By Liz Small

Contributing writer to LatinWorld.com

Please look before you leap.

After reviewing the many articles that are available on the Internet on the subject of relocating to Panama and discussing the subject with friends and neighbors, we (a handful of full time Panama expat residents) thought we would try to present a realistic view of the “Good, the Bad, and the Ugly” of this major life style decision.

The Good

Depending on your choice of location in Panama, you will find the beaches and the beautiful oceans close at hand.  They are typically warm but breezy, thoroughly refreshing, and relatively clean.  Speaking of water, that which is intended for consumption, is fresh, pure, and entirely drinkable.  There are areas, however, where thoughtless use of pesticides has resulted in the need for the installation of home purification systems.

If gardening is your thing (or even if your prefer to just supervise), you will find an amazing array of tropical flowers (with orchids being particularly hardy and with many varieties available) and trees to plant throughout the year – different things during the two seasons, the rainy and dry months.  The climate consists of these two periods, both lasting approximately 6 months.  The dry season (or summer) starts in late December, early January and ends in mid May.  The rainy season (or winter) gets going around mid May and lasts until mid to late December.  Typically, a day in the rainy season begins with the sun out and clear skies. Then in the early afternoon, there is rain for an hour or so, and then the sun reappears.  Temperatures throughout the year (again depending on location) only vary 10 degrees or so (75-85 degrees during the day), the dry season being the higher.  The climate encourages a particularly lush environment which, in turn, provides the perfect habitat for a host of colorful birds, native animals, and exotic looking – some say “beautiful” – insects!

We have all found these things (the proximity to great beaches and oceans, the ability to be surrounded by a vibrant landscape while enjoying the magnificent weather) have greatly contributed to an easy adjustment to life in Panama.  Helping as well are the great roads which lead to many interesting sites and cities, the moderate cost of living, and the ability to meet and enjoy the Panamanian people.

The Bad

Favorite pastimes (reading best sellers, knitting, gourmet cooking, chatting endlessly with family members on the phone, or even receiving letters) sometimes have to be finessed or eliminated altogether.  Bring a good supply of books in the language of your choice – unless it’s Spanish, then “no problemo” – and encourage guests to bring some along with them when they come for a visit.  Ditto any special hobby needs or exotic ingredients which may be in short supply or unavailable altogether!  Better get hooked up on Skype or some other communication modality and be email literate.  Calling internationally and receiving mail is pricey!

Before you buy a piece of ground to begin to have your dream house built, please take into consideration the following:  the “ mañana” factor!  Everything goes at a slower pace here and there is no sense of urgency.  If you have left your ability to be patient wherever you have moved from, please go back and get it.  If you were never a patient person to begin with, please think long and hard about building versus buying an existing spec house or resale.   Retrofitting an existing structure is much easier than building from scratch.  Ask folks who have “been there, done that” and you will soon discover the wisdom of this advice.  By the way, those folks you asked for advice, they are your new “family” so try to listen carefully to what they are telling you and profit from their experience.  After you have listened and actually followed what they have told you and saved yourself no end of pain and expense, not to mention aggravation, have them over for dinner as a way of saying “Thanks”!   They may become your new best friends!

The Ugly

Have you have started to think Panama is synonymous with Utopia?  There are a few challenges of which you must be aware.  Traffic in Panama City can be daunting.  The lack of street signs combined with the curious driving habits of the cab drivers can often result in a hair-raising experience.  Are you used to having everything available at all times and in close proximity?  Unless you choose to live in Panama City, you will not enjoy that luxury.  Many  items (produce and paper goods to name two) have to be imported and therefore will not always be on the grocery store shelf and will be a bit more expensive due to importing costs.  We have a saying in Panama: “If you see it and want it, buy it!”  It may not be there the next time you go looking.  Also, there is a suspicion that some manufacturers send goods they would not be able to market elsewhere to Panama.  Quality can be an elusive characteristic.

