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Warning-real estate in Panama is not what it seems

We purchased a condo, pre construction, from what we were told to be a reputable and a premium developer [Moderated] of Panama City, Republic of Panama in October of 2006.  The project was named Oceanaire, and was supposedly the best amongst the three towers they were building at Punta Pacifica, a very affluent area in Panama city. The marketing material was exemplary and we were told that it is a premium building, in premium location, by a premium builder, at a premium Price. The closest thing was the Trump which we were not keen on.

Make the long story short, delivery was expected to be in 2009, well it took them another 3 years to finish and schedule delivery of the unit in 2012. We actually got the Deed on May 21, 2013.  Once they got our initial 30% deposit there was little if any communication as to construction progress or even an apology for the delays. Even post full payment it was like pulling teeth to get any kind of information from them. Every time we had a question a physical visit to the Aleman Arias office was necessary to get a response. At the time of purchase we were led to believe that over 90% of units were sold, well again that was just talk.  At delivery they still has unsold units. The developer is far from a capable builder.  On delivery we noted a number of items that needed to be fixed and a year and half later nothing has been done.  Here are a few worthy of note albeit a far cry from a complete list of  unfinished items

Literally every item used in the construction was the cheapest you could find from plumbing, the AC unit, tiles, cabinets, electrical outlets.  You name it and you could not find any thing less expensive even in Panama. The staff while pleasant do not get much done.  It's always the sub who is not responsive......the developer simply collects the checks and then let's you hang.

Air conditioner - the day we took possession we noted the loud noise from the compressor such that you can not sleep.  I don't think it has a "DB" rating!  It looks as if it was a used unit on delivery.

Shower - the water flows away from the drain.  So we use a squeegee to push the water towards the drain.

Pool - the pool has never been completely finished.  It looks far from clean, the tiling is incomplete and I wouldn't let my dog swim in it.

Gym - the charged each unit buyer (230 of them) in excess of $1000 to furnish and equip the gym.  Well my basement is better equipped and furnished then Oceanaire. 

All of this can happen anywhere but the difference is once noted it gets fixed else where around the world but not at the projects that Aleman Arias Developers promote and profit from. They are promoting a Ocean reef now and thrust me you don't want engage in a transaction with this group as you will undoubtedly be disappointed.

How horrible an experience for you!

I have a couple of questions if you don't mind.  Prior to the real estate nightmare, how long had you lived in Panama?

Assuming you rented prior to purchasing, how was your rental experience, and your overall living in Panama?


Thank you,
Anna

Data from the Public Registry reflects that approximately 50% of the Oceanaire units are still registered in the developer's name, therefore, if the units were 90% "sold" approximately half the buyers have not closed.  Time will tell whether they will do so or whether they will walk away from the deposits.  The refusal or reluctance of buyers to close is common with new buildings in Panama City.

Is there effective legal recourse in Panama?

Hello Prboss---> An introduction may be?

Thanks

Karen :)

karen1604 :

Hello Prboss---> An introduction may be?

Thanks

Karen :)

How rude of me. Sorry.

But any answer to my question? Sure there are some legal/RE people here.

The U.S. State Department describes Panama's judicial system as follows:

Judicial Recourse
The judicial system’s capacity to resolve contractual and property disputes is weak and open to corruption.  The World Economic Forum ranks Panama’s level of judicial independence to be 133 out of 142 countries in the world. The World Bank’s Doing Business in 2012 notes Panama is 120 out of 183 on the Registering Property measure, and 119 on the Enforcing Contracts measure.

I think they're being kind. In my experience, no meaningful legal recourse exists, especially for expats, to recover against unscrupulous developers and other perpetrators of fraud in Panama.  Indeed, find yourself on the wrong side of a dispute against any number of politically connected families and you'll be lucky if your bank accounts and other assets are not seized without any notice or imprisonment for no reason or both.  Contracts, like the word of most Panamanians, means nothing.

