Real Estate Scams in Latin America to Avoid

By Domenick Buon­am­ici / May 09
Escape from Amer­ica Magazine

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 atwww.EcuadorRealEstate.org

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