User Rating: 5 / 5
*** RIPPED OFF IN PANAMA*** 
FROM THE JOURNALS & WRITTEN by Fred Kohx >
Executive Founding Member for WANTED SA >
Thursday January 27, 2011 >
RIPPED OFF IN PARADISE >
Buying a piece of a Paradise Property is a dream, but the risks are real >
In Panama... Just don't get ripped off?
The Canadian Loonie is flying high and the price of real estate in many foreign countries like the Republic of Panama is astonishingly low -- a perfect storm for those trying to avoid another cold Canadian winter.
But while the struggling Florida housing market may look like a Christmas bonus to many Canadian buyers, there are plenty of naive Canadians being taken to the cleaners in foreign countries; such as, Panama, Costa Rica and Central America.
Canadians are overwhelmed by what they can get for US$150,000 or US$250,000, in Panama, but they need to think it through carefully and understand their primary objective. Snowbirds need to consider their lifestyle, their tax situation and even the impact on their estate.
The price drops in Panama are staggering and that is a danger sign, as to real value of the real estate. These are just the median prices. That means that half of the condos sell for more than that price and half sell for less.
Today recently featured a Florida condo near the beach that was going for US$49,000. One Toronto couple, who do not want to be named in this article, recently, sold a fully furnished Florida condo at the desperation price of US$10,000.
In Panama there are many similar stories; however, in Florida a buyer is protected by the laws of the State of Florida; however, a buyer in Panama is at the exposure of various dangers; such as, unscrupulous developers and promoters; the homes are not properly built; not properly finished, but yet an occupancy notice has been filed; properties flipped 4 or 5 times and the real estate is not properly registered. Nightmares, Nightmare and more!
That's one of the wrinkles in the complex game of Panama real estate. First, it should be noted that Panama's red hot, and not just in terms of sunshine, but corruption and fraud abounds in the real estate market. Value but no protecting from the legal procedures. Panama is the epicentre of overbuilding in Latin America
"I've heard real horror stories," state several portfolio manager for the personal investment management group of banks in Toronto where people have borrowed money using their savings to purchase property in Panama. One of the biggest problems is you can end up in a building where there are actually very few people [occupants] who have to cover the costs of maintenance. Everyone else has been foreclosed.
Other dangers is either purchasing a property or selling the property, but never realizing the legal implications. Panama does not have a proper Registry system and anyone can register a mortgage on the property even months later without any one’s knowledge and then get a Judge to issue foreclosure.
According to many pensioners and retirees; Panama is a cesspool of real estate fraud!
One recent story came to light where a couple from Canada purchased a luxury apartment for $1.5 million which was supposed to be fully finished and find out that it was not. They then spent $210,000 to finish the apartment off with AC, Floors, Etc.
The couple then decided to invest in other projects in Panama and assigned their property to borrow $500,000 with the option to retrieve the property in one year; however, the lender now refuses to abide by the terms and conditions of the Agreement that was drafted by his own group. And then much to their horror, they have recently found out that a lawyer registered a mortgage of $300,000 on the same property illegally.
How is this possible? Simple the Registry does not check liens, mortgages or even owners and for a few dollars you can get anything signed in Panama.
There are hundreds of similar nightmares! How about buying and paying for a 3 bedroom apartment and then receiving occupancy notice to pay for the apartment and finding out once you transferred the money he apartment is much smaller and only a 2 bedroom.
Snowbirds need to be aware that, in general, provincial health care will not cover them outside of their province. Supplemental health-care policies can be purchased through a variety of groups, such as the Canadian Automobile Association, the Canadian Association of Retired Persons and various industry associations. Prices on supplemental plans vary widely depending on age and pre-existing medical conditions.
One nasty scenario in buying a property is a lowball on the homeowners' association fees. Buyers are quoted a modest monthly fee of US$100 or US$200. But once they buy, they abruptly realize that due to all the vacancies in the complex the actual amount paid by those in the complex can run into the thousands of dollars per month.
In other words, don't rush it.
Tax considerations are also important when buying real estate now in Panama. If you own and personally occupy a Panama property, you do not have to pay income tax in Canada. However, if you rent out the property, you do owe money to Revenue Canada because Panama now reports. That's where you start to need a highly specialized firm, one that understands the Canadian tax treaty. A Canadian accountant can do an excellent job on your Canadian taxes, but is unlikely to have the expertise to do Panama taxes, which are complicated and corrupt.
To handle the increasingly complex tax codes on both sides of the border, a whole new subset of financial experts has arisen -- the cross-border financial planner. It's wise to consult such experts.
Canadians who buy in the Republic of Panama also need to do extensive estate planning. The two countries have quite different methods of handling estates.
But the bottom line is that there is no need to rush. Most analysts agree that the housing market is in no danger of a sudden spurt.
So it is expected to be at least a few years before home prices generally return to the levels they reached in the bubble years of 2005-2007. There is plenty of time to make a careful decision and there is every reason to believe that prices may indeed fall even further.
Check out the properties, developers, promoters, lawyers and even the vendors before you sign a purchase agreement. Triple check the mortgage arrangements with the banks in Panama and proof read each document 5 times before signing or you may find yourself paying for a property with hard money and at the same time without your knowledge pledging a mortgage to your law firm on the same property.
In fact one of the major Internet Publications in Panama – “News Room Panama” wrote an interesting and informative article stating that at present there are over 500 Fraudulent real estate transaction in Panama under criminal investigation and another project in Panama which is Trump Ocean Club also has some legal difficulty and concerns.
Welcome to Panama – Paradise or HELL!
WANTED SA thanks to all the News Agencies in Russia, WANTES SA Agents in Russia, IP Providers, Hosting Firms who contributed to this report and all the Parties, Press, Law Enforcement and Securities forces who have contributed to this article and their sincere opinions and statements.
WANTED SA states that the facts and opinions stated in this article are those of the author and not those of WANTED SA. We do not warrant the accuracy of any of the facts and opinions stated in this article nor do we endorse them or accept any form of responsibility for the articles.
*********