I'm sorry you have had such a bad experience! I don't think you are alone though. There is a different work ethic here. One of our neighbors (Panamanian) does construction and we notice that he is on site every day watching his workers. I imagine it's even more important for expats, especially if you don't have a personal relationship with your builder. "Good enough" is harder for us to accept, and getting things fixed that are downright wrong is almost impossible. I know it's small consolation to know that many others have had similar problems. I hope you are able to get enough resolution so you are able to enjoy your new home, and that this will serve as a warning to others that you can't be too careful.

SawMan :

The U.S. State Department describes Panama's judicial system as follows:

Judicial Recourse
The judicial system’s capacity to resolve contractual and property disputes is weak and open to corruption.  The World Economic Forum ranks Panama’s level of judicial independence to be 133 out of 142 countries in the world. The World Bank’s Doing Business in 2012 notes Panama is 120 out of 183 on the Registering Property measure, and 119 on the Enforcing Contracts measure.

I think they're being kind. In my experience, no meaningful legal recourse exists, especially for expats, to recover against unscrupulous developers and other perpetrators of fraud in Panama.  Indeed, find yourself on the wrong side of a dispute against any number of politically connected families and you'll be lucky if your bank accounts and other assets are not seized without any notice or imprisonment for no reason or both.  Contracts, like the word of most Panamanians, means nothing.

Ok, thank you.  But are you implying that there is no rule of law in any RE transaction? If a condo is owned on Balboa Ave, by an expat, than that expat has less legal rights than a Panamanian?

Prboss :
SawMan :

The U.S. State Department describes Panama's judicial system as follows:

Judicial Recourse
The judicial system’s capacity to resolve contractual and property disputes is weak and open to corruption.  The World Economic Forum ranks Panama’s level of judicial independence to be 133 out of 142 countries in the world. The World Bank’s Doing Business in 2012 notes Panama is 120 out of 183 on the Registering Property measure, and 119 on the Enforcing Contracts measure.

I think they're being kind. In my experience, no meaningful legal recourse exists, especially for expats, to recover against unscrupulous developers and other perpetrators of fraud in Panama.  Indeed, find yourself on the wrong side of a dispute against any number of politically connected families and you'll be lucky if your bank accounts and other assets are not seized without any notice or imprisonment for no reason or both.  Contracts, like the word of most Panamanians, means nothing.

Ok, thank you.  But are you implying that there is no rule of law in any RE transaction? If a condo is owned on Balboa Ave, by an expat, than that expat has less legal rights than a Panamanian?

why no answer?

Sorry, didn't know I had a question to answer!

Yes.  There are contracts and laws of course, but recourse as an expat for breach or other civil wrongs are limited at best, as the U.S. government describes, by design:

(i) Remedies, like suing for money damages, typically do not exist.

(ii) The reality of Panamanian justice is that some people get more justice than others! My rights as, say, an aggrieved condo buyer, are far less important and far less protected, if at all, than the powerful, politically connected Jewish developer

(iii) If a procedure for recourse exists, lawyers will claim they'll proceed on your behalf and will take your money, but will not vigorously pursue knowing who is on the other side and knowing even if they advance the claim the judge will never hear it, the file will be "lost" multiple times over the years until you go away.

Hi SawMan > thank you for your participation. :)

thanks.  guess the solution is to rent vs buy. that way you can pack up and leave if legal issues arise.

Prboss :

thanks.  guess the solution is to rent vs buy. that way you can pack up and leave if legal issues arise.

I think that's really the way to go.  After time if buying seems right, you'll be more aware of the traps.  Tell us how it goes!

Me? not really in the market to buy in Panama.  I just visited there and had a great time there. Didn't realize there was so much going on behind the scenes. There is never any mention of these legal issues on any site  promoting foreign RE and it just seems strange that a few people have such a divergent opinion.   I have friends that have purchased in Panama as  well as Costa Rico and they seems very happy so I assumed that it was true that Foreigners have the same legal rights as natives.  I also know many people that lost hundreds of thousands of dollars on RE here in the US after the market downturn in 2008.  So I guess the moral of this story is Buyer Beware no matter where you live.

