registry, and documents are filed in chronological order as they are filed and not as they are dated. This is the first and most important distinction that has to be learned if you want to understand how the Registry really works. The “date” of the transaction is different to the “date” the document representing the transaction is actually filed. This is important because, when the Registrar reviews the documents of a given property, he/she will do so in the order they have been filed with the Registry and not in the order the transactions were executed by the parties.
The Registry operates on the basis of regions or “sections.” For example, the records for properties in Vieques, Culebra and other nearby towns are located within the Fajardo Section of the Puerto Rico Property Registry. Within each Section of the Registry, you will find books (in Spanish “tomos”), and within each book you will find numbered pages (in Spanish “folios”) which contain the information organized by lot or property number (in Spanish “número de finca”).
The most important of these numbers is the lot or property number (in Spanish “número de finca”).
When you file a document within the Registry it has to be examined and approved by the Registrar previous to being “registered.” This may be confusing, so let’s go over it carefully and make sure you understand it completely before continuing.
By the way, this is the second most important data you need to know at this point.
The sequence is at follows:
First – the closing or transaction is completed before a notary who, under Puerto Rico Law, only lawyers can be licensed as notaries for reasons which will become more obvious as you read further on.
Second – the documents are filed within the Registry where they remain pending until the Registrar reviews them. A document in this stage is identified as “filed but pending review by the registrar.”
Third – the Registrar reviews and can either approve the documents/transaction or not approve the document/transaction. If the document/transaction is approved, it is permanently registered and a notice is sent to the parties accordingly. If it is not approved, the parties are notified of the rejection with specific details on the basis for the same. If the documents are corrected, the parties can then file the documents again.
Remember that I am trying to keep it simple, but it is important that you understand these stages and what they mean or represent, specifically when a document is pending registration.
When a document is “filed but pending registration” the transaction is not registered and can be subsequently “rejected” by the Registrar if a deficiency is found. This is usually not a problem, because the deficiency is clearly identified by the Registrar and the parties know exactly what they need to do in order to correct it. Nevertheless, it can be a problem if the parties need the signature of someone who has passed away, or if they need a document which has disappeared and cannot be recreated. This kind of circumstances will be subject of further comments at a later time.
Note that I made a distinction between a “document” and a “transaction.”
Under Puerto Rico Law, the documents filed within the Registry must comply with certain criteria as to form. If a filed document does not meet the well established criteria, the Registrar will not register the document even if the transaction is valid. Accordingly, if the document meets the criteria as to form required under applicable law, the transaction itself will be reviewed and it must be valid as well in order to be registered.
In sum, the above means that you can have a document prepared and filed in a valid format, but rejected because the transaction is not in compliance with applicable law and, conversely, you can have a transaction which is 100% in compliance with applicable law be rejected because the format does not conform to applicable criteria.
I can go on and on with information on how the Registry works, or does not work or it is supposed to work and, well, you name it and it has most likely happened. Nonetheless, I am going to stop here because, first, I have to set aside some time to draft the Spanish version and, second, I can anticipate that I will receive many questions that will help me enlighten you a little but more as the subject develops.
Remember that you are invited to post some questions on your own.
Santiago F. Lampón