Bienvenidos a Panama!

front photo provided by ethantate at http://www.flickr.com/photos/ethantate/2750089356/

first photo provided by seracat at http://www.flickr.com/photos/mserarolsbcn/3370563337/

second photo provided by Alexander H.m: Cascone at http://www.flickr.com/photos/cascone/1295936293/

By Patrick Connelly

It’s a bit strange that a country, after experiencing years of economic growth, would democratically decide to shift political directions.  However, this is exactly what has happened recently in Panama.  In the most lopsided victory in the country’s short democratic history, Democratic Change Party (DCP) candidate and businessman Ricardo Martinelli defeated opponent Balbina Herrera, ushering in a new political force at a time in which Panamà stands on the brink of becoming a economic force.  But it remains to be seen if this gamble will pay off for the economy and foreign investors.

Martinelli does not take office until July 1, 2009, but already Panamanians are ecstatic about the country’s future under the supermarket chain owner’s leadership.  Possessing great business acumen as well as an astute political mind, Martinelli appears to be the perfect remedy for these uncertain economic times.  While the incredible boom Panama experienced in the last 6 or 7 years has largely deflected a severe economic downturn similar to the ones in other Central American countries, growth has significantly slowed this year, something which has definitely not gone unnoticed.  While still healthy, economic growth has shrunk from 9.2 percent in 2008 to 3 percent in 2009.

The real estate sector is feeling the economic pinch most severly.  Whereas only a year ago it was quite easy for domestic and foreign investors to get large construction and investment loans, such ease is no longer possible.  Many of the towering condo and apartment buildings in Panama City lie dormant, half finished steel cable skeletons.

Martinelli plans to tackle the financial crisis by improving Panama’s infrastructure, in hope that a less chaotic environment will be more inviting for foreign investors.  The president-elect has laid plans for a subway in the capital to alleviate the ever growing traffic problem, as well as a host of tax breaks and incentives aimed at luring foreign dollars.  A major proponent of a flat tax for businesses, Martinelli also opposes the request of the U.S. Senate for Panamà to turn over tax documents.  While Panamà has recently come under international scrutiny for being a so-called “tax haven”, Martinelli’s stubborn approach has been welcomed by Panamanians.

No one really expects Martinelli to bring the Panamanian economy back to the golden days of  ‘06,’07, an d’08.  At least not in the immediate future.  In fact, many projections have the economy slowing even further in 2010.  But, as said before, Martinelli has proved through his success in the private sector to understand the business world and has made a modest goal of stabilizing the country.  If Panamà can come out of the current crisis relatively unscathed, the president-elect believes that the country will be poised for incredible economic prosperity as struggling countries will look to Panamà for stability and dependability in the investing and banking sectors.

photo provided by rupertomiller at http://www.flickr.com/photos/rupertomiller/3408143003/

LW: We will start with economy.  In the past four or five years Panamas economy has really been booming, growing at an average rate of 8.5% a year.  With the current financial downturn things have slowed down a bit, but Panama remains strong.  What does incoming president Ricardo Martinelli plan on doing to prevent the economic collapse that we have been seeing in other Latin American countries?

Figueroa: First of all, the impact in Panama of the whole international crisis has not been felt as it should be compared to the neighboring countries, never mind the United States and European countries that are really feeling the stress of the economic situation.  And there are several factors for this.  First of all, Panama has a very sound and solid banking system.  None of our banks failed during this crisis.  The only bank that failed was Stanford bank, and that was because it is based in the United States.  This is important to know, because we do have a very solid market in Panama.  In addition to that, we are undertaking the expansion of the canal, a project that has and will continue on schedule.  So the demand for jobs and the demand for services with that project will maintain the economic growth at a faster pace than normally.  And that expansion project, by the way, is larger than the original canal project from 1904-1914.  So the expansion project is larger than the original canal, as far as movement of land.

LW: I remember being in Panama, and it was definitely a very exciting time.  Just how many jobs the expansion was going to create, and then once, of course, its finished the real boom to the economy the canal will bring.  It really couldn’t have come at a better time because it is a kind of safeguard in this economic crisis, with all the jobs created as a direct result of the expansion and as a byproduct.