Thank you for posting this. Unfortunate your experience was. I agree with you 100%. The promotion of Real estate in Panama is a scam. The marketing looks great, but what you get is substandard. Textbook case of misrepresentation. Unfortunately, there is no accountability, and you'll probably spend more $ trying to seek justice.

Just like purchasing real estate anywhere, it's important to do your research, and spend some time in a location before you buy. 
  I take great exception to the comment that most Panamanians do not keep their word.  I've had the opposite experience.  I have found terrific properties with great prices.  The transactions went very well and the owners became great friends.  The key??  DUE DILIGENCE.  I found that having a good Panamanian attorney is a must!  The attorney will do the research in the National Registry, make sure all the appropriate documents are created, notarized, filed, etc. 
  Most of the great bargains/properties are not advertised by "realtors". You will find by going to an area you like, and spending time getting to know the local people will generate lots of good possibilities.  If possible get a Panamanian to negotiate for you. 
  Have a survey done, go to the Electric Company, water company, etc. 
  The whole process doesn't take long, and is not expensive.  The seller normally pays the commission, and if anyone recommends "Title insurance" beware.  That's why Titled Property is listed in the National Registry (online).
  I'm sorry you had such a bad experience, but those type of people are everywhere.  I assure you it's not the norm.

I spent some time in Panama and was told that most properties do not have a title our certificate of ownership. They are just handed down from one person to another. That leaves the trust issue. In order to prove ownership, one needs to get an attorney. That does take some time. Fortunately, I'll be living on my boat and may consider renting somewhere.
Best of luck and I hope you find a solid answer.

Captain Steve

This is a repost from another site.

"PANAMA PRICES ON THE RISE

Make no mistake, the last six months in Panama have seen a noticeable rise in property values, especially along waterfront districts like Balboa Avenue, Punta Pacifica, and Costa del Este.
Strong demand from the US and Canada, Venezuela and Colombia, along with an uptick in the economy of European countries like the Spain and the UK in 2013, and a decreased supply of new apartments for sale have driven up prices by as much as 10% in certain areas.

Because developers were not building new high rises between 2009 and 2012, the next 12-24 months supply of brand new apartments will be limited to a handful of projects; this as opposed to the roughly 4,000 new apartments that hit the market over the last three years.

This slackening of new inventory, combined with steady/rising demand will continue to drive prices up.

Now is the right time to take a serious look at the market, which after being flat for over three years is once again trending upwards. In real estate, its not just about location, it’s about timing.

2014 is going to be a game changer for Panama. The Metro will open and the road reorganization projects throughout the city will be completed, plus the historic renovations in old town and the Cinta Costera 3 will also all be completed, breathing new life into a city that’s felt like it has been under construction for the last five years.

All the Best,

Kent Davis

Panama Equity Real Estate

Panama City, Panamá

El Cangrejo, Argentina Tower

Office: +(507) 396-0931 Mobile: 011 (507)6030-6782 USA Number: 404 865 1629

Skype: kentpd22

I know Kent Davis.  He's a nice guy, but he is a salesman.  Don't rush to buy in Panama for fear that prices are rising.  Friends of mine on the ground and more knowledgeable than me feel it's more likely prices will fall or remain the same.

By the way, please read carefully the discussion on another thread about Panama seeking to tax the worldwide income of its citizens and residents.  Many predict the repeal of this hastily enacted law (based on wealthy Panamanians who control Panama telling Martinelli "thanks but no thanks").  But, it has not yet happened and those friends of mine in Panama with income outside Panama are seriously beginning to think about leaving if this is not repealed right away.

