How I was deceived by developers in Panama

Year 2006

In June, 2006, I concluded several contracts on real estate purchase in Panama. As it turned out later, the contracts contained draconian provisions.

They stated the construction to last for 18-20 months. It was necessary to stand bail of approximately 30% of the lump sum on building stage; the rest of 70% was to be paid in after commissioning. If the purchaser cannot credit a regular payment, the contract is rescinded; however, the previous payments are not reimbursed him for. Five good years have passed but no building is constructed.

These are two office apartments of 156 meters each on the 23rd floor of Revolution Tower Building. Such facilities were priced at 256 thousand Dollars (or 258 thous.). I paid 10% of them; then 5% more and 5% at last. Totally, 20 % were transferred by me.

Year 2007 год

In 2007 I was somehow asked to re-conclude the contract and change the apartments on the 23rd floor for the similar ones but on the 20th floor. Later I was explained that the apartments on the 20th floor should have cost less. But the developer didn’t decrease the deal amount.

Certainly, this is my mistake but I still signed new papers without having read the detail carefully. Twenty per cent of the lump sum had been invested, prices were rising and I didn’t want the transaction to fell apart. There was a small point I had not noticed. The essence is that I should submit the bank certificate confirming my paying capacity or creditworthiness for that purchase in the amount 70% of the facilities’ lump sum before July, the 31st, 2008, a sort of indemnity bond. I was implied to provide such letter from a Panamian bank or a bank cooperating with some Panamian bank.

It’s worth mentioning, the construction did not begin at the moment. The construction site represented a level stretch. What kind of letter they could talk of if there was no building where my apartments were to be located?

Year 2008

Nevertheless, the developer, quidam Saul Faska, apprised that he wanted to meet me personally. However, if I did not go by the end of the year, he would just grab these two apartments from me, and my contribution equal to 20% of the offices cost would be cancelled. I came in November, 2008. There was a huge pit dug out, a five-store parking arranged on its bottom. The developer stated about price increase for me. If in 2006 the cost of one office made $ 258 thous., such apartments were assessed at about $ 400 thous. by 2008. We agreed on some averaged price: I was added $150 thousand, i.e. $75 for each project. The price for each office rose up to $333 thous. for nothing but an undelivered bank bond from me.
All constructors behave the same way in Panama. All contracts are concluded without a seal that is why the investor may be deceived easily.

  • I dealt via a broker agency that managed its affairs below the belt, as far as it turned out later. Having used my poor knowledge of English, they misinstructed me. Later it was apparent that they deceives very many people, there was a great scandal. When the mediate died on its feet, I remained with the developer one-on-ones.

As I have said before, he jacked up the price of every contract for $75 thous., and proposed to re-conclude the contracts again. When I translated the new contract, I was stricken with dismay: it was much worse than the previous one. It stated that I had to pay $44 thousand more before the 31st, August, 2009, i.e. $22 thous. for each apartment. Besides, I had to submit the indemnity bond or pay in the remainder of money for the real estate before the 31st, July, 2010. There were other unpleasant articles also, for example, envisaging the developer’s title to add 5% to the cost of the facilities (what was made later) if the construction materials would growing more expensive; and in case of force majeure or other circumstances, the commissioning terms are allowed delaying for 12 months more. It was useless to argue: the developer delivered an ultimatum: I sign that contract or we stop our cooperation, therefore, I lose all the money invested.

As far as it was found later, many contract provisions were inconsistent with the legislation of Panama so he did not have any right to conclude it with us as it was. But I did not know about that at the moment. Having signed the papers, I paid the extra $44 thous., i.e. I contributed 30% of the amount he had added.

Saul Faska has brutally violated the legislation of his country having furnished me the contract in the Spanish language. During negotiations in December, 2008, an interpreter translated me our conversation with the developer but not the content of the contract. As I understood at signing moment, if I had not granted the bank bond by the 31st, July, 2010, I would have lost only last payment, and namely $22 thous. for each project. When I translated the contract after arrival into Kiev, I found that the document had provided for the loss of all the money invested for the real estate.

Year 2010

In summer, 2010 it became obvious that I had no money to pay for the offices the rest. Moreover, I could not obtain the indemnity bond from a Panamian bank as after my trip to Panama in December, 2008, I had cerebral accident. My health status was critical during six months; thereafter I was not ready for long-haul flights for several years.

I applied to lawyers for help but they just wrote some letters and met with the developer. He warned once again that I had to contribute the money for the real estate before the 31st, July, 2010 or deliver an indemnity bond from a bank whereby he said that the building would be committed approximately at the end of December, 2010. It looked incredibly as the construction was far from its final stage.

In spite of the high emolument for legal advisers, ($3 thous. for each project + 15% of the amount they would manage to receive from the developer), I wanted them to institute legal proceedings against Saul Faska. I hoped to suspend the contract in such way so as I would not have to submit the bank securities or settle with the developer in full before the 31st, July.

Our main demand was to return the money. It was based on delay of commissioning the facilities in time as well we demanded a possibility to reassign the offices for another purchaser without levying any money (the developer required $20 thous. for each project for the procedure). Beside, we wanted make him revoke his demand to obtain the bank securities as the construction terms are obscure.

He was negotiated firstly; afterwards the pre-trial listening was held. There is a procedure in Panama when the judge hears the case and helps the parties to compromise. As a result of these measures, the developer’s representatives declared about considering returning the money. For 5-6 days before July, the 31st, to the letter, they stated their readiness to return a half of the money invested by me. I could receive about $85 thous. from the developer after all expenses held back but I rejected. Now I have only one way-out – to prove that the concluded with me contract contravenes the local legislation, annul the agreement on this ground and demand mutual restitution for the parties. The attorneys persuade me that at least 12 articles of the contract violate the law and may be challenged at court.

What do you think should I do?

P.S. Do not believe Saul Faska from F&F Properties