Despite being self-proclaimed Panama experts, we were once scammed in a property purchase.
Being Panama experts means having learned some things the hard way.
We’ll share our what happened with you here.
We hope you can benefit from the lessons we learned.
Don’t Make Emotional Purchase
We have made dozens of property purchases safely and without regret in Panama.
Our achilles heel in this particular case was that this was an emotional purchase.
We LOVED the property too much, and we really WANTED it.
This is precisely the way expats get tricked into buying a property that they shouldn’t.
You need to use your prefrontal cortex to purchase property, not your amigdala. Definitely don’t use your tequila sunrise, or your vodka and tonic brain either. This needs to be a morning coffee sort of a decision.
In our case, the property in question was to have been for our own personal use, at a popular surfing spot in the neighborhood of Corazon de Jesus.
You see, we had gotten to know the sellers so well over the years of surfing and swimming there, and we liked the property so much for having used it every day or so over that time, and we were paying such a high price for the land…….(Blah, Blah, Blah)…
Don’t Assume Anything
We assumed we knew everything we needed to know about the property. We had know the sellers for years, and made the mistake of believing what the sellers told us.
(Notice that our train of thought in this emotional purchase is not logical. We were using the wrong part of our brain. Basically, we were worried that if we didn’t buy it, someone else would, since many other properties in Corazon de Jesus had sold fast at that time).
Fortunately, we did much more cognitive research on our investment properties, since we bought for resale purposes. We made doubly sure we were on top of all stages of the vetting process.
We only purchased properties where we ourselves would be happy to live. And over the years, we have fallen in love with them, especially with the Corazon de Oro development where I now swim every day, or stroll 5 minutes down the beach to Corazon de Jesus to go surfing. As it turns out, we like it better than we ever liked Corazon de Jesus and the purple house.
Make Sure ALL The Property Owners Are On Sale Document
We made several payments for the property, over 2 years, and were about to make our final, largest payment for the land, when we began to hear things that made us suspect that what we had been told by the family of the seller might not have been true.
You see, in this family there is an adult son who drinks too much. However, since I usually visited the property in the early morning when I swam, or surfed, I rarely ran into him, or if I did, he was not drunk in the mornings.
However, a couple of times, near the due date for our final payment, I visited the property in the afternoon. I got to witness this man drunk and belligerent. Most importantly to this story, this guy was yelling “crazy” things to me about the property having been left to him by his late father, as well as to the family member we were buying from. Previously, the family had convinced us that this person was the only legal owner of the property.
At this late date and for the 1st time, it was clear that this drunken relative was not happy with the idea of this sale. (Huh? I had been so confident that I knew everything about the property). I had spent hundreds of hours there over the years. I had been to births and funerals of various members of the family of the seller. I had lent the family money to help with travel and education expenses. How could this be?
Betsy and I immediately asked our lawyer do a review of the property documents to ease our doubts, before we handed over the final payment for the property.
It took this lawyer all of 5 minutes to discover that the drunk was exactly correct.
You see, the grandmother of the family, had (intentionally or not. We cannot be sure, although the last minute will was drawn up by this woman’s attorney who certainly should have known what he was doing) written a new will ceding her portion of the property back to her husband just before he died.
This meant that, though the property had been given to the seller only, by both his grandmother and his grandfather, upon the death of the grandfather all of this widow’s children, and their children’s children, as legal heirs, became the rightful owners of the property.
In the developed world, this series of events would have been labeled “felony real estate fraud”. In Panama this is considered a “grey area” especially where poor Panamanians are the sellers and expats are the buyers.
Admitted Fraud, But Unrepentant
In fact they admitted it was fraud.
When we called them on their deception, they admitted it was true. There was more than one owner of the property.
They even signed a notarized declaration to that fact. Their attitude was one of, “Okay, we tried to defraud you. So what?”
Property In Litigation
At this point, we are fed up. And we are also “tied up” on this deal.
We are taking measures to protect ourselves and our investment. In our case, we own lots of other great properties so it is not the end of the world. However, for a retiree on a limited budget this could be devastating. They might have decided to give up and go home to North America.
We still want to buy the property. We have invested too much in it now to back down.
WARNING – They Are Trying To Sell Property!
We have been informed by neighbors that they are now trying to sell this property to other unsuspecting victims. So please beware. This property is in litigation. It is not a property you should buy, unless you want to inherit problems.
We certainly hope that no other expats get involved in this troubled property until we win our suit. Feel free to contact us for more information.
Don’t Be Penny Wise And Pound Foolish
This is why, for most expats, it is not a good idea to buy property directly from Panamanian sellers, or to buy a property that was only recently purchased from Panamanians.
Much Safer To Buy From Expats
It is far safer to buy from expats who have held the property for a number of years.
Yes, you as the end user, pay a premium for property being sold by expats. But in exchange you get much more assurance that there are no conflicting ownership issues.
Of course, you should still throughly investigate the property and get to know all the parties, but the risk is much lower.
Buying From Panamanians
And we are not saying you should not buy from Panamanians. We bought almost all our properties from Panamanians. All with absolutely no issues. But keep in mind, we decided not to buy some properties because of issues that our investigations uncovered.
Buying from Panamanians directly is a great way to get a good deal. But to do that, you really should move here first. You need to personally get to know the players. And you need to do a tremendous amount of research. Buying from locals is a higher risk purchase. You should exercise greater caution. Go slowly and investigate the property and ownership throughly.
Such research will be more effective, and less likely for you to be a victim of fraud, if you are living in the area you want to buy. Plus, you will find out if you really will be happy in the area.
The most important detail to investigate is whether you will enjoy living on the property. After all, the end goal is not only to make a safe purchase, but to be happy with your life on that property.
We hope you found this tale informative.