Thank you Sawman for the information. This is inline with what I've heard regarding the banking community. The US is trying to impose disclosure of all expats who bank in Panama. If non compliance is realized, then a 30% fee would be added to all transactions. Many Central and South American Country's are considering leaving the US regime and going back to their own currency and standards. It's going to be an interesting ride for sure.

Captain Steve

Yep, the U.S. is exerting pressure on foreign banks to commit to disclosing information on U.S. account holders.  But, the 30% under FATCA is not a fee, it is a tax withholding.  So, if you wire funds from the U.S. to a foreign financial institution that has not agreed to provide information with the U.S. your U.S. bank will withhold and remit 30% to the U.S.  This would be like making an estimated tax payment or other tax withholding - you can claim credit for the payment when you file your individual tax return.  The withholding assures the U.S. that you will report the foreign account and pay taxes on any income, as well as I suppose discouraging dealings with "bad" banks and institutions.  Here's a link to general information on FATCA:

http://www.irs.gov/Businesses/Corporati … stitutions

A list of approved FFIs will supposedly be available to search online later this year:

http://www.irs.gov/Businesses/Corporati … urces-Page

Captain Steve, not true. Most property in Panama is titled. If you buy ROP (untitled) you are taking a big risk.

The big take-away from this story is DO NOT BUY PRE-CONSTRUCTION PROPERTY.

its impossible to get complete and accurate information about any property
realtors in panama are like used car dealers trying to sell a lemon
panama is overbuilt and choking - prices are coming down
sooner or later the property tax issues have to be solved
or this huge real estate inventory will just rot unsold
there are so many nicer places than panama

I am Panamanian and agree with you wholeheartedly.  Despite all the corruption and discrimination in the US my chances of buying and selling property legally are much better than in Panama.  I am speaking from experience. One thing that stopped me from purchasing property also is that my kids do not speak Spanish and would have to go to Panama to claim any property left by me and not sure what would happen.  They could be easily fooled and despite having Spanish-speaking relatives I will not take any chances.

Have you EVER bought property in Panama...it makes me wonder where are you going to or who are you talking to...if I didn´t know any better I´d be truly scared...

Lets talk, for a change, about life in the U.S. of A...Teens do what they like, drugs, teenage pregnancy, steal, rob and disrespect authority at will...I know...I worked with the Department of Justice for long enough...at least in Panama, although they are close to U.S. laws, parents STILL HAVE AUTHORITY to discipline kids (mind you, discipline DOES NOT MEAN  TO BEAT!)...I would like one of you to tell me if you´ve never have come across corrupted, down right lying realtors and car salesmen (and women) in the States? With respect to disclosure: The banks in Panama are just reacting to U.S. pressures to disclose even a single dollar any U.S. citizen deposits in Panama (and I AM being FACETIOUS  here).

The unscrupulous behavior of RicardoEva's developer sounds exactly like some stories I have heard about Trump sites, a developer Ricardo consciously tried to avoid!  There is nobody to trust!  I am going to look for a cave in the highlands of Panama to move in to.

From a Panamanian point of view I doubt there is any meaningful legal recourse.  That said, if you don't mind, you can move there. I would not return to live there on a permanent basis unless I was destitute.

We had a great experience buying our home here in Boquete

What we learned:
You do not need or want a Real Estate Agent
You need a great lawyer to make sure all the titles and deed are clear and process the payment and check on taxes paid by the seller
Search through word of mouth
Have a contractor inspect the home
Get a land survey
Try to buy a home from someone that is moving back home..US or Canada, you will get a much better deal and smoother transaction
Talk to the neighbors in your new neighborhood as to the pros and cons and what other homes nearby have sold for.
Drive by late in the evening and walk around
Take your time!

We too are considering buying property in Panama to escape out ghastly Winters in Canada. We are coming to take a look at the Coco Beach develop in Puerto Armuelles. The project looks great on paper but we are still a bit leary- especially after reading this forum!