Figueroa: In addition to that, its very important that we have the Martinelli factor in place.  Ricardo Martinelli is a businessman, he is business oriented, and he has been very successful in his career. Last year he invoiced around 450 million with the Super 99 supermarket chain.  He has a vision, a different vision than most presidents.  Normally we have had a lot of corruption, which is rampant in Latin America, but Martinelli said “No, we aren’t going to steal any money, we are going to work and make government efficient.”  Now, if Martinelli is successful, and I believe he will be, in making government efficient, then panama has an opening to be the first economy in the world.  Panama is a very small country, we came out of the ocean 3 mill years ago, united the two continents.  This made an ecological wonder.  We have more bird species than any other country in the world.  We have more bird species than North America and Europe combined.  We have 177 World records in deep sea fishing, so if yo want to go fishing, you don’t go to Miami, you don’t go to Mexico, Jamaica, or the Bahamas, you go to Panama.  This is where the big fish are.

For the 6th consecutive year Panama has won the World Coffee Championship in Charlotte, NC, which makes Panamanian coffee #1 in the world. Most people think the best coffee comes from Brazil or Costa Rica, but it comes from Panama.  One of the most important assets that Panama has, and people do not look at this as important now but they will in the future, is water.  Panama has a lot of water.

The country that controls the water of the world will be the new world leaders, and Panama is a sponge of water.  We have a very fertile jungle.

I remember a few weeks back i was walking on the causeway and there were some American tourists walking and they were holding a bottle of Evian.  I asked them why there were drinking Evian in Panama.  After all, Evian spelled backwards is naive.  They paid $6 for the bottle at the hotel.  Of course, the hotel didn’t tell them that the tap water in Panama is just as good or better than Evian.

Panama has the largest merchant fleet in the world.  More ships have Panamanians flags than any other.  Panama has the second largest free trade zone, behind Hong Kong, so we have a lot of progress going in our favor.  Martinelli intends to build more highways that will revolutionize this country, the way the U.S. changed during the Eisenhower administration in the 1950s and the construction of the interstate highway system.  By construction highways in Panama, including the Caribbean coast, running from the Kuna indigenous islands of San Blas to the Costa Rican boarder, that whole area of the Caribbean, which is virgin, will be exploding with tourism and commerce.

We mention in our government plan that we are going to build 5 more international airports.  That may seem very exotic to some people, but the Dominican Republic, which is smaller and much poorer than Panama, has 7 international airports.  So building 5 additional airports in Panama is not something that is out of whack.  So by building the airports and highways, as well as developing the ports – last December Panama became the Latin American home port of the U.S. cruise industry.  So cruise ships originate and terminate in Panama.  That brings in additional tourists that were not there before.  We intend to go forth and knock on the doors of all the major cruise lines – Norwegian, Carnival – to bring this business to Panama.

Panama has only 3 million inhabitants.  So, per square mile we have a lot of land. So to grow we need to stop thinking Lilliputian.  We have to think big.  The problem with many of the Panamanian governments before is that they were thinking small.  Two lanes? No, you need to do six lanes!  This is Martinelli’s view of panama.

Now when my customers come to Panama i tell them to take a window seat on the airplane.  They have a fantastic view of the Panama canal, and then as they approach, they see the Panama City skyline, and I don’t care if you are from Manhattan, you will be awed by that.  They get off the plane and say “Wow, we did not expect this.”  And you see all the movement in Panama, you see all the cranes.  Its exploding.  Especially the people from Europe, who come from countries with few high-rises, and Panama’s skyline is very impressive.  Now we open the new coastal highway, which is very beautiful, which is due to open June 15th.

I think we will focus more on developing tourism in the interior of the country.  Right now only 2 out of every 10 tourists cross the bridge of the Americas to enter into the interior.  So we need to develop that area in an orderly fashion.

So Panama continues to grow.  We intend to knock on the doors of all of the large multinational corporations that are now have headquarters in Florida, Atlanta, and the southeast US and to bring it to Panama.  Panama is an excellent place to do business.  We have fiscal incentives, we are free of earthquakes and hurricanes, we have the dollar currency…there are a lot of pluses for doing business in Panama.  But most companies do not know that.  But now a lot more American and multinational companies will be coming to Panama to establish regional headquarters, because we also have a hub of the Americas here.  We fly to every country in Latin America and 5 cities in the US on a daily basis.

By looking at that I can forecast to you, first of all, that Martinelli will be very successful, changing the dormant way the government does business, and he will put priorities in the right place because hes a business man and surrounded by business people.  That will help us grow more aggressively than before.  Even though we may have this recession in the world, as a matter of fact this recession has been very good because people are looking at Panama as an option and were not looking at us before.  I think the market will keep on growing in that direction.  I am going on the 6th of June to Milan Italy to the largest real estate conference in Italy to make a presentation.

