Real Estate Scams in Latin America to Avoid
By Domenick Buonamici / May 09 • Categorized as International Real Estate •
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Real Estate
It’s no secret why thousands of people choose to move to Latin America each year to invest and retire. The pleasant weather, fresh food, welcoming locals and great property deals all are big draws. But buyer beware, here are a few of the common scams out there to watch out for when looking for your dream beach house.
1. The Bickering Sibling Scam: This scam is very prevalent all over Latin America. This is when the house is owned by various people (often left to children in a will) and some of the owners try to sell the property while other legal owners don’t wish to sell. This can lead to big problems for you if you pay someone before getting this legally cleared up.
To avoid being burned by this scam, work with a good lawyer and make sure they null the legal rights anyone has to the property.
2. The Uncle Larry Scam: Often a house is sold without informing an active tenant, and the tenant simply refuses to leave. The police in many countries of Latin America don’t help much in these cases. So before you buy, make sure there are no active tenants. Or if there are, make sure the current owner gets them out before you hand over the money. This can be one big headache for a new home buyer.
3. Shanty Town Scam: This has been happening ever since the Spaniards first arrived hundreds of years ago. You will see that in some areas of the coasts, the cheapest beachfront real estate is inhibited by make-shift shanty towns. Many of these people have been here for decades, yet they don’t actually have the title to the land. This opens the door to someone coming along and buying the land without their knowledge and reselling it right out from under them. Uprooting these people is extremely difficult, and this difficulty should be avoided if possible.
4. The Invalid Contract Scam: This is when you sign a document or contract in Latin America, but don’t officially register it with the corresponding Municipality, rendering it unenforceable! Using a good lawyer can help prevent things like this from happening.
5. Multiple Sale Scam: In most Latin countries, once you purchase a property you have to register it officially with the local Notary and the Office often designated the “Registro de Propiedad.” If you don’t, the seller could sell the same property multiple times, and the first one to register the property with the local authorities gets the official deed to property. To avoid, make sure as soon as you buy to register the property.
6. The Useless Property Scam: This is where someone sells you a property that has some governmentally imposed building restriction, rendering your purchase useless. A good lawyer can help you avoid this scam. In other cases your property may be on the base of a large, unstable mountain of sand that will collapse on you once you start construction. To avoid, always visit a lot before you buy it, and don’t commit to anything over the internet.
7. False document scam: In Latin America, anything can be copied. Identical-looking passports can be made for around $150. Needless to say, some people may try to sell you a property with false title and registration documents. The way to prevent this is to always work with a trustworthy lawyer.
Don’t let this list of scams scare you off. Moving to Latin America was the best choice many people, myself included, ever made.
Domenick Buonamici teaches expats how to find the hidden beachfront property bargains of Ecuador through his e-Book “The Insiders Guide to Ecuador Real Estate” available for immediate download at www.EcuadorRealEstate.org
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Sir:
I´m a susbcriber since many years ago and today I can see this confuse article, where seems thats all Latin Americans are involved in scams, so please IDENTIFY where, in which country and more information but being precise.-
Also, seems thats in USA scams don´t exist, because all arrows go to other countries but never inside…or I´m wrong?
Remember, keep the neutral way at the moment to upload this kind of articles, instead talk other countries or territories.-
Regards
Jorge A. Otero Chaves
Argentina
Pd. Two years ago I sent an email, denouncing one scammer, thats appeared in your listings as a Realtor, after escaped far away avoiding lawsuits againt him, so in this world nobody is a saint..-
In the U.S. when a property is purchased, you receive title insurance, which prevents the scams listed in the article.
Dear Jorge,
While I agree with you that the article written singles out only Latin America, and does not specify in which countries these scams may exist, I believe the purpose of the article was to raise awareness as to the scams, not place blame.
I lived in Brazil for two years and am aware of most of these scams through stories told by my husband’s family and friends (he is Brazilian). Brazilians take this all in stride, but it is a very big
problem there.
