The pitfalls of buying property
One of the main problems of acquiring real estate in Panama is that if you have any complaints about an agent or a promoter and on top o...
One of the main problems of acquiring real estate in Panama is that if you have any complaints about an agent or a promoter and on top of that you do not speak the language, it is difficult to report them.
Sam Taliaferro in his blog “Panama Investors” says that he has received a number of e-mails from property buyers asking for help with Panama developers.
According to a report of the Consumer Protection Authority ACODECO (Autoridad para la Protección al Consumidor y Defensa de la Competencia) one of the main complaints from property purchasers is that promoters are not complying with the closing date, apart from putting Draconian clauses in the contracts, which allow the developers to keep the house if the buyer is a few minutes late after the completion date, plus serious defects in construction and shoddy workmanship.
ACODECO can analyze the case and decide if it has merits to go to court or arbitration, but it has limited resources for the amount of complaints it receives a year.
Taliaferro advises his readers to forget the courts in Panama as they are expensive, take years to get through and “the judges can easily be bought by developers.”
The Judicial system is trying to clean up its act and give more confidence to foreigners who are investing in Panama, but the fact remains that to bring a civil case to court can take years and a lot of money before it could be heard.
However not all is lost. A group of foreigners are fighting back and have created a web site dedicated to the victims of all unscrupulous real estate agencies like “Homes Real Estate of Panama” and developers such as “A2SN”, which allegedly have sold at least 6 pre-construction projects in Panama over the last two years and none have broken ground. They include the Plaza Obarrio, Plaza San Francisco, Loft One and Two and Plaza Costa del Este.
Four of those projects were eventually sanctioned by the Panamanian authorities with fines of up $100,000 each for deceiving the public by marketing without having planning permission approved.
A former client of A2SN, who declined to give his name said that he sent 20 percent down payment for the purchase of an apartment in the city on pre-sale that was supposed to be finished in January 2009, after almost a year and several phone calls and e-mails, he has no apartment or money back.
ACODECO recommends that before buying a property the purchaser investigate thoroughly the property developer in the public registry, the municipal engineer office and the Housing Ministry.
If in doubt, do not buy on pre-sale, currently there are plenty of available units in the markets that are unsold, due to the slowdown in the global economy. Do not be a victim and study all documents before signing on the dotted line and hire a good lawyer.