Developing Panama Real Estate Yourself
If you want to build a Panama home yourself without hiring a Panama architect to draw the plans and have a Panama builder hire the contractors and buy the supplies and rent the equipment; here are things you should know.
Building a home in Panama is very different than in the U.S. or Canada. One difference is that in order to get a building permit in Panama, a Panama architect must submit the application. Once the Panamanian architect submits the plans, he owns them. Making changes to the original plans requires permission from the Panamanian architect resulting in extra fees and the submission of a “remodel permit”. Many Panama architects can be hired to build the structure. The original general contractor signs the documents necessary for the occupancy permit.
Panama architects are accustomed to working with wealthy Panamanians whose home designs and lifestyle are very different from U.S. and Canadian citizens.
Panama lacks trained craftsmen requiring Panamanian architects to keep plans simple.
If you think you can purchase an American or Canadian architect’s plans on the internet and use it in Panama, think again. One reason is that Panama homes are concrete block houses built for earthquakes. Buying a California house plan for earthquakes will not work in Panama. Panama has different steel reinforcement bar designs than a California earthquake home. Look at a Panama home more as a high rise condominium than being a typical single family home in North America. Every floor is poured concrete with welded red steel.
Do not expect to tell Panamanian builders and contractors how you do it back home. If you want things done in a specific manner make sure it is in the contract.
Here are some Tips on How to Build a Home in Panama:
1. Find internet architecture plans designed for concrete block construction. Purchase the plans using AutoCAD software on a disk so the plans can be easily modified and have the changes made by the original architect. Make sure the plans will work for your land’s grade and fits on your lot as there are few flat lots here and foundations are expensive along with site work for the grade. Try to get the plans drawn in the metric system rather than square feet to use in Panama.
2. Find a Panama architect who can redraw the plans in Spanish using the metric system for earthquake construction.
3. Negotiate that you will own the plans and not the architect. Get costs for any future changes in writing. Architects are required to visit the construction sites so get the costs and number of required visits down in writing.
4. Hire a competent and reliable Panama real estate lawyer to write the contracts in English and in Spanish.
5. Find a local bank, finance company, or escrow company willing to open a construction account with pre-agreed disbursements to your general contractor. Expect that a loan official or escrow company will inspect the site before each disbursement. This will help reduce fraud by the contractor as the lender is looking out for its interests and the official will be familiar with contractor’s terms and customs.
6. Bidding: Once you are satisfied with the architect’s detailed specifications you can put the plans up for bidding.
7. If you choose to do it yourself to save money, contract with a local contractor to build the home’s shell known as “in the gray” and then you can complete the project yourself. While you can hire painters, tile layers, electricians, plumbers, etc., the first contractor who built the shell is the one who submits the documentation to obtain the occupancy permit so you need to have a written contract covering these fees.
8. Construction Manager: If you want to hire different subcontractors and act as a “construction manager” you will need to go to a local bank to set up a credit line. Then go to local builder supply companies to set up your own “builder’s account”. You can then order materials and pay for them. Doing this will save you money because if you rely on a builder to order materials and supplies he will get a discount from 10% – 15% and still charge you up to 30% over retail as a mark up. This is a typical mark up by general contractors worldwide. This account will ensure that all subcontractors are paid and the materials bought are used. There are no mechanics liens with releases type of laws in Panama to protect the subcontractors.
9. Expect to be on the site every day to make sure the work is being done properly.
As an alternative, you might consider buying an existing home built for a foreigner and then remodeling it. Another foreigner will have different specifications than a local which may be closer to your needs.
You may also consider another option: Hire a reputable builder with good references from foreigners and use his architect to create the plans. It may be cheaper than buying architect plans on the internet and then having that architect modify the plans and charging U.S. or Canadian fees.
Once you get your occupancy permit you should have a home solidly built meeting all of your needs to enjoy living in paradise.
Contact Us for all of your Panama Real Estate Law and Panama Relocation needs.