I agree that there are scams all over the world, including the USA; however in America, there is in place a title system which makes it extremely difficult to sell the same piece of property to multiple buyers, or to sell a piece of property out from under someone who legally owns it. In addition, while America does have a homeless problem, it is not such that the homeless can squat indefinitely on a piece of property making it unsellable, as can be done in Brazil.
Overall, I think the writer did a good job of giving ex-patriates some rules of thumb when purchasing property in a country where they are not familiar with the laws. It opens one’s eyes, but doesn’t place blame.
Sincerely,
Patti Beckert
I agree with the comment of Mr George, you can not generalize latinoamerica, because there are many countries …. another very important point to buy property in mexico for example, you do not need a lawyer, you need to find a real estate agency and work directly with a Notary public, (who is the highest authority), I lived many years in USA and is very different how to buy a property in USA that in mexico …
I work in REAL ESTATE in this area IXTAPA ZIHUATANEJO. I born here too. So when you know very well the area and the properties, you can give a good service to folk that want to buy…WHY, BECAUSE this is small town, if you make samething wrong everbody know and we lose reputation,prestige and clients.
thak you Mr Domenick:
have greay day….
Pedro Medina.
http://www.ixtapa-zihuatanejorealestate.com
Domenick,
Your information is very useful and although I agree fully with don Jorge Otero, as there are scam cases in all our countries, I want to emphasize in your recommendation on using quality professionals, i.e.: lawyers, realtors, relocators.
Our first recommendation is to use established professionals. You can always get a starting list from your embassy or the local consulate. In most countries you will also find expat associations. Internet will also give you a very ample spectrum.
A much appreciated advice that we give is to invest in renting a place for a year. You will get that money back when you purchase the property.
Regards,
Jorge Gamio
Gamio Real Estate &
Corporate Relocation
http://www.gamiopropiedades.com
Mr Chaves is RIGHT, I purchased a property in a European country and there was alot of careless sloppiness in the whole purchase. I had these English people from Britain set up as agents. They were not registered and were completely incompetant, untrustworthy and unreliable. Paperwork had false signatures, untranslated forms to sign, (1 was a document giving these english idiots power of attorney to take full control of all my financial affairs worldwide and forever even if I signed a document stating otherwise) Who in their right mind would sign something like that?
The worst part was that they were actually featured on British TV and had a nice professional website. But their most common answer to my questions were, ‘I don’t know’
I also purchased a 2nd home in Britain and again problem upon problem. They were utterly useless.
There are definitely alot of scams everywhere!!! Europe included! Just have to get the right agent by referral and an amazing lawyer by referral
Scam artists come in all shapes, and sizes……Madoff, Ponzi, Most British Banks,
I don’t think the article was meant to make North Americans suspicious of all of Latin America. It was simply provided to alert us to things that we are not accustomed to seeing. All of the things mentioned in the article were new information for me, that I had never heard of before. I’m sure that when foreigners come to the USA to buy property, there are things that could happen that would surprise a foreigner, but would not surprise me. I know what to watch out for in my own country, but elsewhere, who knows?
In other words….NEVER NEVER NEVER buy real property in Latin America. Period. I have traveled throughout Latin America and not only will I never buy any property, I will not rent anything which requires my signature or a deposit. Not worth the inevitable headaches, my friends. Mr. Buonamici’s cure all seems to be “find a good lawyer.” Ever tried doing that in Latin America? Most of them will sell you out to the seller for a few dollars. Put your money into property you can take with you when you move, because in Latin America…you will eventually be on the move again.
I tend to agree with you, though there may be some notable exceptions like Costa Rica. And even if you avoid the scams, what is to prevent a future government from taking power in Nicaragua or Ecuador that will seize all property from foreigners?
Rental rates are low enough that, IMO, it doesn’t make sense to buy unless you are married to a native.