In Panama, we are now focusing more on the high-end market.  For example, we are building the Trump Ocean in Punta Pacifica – those units begin at over $1million, so we have to focus on high-end buyers.  We also have everything..everything on the road.  Now, we don’t want make Panama a welfare state.  We don’t want people coming in and saying “oh, i cant live on my social security in the U.S. so I am going to move to Panama.  No, that’s not the idea.  We want to concentrate on the high-level tourists and retirees to move here and enjoy the quality of life that we have here.

Photo provided by kenobando at http://www.flickr.com/photos/kobando/2683729227/

Jisel Parilla

Contributing writer to Latinworld.com

Due to its pleasant, spring-like weather and healthy real estate scene, Boquete is becoming one of Panama’s most popular retirement spots among foreigners. I spoke to Boquete real estate agent Maky Cedeño, who runs the Boquete office of Panama Real Estate Pros (www.panamarealestatepros.com/) about the ins and outs of buying property in Boquete.

LW: What’s the average cost of a home in Boquete, from budget to luxury accomodations?

The variety of housing options in Boquete are infinite, ranging from a modest home starting at $150,000 to $1 million homes. So there are options for every budget.

Obviously, if you want to live in a gated community, you’re going to spend at least $250k, because of the existing infrastructure and amenities. You also have to consider the monthly maintenance fees that exist in planned communities.

My advice is to evaluate all the different options, but most of all, decide what kind of investment you’re looking to make. Do you want to buy a house as an investment to rent, as a vacation home, or are you seriously considering moving to Panama permanently? If the person can make this decision before buying, they are guaranteed to make the best decision about what to buy.

Another piece of advice we give future buyers is for them to seriously consider [the implications of] building their own home. They need to seriously consider that they are in another country where Spanish is spoken (although English is widely spoken) and where different building materials are used than in their country of origin. We recommend you remain in the country while your home is being built. That’s why planned communities are so popular: because there is generally someone directly supervising the construction of the project.

LW: If someone is interested in buying property in Boquete, what is the first step they should take?

Establish communication with a licensed real estate agent. That way, you’ll be talking with a qualified person certified with the Asociacion de Bienes Raices (Real estate agency). This way, he or she will show you properties that have already been appropriately evaluated [and inspected].

LW: What should you ask your realtor when buying Boquete property?

The first thing you want to ask is if the property is “titled property,” since this assures the future buyer that he’ll have a title over his future property. Next, ask if the property (house or condo) meets the criteria for the 20-year [property tax] break. This is one of the biggest confusions right now. Not all homes necesasarily meet the [criteria] for the 20-year tax break. You’ll need to submit the documents and permits to the pertinent entity for approval.

Another important aspect is the financing [available to] foreigners in Panama. Due to the global economic crisis, Panamanian banks are being more cautious when evaluating home mortgage [loans]. The individual should bring a series of requirements from his country of origin, such as an income tax report for the last two years, among others. These documents are then evaluated by the bank board.

LW: How many foreigners live in Boquete?

It’s difficult to know exactly how many foreigners live in Boquete. Some of them only come for part of the year, others for longer periods of time and others year round. Many of them are no longer considered foreigners; you find them at banks and local restaurants and they become just another local. The statistics are not exact, but I can tell you that the foreign population has doubled in the last few years, and more foreigners are visiting Boquete.

LW: What are some of the perks and benefits available to foreigners living in Boquete?

Boquete is cosidered one of the best places in the world for foreigners to retire and visit. The main reason is Panama’s security and economic growth, despite the [economic] crisis.

There are also other important factors, such as the fact that there’s an airport only one hour away [in David]. Also, there are hospitals and malls located in David, the second largest city in the country. The beach is just a few hours away, and there’s the possibility of open water fishing. And I haven’t yet mentioned the lower cost of life or the different visa options that allow foreigners to enjoy substantial benefits such as discounts on medications, air flights, restaurants and hotels, among others.

Sammy Wolcovinsky, a native of Panama owns a real estate company, Flat Free Realty in Panama. Prior to founding the company, his family worked as financial advisors of Charles Schwab in Panama where they managed over 150 millions dollars and in 2006 sold the company.

