Le Parc Tower and The Meridian Projects Cancelled – Real Estate Fraud Allegations

What Happened – The Meridian a 49–story Obarrio neighborhood condo project was cancelled. The developer had received $610,000 in deposits for units to be completed by August 2009. The 51 story Le Parc Tower condo project was located in San Francisco area was also cancelled. It was also supposed to be completed in 2009. Criminal complaints were filed with the Panama Government. This does not mean the parties named in the complaint are guilty, these are just allegations. Allegations contain claims that the developer was placing the land sites for the projects up for sale instead of building out the projects. To date the deposits have not been refunded. This is as reported in La Prensa Panama newspaper.

Discussion – We previously reported several other condo projects of substance that have failed to move forward to completion. There are now two more. Many of the projects that are under construction have delays in their completion dates. There are shortages in raw materials and building supplies.

Our law firm advocates buying a condo that is already built, by this we mean it is ready to move in immediately and is occupied by other residents. The older buildings are the best buy. They are built better and much cheaper costing only a fraction of what the new cones cost. The speculators and flippers by and large buy the new units hoping to turn a profit selling them. The premium units in the best buildings are over $5000 a sq. meter right now. The realtors are hoping to drive prices up to $8,000 a sq. meter. Will they – who knows.

Two years ago I would never have believed $5,000 a sq. meter. When we see more failures to complete it gives the new condo projects a black eye. Here is an investor who comes down here buys a unit, waits 18 months for it to complete, finds out it isn’t going to complete. Now he has a hassle and delays getting his money back and now finds out a similar condo will cost him 40% more money. This is called opportunity loss but is generally not actionable in court unless there is a writing specifying such damages as collectable.

It looks like new condos are becoming a crapshoot in Panama. If you are a speculator the new units are the way to gamble. If you are looking to reside in Panama go after an older unit. The new condos are not going to be occupied by locals – too expensive and not worth it. So now you have a new 50–story building full of foreigners, some only living here part time.

New Condo Security Problems – While Panama is safer than North America and Western Europe being a large city it has some problems. One must take care to make sure they are not a target. A brand new condo full of foreigners is a security nightmare waiting to happen. Who is going to look out for the security of the building? The new homeowners association composed of foreigners who do not know what is going on in Panama? The building manager appointed by the developer who may be good or not good, care or not care, and she may be figuring on being replaced by the newly formed home owners association or even worse is she may have a contract keeping her in place for some years and then she may not care.

The security guards are generally implicated in many robberies in condos in Panama. In a new condo the guards are all new, know the building is full of foreigners and the temptation is there. This is a hidden advantage the older buildings have. In an older building the residents are local, they know what is going on and the security guards will have been tried and true, well generally speaking anyway.

By all means if you do move into a new condo get a heavy steel door and frame. Install two security locks along with an inside sliding bolt for night use. Do this on all doors. Never rely on the cheap flimsy doors the condos come with. These can be kicked in very easily. Do not open the door thinking the building is secure and if someone is in the hallway they must be all right. There have been home invasions in new condos. If you are not expecting someone do not open the door. Do not fall for it is a new neighbor. This is an easy one since no one knows his or her neighbors are in a new building. Same for repairs, security etc. Tell the maid do not open the door if you are not expecting anyone.

Home invasions generally result in being left tied up and gagged, beaten or worse like rapes, shootings etc. New condos are a target for this sort of crime. The people are foreigners, new to the area, have money and probably valuables. Foreigners new to panama are unlikely to have guns. It can take many months to get your immigration approved and then add on several months until you get your gun permit and gun. So the bad guys have a good chance of not encountering any armed residents in these new condo projects and the last thing a crook wants is to get shot at.

How do the bad guys get in? They impersonate emergency medical personnel, delivery personnel; police impersonators have even done home invasions on private homes. If someone knocks on the door and says they are a police officer have them show a badge and ID card to you through the peephole. If hey hesitate step away from the locked door and call the police immediately. If they pound on the door go out on the balcony and scream help break in, robbers. The neighbors will get the idea and so will the crooks. and they might take off. They normally will never have a badge and an ID card. Most police ID cards will appear well worn and beat up since they are carried around in the heat and humidity inside a wallet in a pocket. Brand new ID cards and badges would be suspicious to me.

Call them in for any reason, the police will not mind. If they say it is a drug raid open the door or they will break it down look through peephole you should see several uniformed officers there, if not go away from the door and call police. If you see uniformed police you should feel better but can still call it in as a possible police impersonation. It is always nice to have a safe room in he condo hide in until help comes. We cover safe rooms elsewhere on our website.

Conclusion – Unless you want to gamble on real estate flipping (think musical chairs) the best buy is an older condo that has been around for a while. If you are a pensionado you do not need the 20–year tax exemption since you get a personal residence tax exemption anyway but a lot of the older units may still have some years left on the property tax exemption. The property taxes are low in Panama anyway. The new condos are going to have much higher homeowners association dues as well, which is a negative offset. We can think of no reason to buy a new unit over an existing older unit for a fraction of the price unless you are into flipping. Our law firm will be happy to handle your real estate purchase for you. Inquire.