“If we can learn from the mistakes of others rather than repeating them, we are wiser for their  experience”

If not for a post on BoqueteNing offering a slice of Eden, in still another urbanization, I probably would not have written this, Caveat Emptor check list. This is a advisory to people who plan to retire into a subdivision or just buy land  in Panama. This is not a complete list so I would ask anyone who wishes to add to it in comments.

(Please do not consider this anything negative about the Eden project.  I know nothing about the project. I am only using it as an example of a marketing piece.)

Those who chose to purchase property in a subdivision (urbanization) do so for various reasons. For some it is a sense of security, for others the sense of common community and each subdivision has other competitive virtues. If we buy into a subdivision we are paying a premium for those elements.

I am extracting this one line from the Eden post, “* There are covenants designed to protect the community without over regulation.”

As the residents of another urbanization are learning without those covenants beginning  filed with the Registrario Publico and attached to the Finca there are no protections. If the covenants say there can only be residential development and define the regualtions defining that development those will hold up only if the documents are recorded, if not they are just marketing material. Remember the highest and best use of a property might change and you do not want the lot next to yours to become the neighborhood mini super.

One more caveat emptor, not only in Panama but anyplace in the world, deed restrictions are a legal contract but unless tied to the property and legally recorded they only effect the people who signed them.  If you buy into any subdivision, anyplace, for the specific enhancements marketed by the developers be sure that the restrictive covenants for which you paid a premium are legally enforceable.

Some other questions to ask the developer and be sure the answers are in the contract.

1. Do I contract for utilities directly or are you reselling utilities. If utilities are being resold find out how much more they are going to cost you . Most urbanizations are classified as commercial businesses and if they are reselling utilities they are in the utility business. I pay about $40 a month for electricity, friends in various subdivisions pay $100 – $200 a month.

2. Who owns the water concession. Many of us do not consider water source ownership in a property purchase but none of us can live without water and in Panama all water is owned by the government, rights are conceded to someone. Boquete has balkanized water sources and none of the District is on the National Aqueduct, IDAAN. Who owns your water rights effects availability, maintenance and costs. We on Jaramillo had to fight to gain our water concession for the community and after years, ownership is still unresolved.

3. Who owns the common areas. You might have clear title to your lot, but what about the street in front of your house. If it is in an urbanization, it is a private road, not public. Who is going to maintain it? If a sequester is placed on the owner you might lose your right to access or egress from your own home.

4. Is there a home owners association legally constituted as a “persona judicial” of some type? If not you need to be sure there is and that it has clear bylaws that put the home owners, not the developers, in the drivers seat. That association should, in an ideal world get title to common areas.

5. What are the recorded prices of your lot. Lots recorded at a value of more that $30,000 have property taxes due three times a year. No one is going to send you a bill but if you are ignorant and do not pay the taxes you will have a big, unpleasant surprise at some time in the future.

6. Is your home exonerated on property taxes and for how long. Regardless of the marketing, unless the paperwork is done property and accepted by the tax people at Catastro, you will owe taxes.

7. Is the title on your lot secure. Was it actually subdivided legally, given a Finca number and free of any liens. Panama lacks title insurance, so it is buyer beware and your responsibility on any land purchase, not just a lot in a subdivision to research title.

8. Was a geologic survey done on subdivision property. Request to see it and the ANAM environmental impact study and have someone, not the developer, explain them to you. If neither was done, look someplace else.

9. One more thing not found in Panama is an escrow service. Every Real Estate transaction should have at least two lawyers, yours and theirs, never  take the suggestion that you use just their lawyer to save you some money. You need someone to watch out for your interests.

This is just a short list of due diligence needs that many of us take for granted if we come from a developed country. Panama is a rapidly developing country and although it has a law to cover all occasions those laws are not always followed nor enforced. It is easier to walk away before you make your investment than after.