Chiriqu? Chatter ? Real Estate Consumer Protection Laws in Panama

Hi Don,

I received a 3 page scan excerpt from a recent article in ?The Visitor?. I reformatted it to be more blog friendly and am sending it to you in the hope that it will be of benefit to your readers who are potential or present property buyers.

I have no information at the moment good or bad re: Panama Offshore Legal Services who wrote the article. Maybe some of your readers have had experience dealing with them?

Anyways, looks good on paper at least, buyers appear to be well protected. Of course that all depends if the law really has teeth and on the quality of your lawyer.

Warmest regards,

J L

29- JULY 22 ? 27, 2011

The Visitor: El Panama?s weekly newspaper

Special Features

REAL ESTATE BUYER RIGHTS

Consumer protection in Panama

By: Staff at Panama Offshore Legal Services / E-Mail: info@pos-inc.comll Phone (507) 227-6645

Panama is protecting consumer rights in order to bolster foreign investment through laws, principally surrounding real estate purchases, but also including other goods and services. Law 45 of 2007 (known as The Consumer Protection Law) prohibits clauses in contracts allowing excessive delays or limiting the rights of consumers in real estate transactions. If the delivery of services or goods takes too long, purchasers have the right to end the contract without penalties.

This law also prohibits contracts calling for penalties such as loss of down payments or installments if the contract is cancelled through no fault by the purchaser. And sellers no longer have the sole right to cancel the contract. This law also eliminates the cancellation of contracts by developers wishing to resell for greater profits.

Abusive clause protection

The law provides that abusive clauses will become invalid if the contract excessively favors the vendor. Such clauses defined as follows: Those restricting adherent rights of consumers by limiting the obligations of the vendor. Excessively favors the vendor; or exempts the vendor from personal injury liability; or allows the vendor to cancel or modify the contract (unless the purchaser fails to comply); or requires consumers to waive rights in advance; or waives rights of consumers to take legal action; is illegible; or written in a language other than Spanish.? A contract is also illegal if it allows excessive time for completion. The consumer now has the right to terminate such contracts without being subject to any penalties.

New construction

Here are the terms provided to protect consumers in pre-construction contracts. New residential construction projects must establish clear written terms and conditions of the guarantee of workmanship. All advertising must be truthful. The consumer will have the right to demand fulfillment of such advertised promises. Every contract must specify delivery or completion dates if not immediately. Consumers have the option to terminate the contract if those dates pass without any penalties. The exact price and adjustments for increased cost of materials must be in writing. Consumers have the right to demand proportional price discounts for new construction when final specifications change substantially from what the contract stated. Panama?s Consumer Protection Agency (Autoridad de Proteccion al Consumidor y Defensa de la Competencia) will enforce this law in the near future. This agency also investigates complaints against developers and real estate agents regarding false advertising and

breach of contracts.

Other regulatory agencies

Aside from this law, other Panamanian governmental agencies regulate the real estate construction industry as well. Law 6 of 2006 prohibited fraud in advertising in the construction industry. On May 16, 2007, The Ministry of Housing (MIVI) created regulations preventing developers and their promoters from advertising or selling properties before the Master Plan approval facing fines up to 1% of the entire project?s value.

Environmental sanctions

A few years ago, Panama?s National Authority of the Environment (ANAM) levied a $930,000 fine on a real estate tourism development for illegally cutting down trees that

threatened the local ecosystem. The company failed to comply with their approved Environmental Impact Study and began other projects without a proper evaluation of its

environmental impact. In 2004, ANAM imposed a record fine of $1 million against the developer of a large project in Panama.

Court rulings

Local courts are now ruling against property developers too. In 2008, a Panama Superior court ruled against another property developer by declaring certain sections of a purchase contract null & void because they were ?abusive?. One clause allowed the developer to rescind the contract and to keep the buyer?s deposits. Another clause allowed the developer to stop construction without any compensation to the purchasers or liability for damages caused. The last clause dealt with price increases because of rising costs of materials. However, this ruling has no precedent meaning that it does not have to be followed by other courts with similar claims.

http://www.focuspublicationsint.comlNew_Site/Visitor17-29/third.html 07/08/2011

Source: http://www.chiriquichatter.net/blog/2011/08/09/real-estate-consumer-protection-laws-in-panama/

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