This an interview I had with Sammy.

LW: How do you get real estate financing in Panama?

Most people in Panama finance properties through Panamanian private banks. Due to the increased demand of mortgage from foreigners, other Latin Americans or those from the United States some banks and private companies from the US started to come to Panama and offer mortgages, but now with the financial crisis in the states all these companies stopped giving out mortgages. Basically right now if you need to get a mortgage you will have to do it through a Panamanian bank. Usually what happens here in Panama, there are two things…if you are going to buy a resale property you will have to pay a deposit to the seller so he holds the property for you and you will then have to get a mortgage, but if you are going to buy a property that is not done yet (pre-construction) you will have to pay 30 percent to the developer and when the building is ready you will pay the remaining 70 percent. At that time is when you will need to get a mortgage and normally it is through a Panamanian bank.

LW: What kind of interest rates are we looking at?

In Panama, interest rates are not fixed by the government. They fluctuate depending on many economic factors. Over the last 20 years the rates have fallen from 12 percent and right now the market rate is between 7 to 7.5 percent.

LW: Is that a fixed rate or adjustable rate?

In Panama most of the banks do not offer fixed rate mortgages, but rather adjustable rate mortgages, usually fixed for the first year and after that they adjust every 3-6 months. Most of the mortgages are 30 year adjustable rates.

LW: What dictates the fluctuation of the rates after the fixed term?

The banks adjust the rate based on LIBOR or London Interbank Offered Rate.

LW: What kind of documentation do foreign investors need to get a loan in Panama?

Thanks to the increased demand the process of obtaining a mortgage loan for foreigners has been simplified over the years. The actual process of applying for a mortgage requires that a client provides documents proving who they are, their credit status and the total income and assets that they have. But every bank will have a specific list of requirements, but basically the more you show the banks the easier it is for them to understand the risk involved. The basic documentation that you need if you live outside of panama is:

• Legible copies of your passport
• Letter from your employer if you are not self employed
• The last two years of tax returns
• Bank reference letters
• Bank statements from all existing accounts for the last six months
• Government issued I.D.
• Business and personal reference letters
• Purchase contract
• Completed and signed application form

Banks in Panama are very conservative and they ask you for a lot of things in order to give out a mortgage. With all the things that are happening in the world, things are starting to slow down in Panama, but I don’t think that we are going to suffer like the the US because there has been more controls and regulation.

LW: Do people use title insurance in Panama?

That’s a good questions…Yes, people use title insurance, right now they do, but four years ago title insurance did not exist. Let me explain, Panama has a very sophisticated public registry with a specific department that oversees the registration of all the properties in all the 9 provinces in Panama so when you are going to buy a property everyone usually uses a lawyer to certify that the property has a clean title. However, when more Americans and people from Venezuela started investing in Panama they wanted an extra layer of security so at that time insurance brokers got together with insurance companies and now you can buy title insurance in Panama. But if you ask me if the majority of people buy title insurance I would say no, most people in Panama don’t use title insurance. Panamanian law is set up to protect foreign and local investors, however if you want to have more piece of mind title policy costs are minimal and you can buy them through any national and international insurance company in Panama.

LW: What kind of due diligence is important when buying property in Panama?

What I recommend first is that you hire a lawyer so they can go to the public registry and see if the property you are buying has a clean title, most people know that. In Panama you can buy property with title or property without title. If you buy a property that doesn’t have a title there is a process with the government where they will give you the title, but it could take 6-12 months. I always recommend that if you are going to come down to pamana that you only buy properties with title.

LW: What other tips do you have for people considering buying real estate in Panama?

Panama has a lot of advantages, it is a safe country and we operate on the dollar. Since 2005 prices has increased substantially some properties have gone up in value 40-50%. So if you are going to come down and buy real estate either you are going to buy real estate to live or buy and resell. You have to be very careful where you are buying and first you should find a well known broker in Panama. Since Panama is a hot market people are buying properties all over the country and sometimes they buy properties and they pay too much for them. For example in La Avenida Balboa four years ago you could buy a property for 900 USD per square meter now you are going to find properties in Avenida Balboa which is ocean front starting at 3,500 USD per square meter so you have to be aware of where you are buying.