Pretty much everyone will tell you to live here for at least 6-12 months before even thinking of buying something. Never buy preconstruction either. It's easy to buy, but not so easy to remedy problems or sell if you change your mind. Renting on the other hand is easy. Change your mind, here are your keys back, bye bye.
Coming from Canada, I wonder if you would find that area unbearably hot.

BRUMMY :

We too are considering buying property in Panama to escape out ghastly Winters in Canada. We are coming to take a look at the Coco Beach develop in Puerto Armuelles. The project looks great on paper but we are still a bit leary- especially after reading this forum!

We don't intend to stay for more than a couple of months and intend to rent it out the rest of the time.  It won't even be ready for nearly 2 years (or 10!?)
February we are coming over to take a look around.

Be careful with Coco Beach....has the signs of hyping the dream more than reality.  Panama has quite a few "developments" where lots are sold with beautiful artist renderings of completed houses and amenities that never come to fruition.  The first clue is the bold statement that you'll double your money in five years.  Much more likely is that the lots will be all that's there in five years.

Oh boy, the more I read, the more I lose heart about buying in Panama.  How does this happen time after time?  The guy I have been speaking to from Holland appears to be very transparent and open with everything regarding Coco Beach, but now I am questioning everything.  We are coming in February to take a look at the lot we have put a deposit on.   We have the paperwork to say that our deposit is 100% refundable should we decide against it.

So, you can't see there being any reality to Coco Beach ever happening?

You are right to question everything! I looked up Coco Beach. They don't tell you that Puerta Armuelles is a pretty depressed area. One of the fruit companies (Chiquita?) pulled out and the jobs dried up, and many people are hurting. There is talk that another company (Dole?) is coming in and things may improve, but who knows what the future holds. There is also talk of a shipping port in the area and they have improved the road in preparation for this, but again who knows what or when anything might happen.

You are from Canada. The majority of Canadians I know are used to a much cooler climate and aren't comfortable at sea level here. This is the tropics and it is hot and humid.

$50K or more? That's a lot to put into a property that may not go anywhere. double your money in 5 years? really?? how? There are so many stories of people who invested in things like this and ended up very sorry. Anyone can talk a good line, but it's only talk until something actually happens. I hate to rain all over your plans but I would be very very cautious. When you come in Feb you can see for yourself what it is like in Panama and in that area in particular.

I think you would be much safer to rent something for the couple months you plan to spend here. Also, who would rent your place for 10 months of the year? I wouldn't want something I had to leave for a couple months a year so the owners can use it. Your area could possibly be a tourist destination someday if improvements and developments happen but it certainly isn't now.

It will be interesting to see how you feel about things when you come. Me? No way. Rent a condo at Las Olas instead.

BRUMMY :

Oh boy, the more I read, the more I lose heart about buying in Panama.  How does this happen time after time?  The guy I have been speaking to from Holland appears to be very transparent and open with everything regarding Coco Beach, but now I am questioning everything.  We are coming in February to take a look at the lot we have put a deposit on.   We have the paperwork to say that our deposit is 100% refundable should we decide against it.

So, you can't see there being any reality to Coco Beach ever happening?

There's an endless stream of newbies for developers to prey upon.  Don't buy pre-construction, unless the funds are insignificant to you financially and you like playing "Panama Hold 'em."

Your second clue is that the developer posts no information about itself anywhere on the website.  Any reputable developer with "skins on the wall" and a track record in Panama would be boasting.  These guys are hiding.

Unrelated to the Las Olas project is a Las Olas project in Ecuador.  The U.S. developers are much maligned on the Ecuador forum:  http://www.expat.com/forum/viewtopic.php?id=243442
You might find the discussion interesting on the ability of non-local developers to successfully develop in another country.

Thanks for the information!  There is information on the development group actually, it's called Panama Portfolio.  They are Dutch/US company and have, it seems anyway, a few developments going on at the moment.  All are in Panama.  I am still scared though, don't feel good about this at all....

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