Customer Service and Attorneys
by Gail Geerling
I’m often asked what is the biggest challenge foreigners face when they visit Central America, particularly if they want to purchase property or do business in the region. My answer is usually, “It’s easier to identify what ISN’T a challenge in Central America!”
Just so we’re clear, for the geographically challenged: Central America is not Kansas or Missouri. It’s the cluster of countries that connect North America to South America – including Belize, Honduras, Guatemala, El Salvador, Nicaragua, Costa Rica, and Panama. On a map, it’s the long skinny bit in the middle of the two larger Americas.
While North America is largely the First World, and South America has a somewhat European orientation in many places, the land bridge separating these two continents has somehow managed to become the red-headed stepchild of the Americas — left behind just a bit. Yet, I can say without a shadow of doubt that some of the most dynamic property deals and investments in the world are on offer in Central America right now.
Map of Central America
The first ‘issue’ visitors often have with Central America- in particular, in countries such as Panama where the massive skyscrapers give one the impression of the First World – is Customer Service. Let’s face it, I’m originally from the U.S.A., and even my stomach roils sometimes at all the “Have a Nice Day” terminally happy jargon. Yet, upon arrival in Panama, my soul cries out for the tiniest bit of recognition by an Immigration employee… the smallest guidance through a complex and often time-consuming system.
My expat friends often joke that in Panama, nearly all the restaurants are Self-Serve, whether staffed or not. They’d be just about right, actually.
While this is changing slowly, the concept of Customer Service has not yet made it to many parts of the region. Learning how to handle this in a property transaction can save you time, money, and lots of grey hair.
For example, often my clients will leave a real estate purchase in Panama in the hands of an attorney, and be confused when they don’t receive responses to their emails and the deal has not yet closed. They usually ask if they picked the wrong attorney…
Picking the right attorney in Panama – in fact, in any Central American country – is a difficult process, much like it is in your home country. Often when I’m asked if there are any good attorneys in Central America, I reply, “Yes, and I can give you contact details for both of them!”
All joking aside, it may be that they have picked the wrong attorney. However, it’s far more likely they’ve picked an ineffective means of communication for the cultural norms of the region.
Those of us from First World countries are generally accustomed to email communication, and we use it regularly. Email is fast, effective, and it serves as a set of notes and a record of what has been agreed, in case one or the other party forgets.
However, I have found many people in Central America who prefer not to use it at all, or, if they do it’s used sparingly and ineffectively.
Here’s to your success in Central America!
Why does Panama make so much sense NOW?
- Panama’s banks are healthy, while financial institutions in other parts of the world suffer.
- Home Economics doesn’t apply–Panama’s economy is posting big growths this year.
- Banking privacy, Asset Protection, and legal structures for personal or business.
- Large businesses are relocating their regional headquarters to Panama, thus further stimulating the economy and providing unique investment opportunities.
- Undervalued property still abounds – you just have to know where to look!
- Outstanding Retiree residency benefits
- Investments available in Panama with incredible upside potential – even in the current economy!
- Live TWICE the lifestyle at HALF the cost. From health care to household help – in Panama, it’s affordable.
- No snow to shovel – Tropical weather 365 days a year!
Part 1 of a presentation by Gail Geerling about Successful Living and Investing in Panama
Ten things YOU MUST KNOW BEFORE purchasing property in Panama
Ask yourself, “What don’t I know?”
Learning what you don’t know will be the biggest key to your Success In Central America!
Having the right answers to the right questions before you live, buy or invest in Central America could save you thousands, possibly tens-of-thousands, of dollars and a lot of wasted time, frustration & aggravation.
Panama City, Panama – Ocean View
- There Is No Multiple Listing Service in Panama.
- Panama’s Legal System is vastly different to North America’s legal system.
- You are liable for Transfer Taxes when you sell property in Panama – And sometimes even when you buy!
- Net Sales are common. Often you will find the same property for sale at several different prices.
- Occupancy Permits are often given before a building can reasonably be inhabited.
- In Panama all Safety Nets simply disappear. Typical North American rules and regulations regarding property sales and building codes do not exist here. The only person watching out for you – is YOU
- You are almost always liable for property taxes in Panama.
- Properties in Panama rarely come with the things you think they should. E.g., light sockets, electrical plugs, light fixtures, hot water, appliances, air conditioning, etc, etc, etc.
- It Is Legal To Sell “Rights Of Possession” Land In Panama. Make sure you understand the potential problems associated with purchasing “Rights of Possession” Land to avoid costly mistakes.
- You have legal recourse if it all goes wrong. But it doesn’t work the way you think it should!
The above… is the tip of the iceberg of what you need to know to live and invest successfully in Central America and specifically in Panama. To find out more and to to help yourself to succeed in Central America, Contact Us today
Rights of Possession (RoP) = Rights to a Headache
by Gail Geerling
Guess what, folks? It probably is too good to be true.
In Panama, quite a number of properties with rights of possession are being sold on the open market- many of them on the Caribbean side of the country or in limited Pacific coastal areas. These properties are commonly referred to as “RoP land”, and may be offered with some type of already completed construction such as a home or a hotel.
Panama City, Panama – Night Skyline View
Sellers assure anyone inquiring that these properties are a good investment. They will occasionally say such things as, “After we’ve sold it to you, you can easily get it titled, and you’ll make a lot more when you resell it.”
The question is: If it’s so easy to take the property to title, why hasn’t the seller done so?
RoP land could be compared to leased land available in certain areas of the first world, such as London. Some flats in London are leased, as opposed to freehold- in other words, the buyer purchases the right to use the flat for a certain number of years. In these cases, there is usually no option to purchase title to the property, whereas it’s almost always possible to title RoP land in Panama. So should a buyer take the chance?
Yes, it is possible to simply purchase the possessory rights, and use the land and whatever is constructed upon it, indefinitely. It is also possible to take RoP land to title. However, there are no guarantees and no safety nets. Regulations and red tape – including the amount of time and money required – often frustrate buyers who, in the end, remain only with the possessory rights due to unfamiliarity with the system.
Even when a buyer purchases just possessory rights with no intention of taking the property to full title, it can sometimes be extremely difficult to get to the true answer of whether or not the possessory rights are valid. Often they are not registered, or there is more than one person with a claim to the property – whether legitimate or not. Be assured new claimants will come out of the woodwork as soon as they hear of a new owner.
It has also happened recently that some buyers have been in the middle of the titling process, only to be blindsided by a change in the titling law. Although the current titling law would be considered by many to be much more straightforward and fair, those who had already started their titling process under assumptions that became outdated overnight would argue otherwise.
Therefore, the advice I usually give foreign buyers regarding RoP land is RUN, don’t walk – and don’t look back!
It can potentially be fine. I myself own a stake in two tracts of RoP land. But for most people it has become a nightmare of uncertainty, as the RoP laws have changed in Panama no less than 3 times in the last ten years. Each time there is a change in the law, a different set of requirements is needed to take it to title…and of course it takes time for it all to shake out with legal opinions, test cases, etc.
Meanwhile, in my mind there are four requirements one must meet in order to go into an RoP purchase:
- The money you invest is money you can afford to lose if the law changes. (RoP is a real punt.)
- You are fluent in Spanish.
- You plan on living in Panama full-time in order to keep an eye on the way the wind is blowing.
- Your exit strategy is clearly defined before the purchase. (Will someone else buy your RoP property when you are ready to sell? Can you use normal channels for property sales?)
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