Isla Saboga, one of the most pristine of the Pearl Islands, contains a charming traditional fishing village with just over 350 native residents. The island is beautifully covered in lush vegetation and tropical forest. Isla Saboga is still one of the most beautiful spots in Panama and for years, many developers have had their eyes on this beautiful place as a destination for retirees and investors looking to buy a second home or vacation home in this exotic part of Panama.

Unlike other popular real estate destinations in Panama, Isla Saboga remains undeveloped, however, with the growing interest here, investment dollars are rapidly pouring onto the island.

Keeping in mind the importance of preserving the characteristic wild environment and the long-standing tradition of no car-use on the island, in 2007 Grupo del Sol, a Nicaraguan development firm embarked on a project to set up the necessary infrastructure to attract property developers and investors using less than a third of the island’s 1,200 acres.

Armel Gonzalez Muhs representative of the project, said that his company is planning to invest nearly $1.5 billion USD to create a paradise that within ten years will include all amenitities on par with top destinations from around the world.

The company is not actually building anything at this point and is not planning to do so in the short term. Their goal is basically to open up the doors for investors and property developers by gathering the required permits that will allow future investors to carry out a wide variety of construction projects.

Currently Isla Contadora is a hot spot for foreign property investment, but a growing number of investors are looking to put their money in projects focused on undiscovered places where no big companies have yet to make their mark. Isla Saboga has great potential.

The project is a challenging one indeed, taking into account that the Island has no aqueduct, sewer system or paved roads. Nonetheless, the company representative stated that they have managed to sell at least twenty percent of the project, which will benefit both future investors and locals since it is expected that the project will generate hundreds of new jobs and business opportunities in the next couple of years.

To learn more, visit their website: http://www.islasaboga.org/

By Patrick Connelly

Standing on my hotel roof in downtown Panama City last year I counted the number of skyscrapers being built within the tiny sliver of the skyline that I could see. The skeletal steel frames jetted skyward with huge cranes flanking, giving the appearance of some apocalyptic coral reef. I counted seventeen towers being constructed, an amazing number considering I could only see a fraction of the city.

Panama is booming, growing at a rate few Panamanians have ever experienced. At any given time, around four hundred construction projects are under way in the capital alone. Money is flowing in from all over the world in various sectors such as banking, energy, tourism, and, of course, real estate.

And at the center of this boom is the $5.5 billion canal expansion. Slated for completion in 2015, the project will double the canal’s ship traffic capacity as well as allow for the modern super-ships to pass through, which many are unable to do with the current depth and width of the locks. Panamanians are insanely proud of the massive project, and eagerly await an opportunity to discuss their canal expansion and the direction Panama as a whole is headed towards.

The banking industry has benefited greatly from these strong economic times. In 2007 Panamanian banks reported a 20% increase in profits from the year before; similarly, credit is expanding at record rates, between 15 and 20%. As North American and Europe face increasing budget deficits, economic growth hit a record high in Panama in 2007 (11.5%) and remained strong at 9.2% in 2008.

Even though it was started prior to the 2008 global economic crisis, analysts in Panama and abroad believe that the massive canal expansion project may just be the country’s antidote for economic stability during the worldwide recession. Experts predict that economic growth will continue to grow over the next five years, in the neighborhood of four to five percent a year.

While the U.S. is spending hundreds of billions on stimulus packages to jumpstart its economy, Panama already has one in place; the canal expansion project. The huge undertaking represents a fourth of the country’s entire GDP of $23 billion. Over 7,000 jobs will be created directly from the project, with thousands more indirect employment opportunities. “It’s as if we are increasing public sector spending by 35 to 40 percent,” Minister of Economy Hector Alexander said. “Today it works as a fiscal stimulus.”

“In Panama, the dominant topic isn’t the recession,” Alexander said. Indeed, the economic crisis seems a world away for this tiny Central American country, where steel buildings tower above the jungle, reaching towards the sky.

Thank you Scott for letting us use the picture

Listen to this interview with local real estate expert, Lin Ronald. Lin is an expat from New Zealand that has been living and selling real estate for 3 years in Bocas del Toro. In this podcast he talks about the cost of living in Bocas del Toro, owning real estate and general life in this Caribbean paradise.

