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Home Buyers Get a Bit More Protection in Panama

Article Summary:

Home buyers in Panama have little recourse if a builder defaults after purchasing a home at pre-construction. To ensure buyers rights, Panama is proposing the creation of an escrow account, managed by a third party, which will administer payments to builders following completion of pre-construction terms.

Photo Credit: Panama America

Original Article Text From Panama America via Google Translate :

Controversy Generates Standard to Regulate Home Presales

The home buyers are not guaranteed the return of their subscriptions if the developer defaults. The trust would be in the hands of a third person, in this case a fiduciary, and generate pareses.

In the first quarter of 2012, the value of residential construction recorded 406.857 million dollars, an increase of $ 119.141 million more than the same period of 2011, according to figures from the Comptroller General of the Republic of Panama.

The boom in construction of residential projects has soared, as are thousands of Panamanians who have made arrangements to purchase a residence. But for the purchase of goods, the buyer shall be subject to approval and implementation of a mortgage in which the bank will finance a percentage of the property to acquire, before approval of the mortgage, the developers require buyers to make a payment called “subscription”, in order to separate the residence, money which in turn represents the percentage that the bank will not finance the consumer.

Money from this fertilizer is used by the owners of the projects to other buildings, which puts at risk the investment of consumers, according to Peter Meilan, manager of the Authority for Consumer Protection and Competition (acodec).
To minimize risk, said Meilan is pending the amendment of Law 45 of Acodeco, and thus the creation of a trust that will administer the payment, which will ensure that neither the developer nor the buyer can touch those resources until has been given an advance in the construction of the work.

The administrator noted that the proposal Acodeco arose from the many consumer complaints submitted to the entity, including the advance is paid or credited, and that the buyer lost when construction is not done.
These amendments to the law and the implementation of the trust were not pleasing to some employers, as the president of the National Council of Private Enterprise (CONEP), Gabriel Diez, and former president of the Panamanian Chamber of Construction ( CAPAC), Manuel Ruiz, who during the morning news on Channel 2 in the day yesterday, disagreed with the creation of the trust.

Benefit.
Meilán explained that this proposal would benefit consumers because, besides their money would be safe, it will generate paraeses to be administered by the trustee.

The project is still under consultation with the parties paraesadas, and to be presented to the Executive, Meilan said the proposal is supported by the Ministry of Commerce and Industry.

Meilan said that on July 30 expect the CONEP present a counterproposal to the project. Banking Association reported that they could not give an opinion, as they are reviewing the proposal aims to regulate the pre-real estate projects.

Link to Original Article:

From Panama America

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