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Panama Real Estate Squatter Scam: Foiled

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Written by Matt   
Friday, 15 September 2006 16:15
The tropical beaches and lush jungles of trendy Costa Rica have been commercialized in TV commercials, magazine ads, and the occasional Magic Eye optical illusion book, where if you look long and hard enough, you can see excited titi monkeys jumping into the ocean. Because Panama is following suit, it can be helpful to take a look at certain real estate scams from Costa Rica, then evaluate whether or not they could happen here. There is a semi-well-known real estate scam in Costa Rica that goes something like this: You and your gringo buddies come down to invest in some land and meet up with what you think is a pretty honorable agent. You know, he's got nice clothes and carries one of those black leather folders. So anyways, Slick Rick shows you a beautiful piece of property that appears to be a real bargain. You and your cronies, over a few rounds of golf, decide to buy the property and head back to the states feeling sunburned yet satisfied.

The hook is that when you're gone, the agent (or in some cases a separate syndicate) goes in and installs squatters on the land—people to whom he promises some sort of compensation in return for occupying the land. When you come back to check on your land, you find the squatters and obnoxious laws that allow these squatters immediate rights to your property. This being because Costa Rica does not have laws, like we do in the States, requiring some extended period of time before significant rights can be acquired. The next part of the shtick, and perhaps the kicker, is that the agent comes back and offers you some small amount for the land—a “kind and apologetic gesture”—because land with squatters is worth nothing. He then repeats the process with any future idiot who will fall for it.

Ramifications in Panama:

-The good news: If you practice good habits and read up on certain laws, this scam has no place or bearing in Panama!

-To avoid this problem there are several things you can do. You can (1) pay your taxes on the property regularly. Oftentimes, syndicates will go and find out property owners who aren't up to date on their taxes, pay the due taxes, then take over the property. Another way (2) would be to maintain your property well. This means cutting the grass every year or so, and keeping your arondas (or property borders or fence lines) clean. This way, your property will appear well-kept and supervised.

-This scam often targets properties that are near main roads, and that have water and electricity. To the scammer or the syndicate, these kinds of properties are more attractive and easier to sell.

-Articulo 1678 y siguientes del libro IV Titulo XVIII, Capitulo II del Codigo Civil -Para obtener un bien inmueble de buena fe, la ley Panamena otorga un periodo para obtener dicho derecho. Para que una persona obtenga justo titulo sobre la propiedad es necessario que la posession ser realice en forma publica y por un periodo ininterrumpido de diez anos y veinte anos en ausencia.

-The essence of the above being, that in order to obtain property in good faith, the Panamanian law establishes a length of time to obtain said right. For a person to obtain the title of said property, it is necessary that the person should posess the property in good faith and for an uninterrupted period of time of ten years and twenty years in absence.

This is a way for a squatter to obtain a property, but it is not all that common. Because usually if you can afford, say, 20 hectares, you can afford to pay someone to watch over it for you. If this person then finds a squatter, they can use the aforementioned law to kick them out.

I consulted with a Panamanian lawyer on this article. Her name is Larissa Llamas and if you have any questions, you can contact me to get through to her.

Real estate in Panama

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Last Updated on Monday, 11 August 2008 20:57
 
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