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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I think the BIG scam story today involves off-plan sales, in places such as Panama & Costa Rica, for projects that may be significantly delayed or never built at all! The RE crash and shady developers are doing a double whammy on starry eyed buyers. Is it any wonder that this story gets no press in the many industry supported websites that continue to promote RE investing in developing nations while ignoring the reality that the global crunch has seriously hammered home values…particularly in Latin & Central America where US buyers account for a large percentage of purchases. Who is safe guarding the deposits, etc.
hey david,
thanks for the heads up, its a logical thought….but needs to brought into public dialouge.
now I’ll be in touch..
Paradise Stolen 2
This is the second TV film by Adelita Coriat and combines the original shown last September (06) (over 1000 viewings) it divulges more facts about the scams on Isla Solarte in the Bocas del Toro archipelago selling RoP (Derechos Possesorios) of state owned land in Panama.
Shepard Johnson is on the run and has not returned to Panama or Isla Solarte for years his sales have collapsed he remains in his house in Granite Bay California, complaining he is the innocent party and refuses to return to Panama City and face the charges against him, blaming everybody for his demise and declaring Chapter 11 last July (07) in California and suing anyone who does not agree with him.
Guillermo Martucci and his partners even though under house arrest go about their daily business as normal, the same applies to the other defendants in the case, they have very deep pockets having swindled people out of millions of Dollars.
The Government and the corrupt Judiciary refuses to do anything about the corruption at all levels, instead of tackling the problems are now part of it which recent events and legislation protecting crooks in Panama has proven. This has outraged investors who are demanding action and indicating that if this problem is not tackled soon the whole Panama land bubble may burst. In August the Government were forced to amend law 62 regarding RoP that had caused so much controversy and was open to misinterpretation by crooks and scam artists, and even the introduction of law 2 with concessions in 2006 has done little to alleviate the problem.
Non-Spanish speakers are advised to have someone with knowledge of the Spanish language to assist in understanding some of the complications of this problem. I would like to extend my grateful thanks to Adelita Corient for her persistence and excellent reporting.
Enjoy the film, please spread the word and pass the URL on to any other persons or organisation you think will benefit from it’s contents, you are reminded that this documentary covers the 200 investors on Solarte and now includes the native community on the Island who are also under threat. They all hope one day to call Isla Solarte home, regretfully after ten years there are a few (now deceased) who will never be able to do that.
Thanks for watching
Bernard Collier
P.S. The murder last week of Kim Crofts on the island has now created more fear and uncertainty.
Paradise Stolen 2-a
http://video.google.com/videoplay?docid=-876547171908907409&q=solarte+paradise+stolen&pr=goog-sl
Paradise Stolen 2-b
http://video.google.com/videoplay?docid=-7247709494971970796&q=solarte+paradise+stolen&pr=goog-sl
The biggest scam of all is finding a “good lawyer”. What an oxymoron and something that many of us from countries with good legal systems have come to trust, yet we get ripped off in the Latin American countries because we “trust” the so-called lawyers, notarios, and the rest of the scam artists involved in the real estate game. We have been ripped in Mexico and the latest is Costa Rica…by a Tico lawyer, Tico realtor, and American seller.
My wife and I visited Bocas del Toro with an intent of purchasing some property for investment and retirement. We didn’t like it much. The people were very friendly but it was way too remote. We weren’t looking for a Supermarket WallMart but a least a modest grocery Store….none were found. No entertainment. Not a large selection of restaurants. We also looked at lots on the Isla Solarte. It is a nice little Island just a short boat from town…..glad now we didn’t buy any property after reading the above article. There was a Britt named Ron who we liked very much. He had developed about 6 lots on another small Island. Ron lived in town but was going to build a house on one of his lots and sell the other 5. I am not sure if he ever did build his dream house. We looked at other places in Panama and Costa Rica…..decided and bought a place in Argentina.