Download the mp3 file by clicking the left button of your mouse and selecting “Save Link As…”

Costa Rica is one of the most beautiful tropical countries in Central America. It has some spectacular land buying opportunities for Costa Rica real estate investors. But buying land or property in this tropical paradise does come with it’s share of risk. The unfortunate fact is that the risk is pretty great if you fail to do your homework.

The Harsh Reality

There have been complaints from foreigners that have purchased property in Costa Rica and have subsequently ran into title problems or have even lost their home due to fraud or being sold homes where sellers provided false documents, misleading information, etc.

Some home buyers have lost their homes in regions or areas where Costa Rica laws and government regulations fail to protect the interests of home buyers or where local laws are in direct conflict with national legislation. Perhaps they bought a home which was allowed by a local regional government entity but was in direct conflict with national law and was therefore unlawfully built.

A great deal of people have lost their properties to so called Squatters. Squatters are basically people or groups of people that simply invade your property and start living there without permission. The crazy thing is that Costa Rica law favors squatters, especially if they invade property which could be considered agricultural.

The laws may determine that if someone invaded your piece of land and uses it for agricultural purposes they can apply to take YOUR title away and make the land legally theirs. Costa Rican courts have historically leaned toward favoring squatters over wealthy investors.

These expropriation events are more frequent in Costa Rica’s Zona Marítimo Terrestre areas which is a popular real estate investment haven.

There is a Bright Side…

The Costa Rica coastline is synonymous of paradise on earth. It is a country with very attractive real estate opportunities, especially for international retirees, ex-pats and foreign property investors. Home and land value has a long history of showing steady appreciation and growth.

Even with the global recession, Costa Rican home prices are expected to behave pretty well. There may be ups and downs in the real estate scenario but long term investors and experts affirm that Costa Rica real estate is a safe and profitable investment for long term buyers. Click here to read more about what Costa Rica is doing to combat these tough economic times

5 Tips to Help Mitigate the Risks Involved With Costa Rica Real Estate Investments:

So, if you are one of the many people who have fallen in love with the country and want to own your own piece of paradise on earth, these tips can definitely minimize the risks associated with buying land and property within this nation.

1. An exhaustive title search is a must and should only be done at the Central Depository or Registro Publico as it is known in Costa Rica.

2. Make sure these two very important documents, namely the deed (escritura) and the land registry (catastro) are completely the same. Discrepancies in these documents may well make you a “lose your home candidate” so make sure any differences between these documents are taken care of and fixed way BEFORE you write the check.

The reasoning is that simply because you have a legal document to support your ownership rights it doesn’t mean another legal document cannot take those ownership rights away. So watch your backside and get this right.

3. Determine if squatters are present on your property. If they are, stay clear of this land deal. It doesn’t matter how cheap or spectacular the deal sounds. Remember the rule that says “If it seems too good to be true then it probably isn’t.”

Reminder: There are people that will greatly lower their asking price and try to sell you their property fast when they find out squatters have invaded their land. They will offer you irresistible prices, terms and conditions to get you to buy quickly. However, buying land that has been invaded by squatters will likely turn out to be a nightmare for you.

4. Make sure no conservation or “green” laws are in direct conflict with property ownership in the area you wish to buy. This is especially true if you are looking for property in the Zona Maritimo Terrestre. Local or municipal law may permit the sale of property but national or country wide law may forbid it. So make sure your piece of paradise on Earth allows for private ownership at both the local and national levels.

And even if no conflict of laws exists now it doesn’t mean some new law in the future wont restrict your use of the land or take it away. So staying in tune with the latest legislation is a must.

5. Research, research, research! Do your homework before making any payments. Study real estate rules and regulations and also find out whether the property owes anything in terms of taxes, mortgages, liens, old unpaid utility bills, etc.

Final Words of Advice

Following the tips above can save you many headaches and mitigate much of the risk involved in buying Costa Rica property. It won’t however, shield you 100 percent. Remember, Costa Rica is a developing nation with it’s own laws and regulations. That may sometimes be in direct conflict with your status as a foreign land owner.

On the other hand, the beauty and the peace that comes with an investment of this sort makes it well worth it for most of us. You just have to be aware that dangers do exist. Hiring a good attorney will save you potential headaches.

Photo provided by JetPunk