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Shoddy Construction makes Cranky Gringos

Are you one of the many retires thinking about buying a property in Panama? If so you need to do your homework and thorough homework before you buy, otherwise your dream retirement may turn into a nightmare.

Over the past several years, Panama has experienced a construction boom. New construction companies have been popping up like mushrooms. Like anywhere else in the world, when the talent pool gets stretched, costs go up and quality goes down.

We have met many owners with nightmare stories about what should have been their dream home. We have heard tales of development projects that involve shoddy construction, empty promises, and possibly outright fraud.

The problem with poor construction and shady developers has become a recognized issue in Panama. Between May 2006 and June 2013 there have been 3,277 complaints against real estate developers, complaints run the gamut from breach of contract, unfilled warranty claims and failure to return deposits.

The July 2013 forum with the Panamanian Institute of Consumer and User Rights (Ipadecu) resulted in the decision that The National Union of Consumers and Users keep a registry of complaints against developers and operators of real estate projects. Note at the time of writing the author could not find links to the registry or to any qualified property inspectors in Panama.

 

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We rented a beach community condominium a few hours from Panama City. Within a few weeks, we discovered why such a registry is needed.

Speaking with both owners and property managers the following Issues about the complex were revealed:

  1. Plastic water lines installed without being glued resulting in leaking joints behind concrete walls.
  2. Leaking gas lines.
  3. The original sloping roof design was changed to a flat roof which contributes to the top three floors experiencing water ingress
  4. The well water in some of the buildings is potable and in others, the water has high bacteria counts.
  5. In some units, the floor tiles lifted due to incorrect materials usage. 
  6. The sewage treatment plant is apparently faulty; resulting in sewage leaking into the nearby river, this of course empties into the sea and onto the beach area, (at low tide the river does smell bad).
  7. The water feature on some of the buildings does not function resulting in standing water and clouds of mosquitos (not good during a dengue epidemic)

Although the unit we were in did not experience any specific issues (with the exception of the elevator not working for several days). The evidence of poor construction is apparent in the indoor cracks and water stained exterior.

Troubling are the unsubstantiated rumors of beach sand used in the buildings concrete. This is a real concern; beach sand is contaminated with chlorides (salt) which causes embedded steel reinforcement to corrode almost immediately. Corrosion causes the steel to expand, resulting in the concretes failure. As the concrete cracks, the rebar is exposed to increased concentrations of water and oxygen resulting in more corrosion. A building constructed from beach sand is doomed from the day it is built and will rot from the inside out.

Building issues aside, the result of the ongoing battle between owners and the developer has been nasty. Some owners frustrated by the unaddressed problems have refused to pay maintenance fees and in turn the developer, at times, restricted access of gas service providers and elevator repair technicians. Security has also reportedly restricted resort access for the owners. 

Panama can be a wonderful place to live and invest, however it is critical to perform your due diligence. Assuming that a building is built to North American Standards is a huge mistake.

 When it comes to living and especially investing in a foreign country, we recommend you give it a thorough test drive before plunking down your hard-earned dollars.

 Here are a few tips to help you avoid your dreams turning into a nightmare.

 1.    You have heard it a million times. Rent for at least 6 months before even considering moving there.

2.    I would also strongly recommend renting the specific property you may be interested in purchasing before you purchase the property.

3.    Do your own research, especially if you are interested in an older development. A simple google search may bring up some surprising comments.

4.    Take the time to thoroughly explore the building and its surroundings and make sure you speak to current residents.

5.    The sales department and your realtor may be very helpful sincere people, however remember that they want you to buy from them and some of them can be very skilled in avoiding or skimming over important questions.

6.    Make sure that you have the purchase contracts translated into English and that they match the Spanish one.

7.    Are there any guarantees built into the contract with regard to the developments future expansion? Your beautiful sea view may be obliterated by a mammoth resort in a few years’ time.

8.       Do all the diligence you would do when purchasing a property at home, remind yourself it is a different country with different standards and then do twice as much research.

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Post Script (January 26 2013)
Yesterday as I was sitting in our rented 5 th floor beach apartment when I hear a thunderous bang. Upon  inspection the source of the crash was evident. A 30 pound chunk of concrete (approximately 12 x 10 x 3 inches) fell 140 feet from the top of the building to the pavement below. The piece of building landed approximately 6 feet from the front entrance. Luckily nobody was hurt!!!  Not only does shoddy construction make for cranky gringos – it may also result in dead ones!

About the author: Apparently born under a wandering star, Michael spent hours as a kid poring over maps, atlases and plotting where he wanted to travel when he grew up. Sadly Engineering school got in the way….. “it takes 5 years to complete and a lot longer to get over”. He still considers himself a “recovering” Professional Engineer. He escaped the rat race at 44 and now pursues his passions for travel, photography, Tai chi, scuba diving, cooking and sampling the world’s wines. Michael is also… Fiercely independent, a bit of a rebel, is on a self-imposed media diet & married to an incredible lady.

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