Real Estate Fraud in El Salvador – in our neighborhood   Leave a comment

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It happened here, in our innocent rural neighborhood in Chalatenango.  We’d heard about real estate fraud in the papers and on TV news, and not long ago even the mayor in La Palma was accused of being involved in a string of real estate scams.   Television newscasters reported about and warned of real estate fraud in El Salvador, but it was always “someone else.”

Today the problem hits home for us, as a neighbor who is also distant family of ours was defrauded of $50,000, and lost close to that much more in what he invested in a property he bought in our neighborhood.

What we knew up until a few days ago:    Last fall, the family of “Freddy” (I’ll give him this pseudonym) purchased a set of two side-by-side lots that were a “ganga” (bargain).   The owner’s mother-in-law walked around the neighborhood and visited families whom she knew could afford to buy them, and even came to my in-law’s home offering my husband the two lots for $40,000.   “I wish I had that kind of money,” was his response.  She then spoke with Freddy’s family and made the offer, upping the price to $50,000.   They went for it.  This was perfect timing, as Freddy was planning to return to El Salvador soon, and wanted his own home.

The purchase was done quickly, as it was such a steal and they didn’t want to lose the opportunity, not to mention how close the two lots are to Freddy’s parent’s and brother’s house.  It was perfect!

Yesterday, my husband learned that the sale of these two lots was a scam.  Here is the story as he relayed it to me:

A man in our neighborhood who was a cattle/dairy rancher owned or owns a large piece of land – enough for  60 – 70 “ganado” (livestock) to graze on it.    He is a Christian, and so decided to donate a small piece of his land to a church about five years ago.   A church and house for the pastor to live in were built there.  The cattle rancher was a regular parishioner at that church.   About two years ago, he sold all his cattle and moved to the United States when his family petitioned for his residency.  After he moved, the church began to lose attendance.  The pastor had no other form of income than the donations and “diezmo” (tithe) he and his family were living off of.   Things had gotten bad so he decided he better close up shop.    He called up a local attorney and the two of them drafted two “escritura” (deeds) together.

The pastor and his family offered the two plots with those deeds together as a deal – one plot had the pastor’s house on it, and the other had the church.   The two plots are the size of a modest suburban home with a yard around it in the United States.   Considering they had structures already built on them, this was a good deal for both the land and building.    The purchase was ideal for Freddy since he did not have to build a house, but only make renovations.  On the church side, though, he dumped a ton of money into it, to run a business.   He invested probably $40-50,000 after the land/home  purchase between renovations on the house and the major changes to set up his bar/restaurant, which he opened less than two months ago, and is a raving success.

The deeds the pastor and the attorney drafted had one major problem:  they forged the owner’s signature.   Though the owner had donated the land, had NEVER gave them any kind of paperwork or a deed.  He was simply allowing the church to build and hold its masses for the congregation on his property.  Nothing more.  Someone must have called him to ask  what happened to the church, which has become the home of someone else, with a very popular restaurant/bar beside it.

The owner, who was not even present in El Salvador at the time of the sale, said that was not his signature on the deeds.   The pastor and his attorney are now in jail.

Freddy’s family had an attorney look at the documents and said they were legitimate.  I do not know if this was before or after their ‘rushed sale’.  I would like to unearth more information to see how responsible the second attorney may be.   I’m thinking he may have glanced at them after their hasty purchase, but as the story unravels and the ‘chambres’ (gossip) run wild through our neighborhood, we’ll discover more about this, plus we are friends with the family.   Along with following it in the local news, if they decide its worth covering the story.

So, buyer beware:  When buying property in El Salvador make SURE that the deed is legitimate.  I do not know all the ins and outs of buying property, but I learned that an “escritura publica” (public deed) exists here, but that also an escritura privada (private deed) exist.   Where possible, do your own do diligence and get as much public information as possible, even if you’re working with a trusted lawyer.  Never hurts to double-check in case they happen to overlook something.

The agency where property deeds are registered in El Salvador is the Centro Nacional de Registros.  (National Records Center).

I’m hoping there will be some type of a happy ending for Freddy and his family.  I asked my husband if the owner and they know each other.  “Do they get on well?,” I asked.  “No,” my husband said.  Oh boy.

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