“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.
Great summary Lee – thank you, as always, for sharing your knowledge with the rest of us. By doing so, you are helping many foreigners, if they just pay attention. As you know, this is way more information than those of us who moved here and built 4-6 years ago were provided. As a result, many folks have found themselves in financial loss situations and dealing with some “not so wonderful” developers.
Thank you, Lee.
good summary Lee
Excellent advice, Lee. This list should be referenced in all the Tuesday newcomers’ meetings. From personal experience, I would also add that potential buyers should be very wary of property bordering rivers and streams or careful about where homes are sited where there is a nearby river or stream. Devastating floods are a reality here.
Thanks, Lee. If this info was available to me when I purchased my house in Los Altos de Cerro Azul, I would have asked a lot more about the homeowner’s association which hasn’t had a meeting since inception. There are bylaws but they don’t appear to have been followed.
I find your Blog extremely helpful. My husband and I are planning to move to Boquete next June and although we have spent six years researching many different locations and feel pretty well informed, your posts are filled with valuable info! Many thanks, and keep writing! Cheers!
Lee, This is wonderful. As you know, some attorneys are up to date on this type of work, and others are not. One, concern, is to pick the right one. How does a person start to locate a competent attorney here?
Abby, Finding good lawyer anyplace is difficult. Finding a good lawyer in Panama more challenging than in most places. Most lawyers here will take amy case even if they have no knowledge of the law. The only advice is find someone who has used a lawyer for the same type of work in the past and hope that the lawyer has not become so busy that they forget to provide the services requested.
Thank you Lee. This is sound advice. I was contacted by an realtor there and I asked all sorts of questions since I have been in a similar occupation here in the US and I guess the questions I asked were more in depth and they could not be answered and I never heard back from her again. That was my 1st contact with a real estate in PA. Keep up the great work and information!
You make excellent points. Although you claim to know nothing of Eden or it’s developers, you mention Eden. That is horribly unfair. Shame on you.
I think I made the reason for reference clear. They have marketing points people should investigate and they posted the points not me. Their marketing prompted the post.
Understood. Very fine line when a specific name is mentioned specifically with a “buyer beware” connection. Your intentions were for the greater good and I get that.
So we are thinking of purchasing a house in Boquete ( which we loved on our recent Summer visit BTW) but having read your comments about proximity to streams I am now concerned. The house we are looking at has a garden bordered by a stream albiet set 6 feet below the garden edge and the stream banked with rocks.I did hear the bridge over the stream is new because the road there was taken away in the storm? Any clarification greatly appreciated. It is a tributary to the main river.
I am not qualified to clarify but if I were you I would recommend getting a professional opinion
Lee,
I would like to check out Bouquete for part-time retirement, While doing so I would like to have some dental work done. Is there a service I can contact that speaks english for makeing appointments with the dental office and services they provide? Also for reservations at a place to stay and maybe a guide to show around while learning about Bouquete? Any advise you can provide would be appreciated.
There are dentists in town who speak English, but no service I know to prebook and appointment.