Filing a Complaint Against a Panama Real Estate Developer
Panama has few laws regulating real estate developers. When the real estate boom hit Panama in 2005 many foreigners complained about greedy developers making promises they didn’t keep. The government of Panama responded by creating a new law in 2006.
Law 6 of 2006 is a law intended to prevent fraud in advertising in the construction industry. On May 16, 2007, the Ministry of Housing (MIVI) issued regulations under this law prohibiting Panama real estate developers and their promoters from advertising or selling properties before the Master Plan approval. The fines for violating these regulations can total 1% of the entire project’s value. This law also requires municipalities, where a project is being proposed, to create various committees of laymen and professionals to review and approve the project.
Law 45 of 2007 is the Panama Consumer Protection Law. Panama’s real estate developers accused of false advertising, breaching contracts, causing undue construction delays, supplying defective materials & workmanship, and refusing to honor warranties now fall under the jurisdiction of the Panama Consumer Protection Agency called “ACODECO” (Autoridad de Proteccion al Consumidor y Defensa de la Competencia). ACODECO is supposed to protect and preserve the rights of consumers, including rights of real estate buyers.
Purchasers of real property, houses or condos in Panama who have been defrauded, or victims of false advertising, or a breach of contract, should file a complaint with ACODECO. This agency will analyze the complaint and decide if it has merits to go to court or arbitration. Still, ACODECO has limited resources given the amount of cases it receives every year.
ACODECO has a website where you can download a complaint form and learn about investigations and statistics concerning consumer complaints concerning various businesses and industries. http://www.autoridaddelconsumidor.gob.pa/index.asp
In 2009, more than 265 complaints were filed against Panama real estate developers with the Consumer Protection Agency. Most of the complaints were breach of contract for delays completing the project. Others complained about receiving less meters of space than promised. Others were asked to pay more because the finished apartment had more meters than contracted for. Another area of complaints involved promised “luxury” appliances, materials, and fixtures turning out to be of mediocre quality. Defects in workmanship and materials were another area where complaints were filed. Finally, there were complaints about “unfair terms” in the pre-construction sales contract where buyers were charged high monthly rents for not completing the purchase when the occupancy permit was issued. These delays were often caused by the Panama bank approving the mortgage and getting the transfer of title deed filed with the Public Registry.
According to ACODECO, in 2010 there were 507 complaints filed against real estate developers for over $49 million. Most of these complaints were for breach of contract, not honoring warranties, and demanding additional payments.
ACODECO’s July, 2012 Report of Complaints filed against Real Estate Developers from May 2006 to June 2012, totaled 2,796.