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Common Latin Real Estate Scams Article.

Escape Artist posted the article below on common latin real estate scamms. Any others to add ?

Real Estate Scams in Latin America to Avoid

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.

By bickerss on May 22, 2009, 04:37 in Friendly Talkzone.

bickerss says on May 22, 2009, 04:37:

Article Link

http://www.escapefromamerica.com/2009/05/real-estate-scams-in-latin-am...

Investment Strategy - buying when others are crying!! Offloading when others are gloating!!!

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Boatygringo says on May 22, 2009, 05:30:

Other things to lok for befor you buy. make shure the owner has paid the property taxes, water bill electric bill. The utility companies will not reconect the utillites unless the bill is fully paid.

Boatygringo

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roccatanski says on May 22, 2009, 06:49:

Great post.I am in the process of looking for a place here in Bogota(want to within the next 2 months) and it looks like the underlying theme is to have a good lawyer,one that is specialized in real estate.Thanks

"A man is defined by his actions, not his memory" ( Kuato-- total recall)

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somedumbguy says on May 22, 2009, 07:14:

They should add:

The lawyer scam. Said lawyer uses your trust money to finance personal or family affairs.

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Escape Artist says on May 22, 2009, 07:29:

Funny you should post this bick. Just yesterday I was peeking and poking around on http://www.escapeartist.com/ and came across the same article. As a matter of fact I still have the tab open with that page open. Coincidence for sure...

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kingfish5515 says on May 22, 2009, 08:29:

Another thing for gringos to remember when buying property in latin countries is that their legal system is based on the Napoleanic Code versus ours which is based on english common law. Actually I am assuming that COL is based like all the other latin countries I am familiar with but I am not sure,, but then again I aint usually wrong.... Napoleanic law differs from what we are used to in several ways. Most importantly squatters have rights not afforded in ECL. One other thing is to hire 2 lawyers, one to do the deal and another to check behind him to see that he filed and registered everything he was supposed to correctly. This is a common problem in other countries as crooked lawyers not registering things opens up a can of worms that is hard to close. Everybody says to get a good lawyer,,, but,,, how are we to know which lawyer is bad or good, the one that speaks english and has the biggest ad?? I havent found a way yet to determine who is good bad or a crook. Once again, my statements are made based on events transpired in another latin country and assuming Col law is not based on ECL. KF

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bopenyan (☼Travelguide writer) says on May 22, 2009, 10:28:

Further to kingfish's comment, we in North America are used to the system of fee simple, based on common law principles. Rather, it is based on grants of use (which is why it is important to determine whether the property being offered is "por todos usos"). People have been burnt on ocean front property as a significant amount of land beyond the high tide mark is part of the public domain, and lands beyond that usually are for use (such as a right to harvest produce and fruit and erect shelter to accommodate same).

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Noelito40 says on May 22, 2009, 12:04:

Great article another thing when you buy an apartment or in a conjunto, is that you get a notarised letter from the administration stating that the property is in "pav y salvo", basically means that the administration and the like is paid up to date! if not then you could inherit any debt as the new owner.

Noelito

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miamimike says on May 22, 2009, 16:59:

In Mexico(and maybe other LA countries as well) Foreigners are not allowed to own oceanfront property(forget the exact yard/meter restriction) within so many yards of the ocean. Problems have arisen in the past on this technicality in this country. Buyers thought they had nice beachfront land only to find out they were scammed and aren't allowed to own period. Here in Miami, home to many Latinos, a problem we have, esp with los Cubanos, is they add small apartments on to the rear of their homes without pulling permits. This is in many cases impossible to pull off as they don't meet the sq footage for multi family dwellings on a small lot. Now, due to a change in the law m(maybe 5 years ago) this is impossible to pull off because a City Bldg Inspector inspects the home before each sale to a new buyer. What happened in the past was the seller who built one of these add-ons would sell the house and sometimes years later, the new owner would get nailed for building without a permit when the house was inspected for another reason. Now, due to the new laws, this doesn't happen anymore. Funny you drive down some streets in little havana(miami) you see 10 cars parked outside a single family home and 10 large bags of garbage for a single family(highly unusual)--all from illegal add-ons.

No hay Peor Ciego que el que no quiere Ver o Sordo que el que no quiera Oir--Soy Yo, Sarah Palin, Wasilla Alaska.

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miamimike says on May 22, 2009, 17:02:

Restricted land owwnership in Mexico:

CAN FOREIGNERS REALLY OWN PROPERTY IN MEXICO?
Yes, Americans and other foreigners may obtain direct ownership of property in the interior of Mexico. However, under Mexican law, foreigners cannot own property outright within the restricted zone. Instead, a real estate trust must be set up to hold title for the foreigner. Since foreigners are not able to enter into contracts in buy real estate, they must have a bank act on their behalf, much as a trust is use to hold property for minors because they also can not contract. The following is a brief outline of the law regarding such trust, known as "fideicomisos", but potential buyers should always get advice and have all real estate transactions overview by a licensed Mexican attorney.

THE RESTRICTED ZONE AND "FIDEICOMISOS"
The law declares that the Mexican nation has original ownership to all land and water in Mexico, as well as minerals, salts, ore deposits, natural gas and oil; but that such ownership may be assigned to individuals.

The Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the "restricted zone." The restricted zone encompasses all land located within 100 kilometers (about 62 miles) of any Mexican border, and within 50 kilometers (about 31 miles) of any Mexican coastline. However, in order to permit foreign investment in these areas, the Mexican government created the "fideicomiso," (FEE-DAY-E-CO-ME-SO) which is, roughly translated, a real estate trust. Essentially, this type of trust is similar to trusts set up in the United States, but a Mexican bank must be designated as the trustee and, as such, has title to the property and is the owner of record. The Mexican Government created the "fideicomiso" to reconcile the problems involved in developing the restricted zone and to attract foreign capital. This enabled foreigners, as beneficiaries of the trusts, to enjoy unrestricted use of land located in the restricted zone without violating the law.

http://www.mexonline.com/propmex.htm

No hay Peor Ciego que el que no quiere Ver o Sordo que el que no quiera Oir--Soy Yo, Sarah Palin, Wasilla Alaska.

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