PROTECT YOUR INVESTMENT IN PANAMA WITH TITLE INSURANCE AND ESCROW SERVICES
Monday, October 19 2009 @ 09:00 AM EDT
Contributed by: Don Winner
Authorization Required: In Panama insurance companies can only legally sell title insurance if they have been approved by the Ministry of Commerce and Industry and the Superintendent of Insurance. Anyone who purchases a title insurance policy from an unauthorized company can be penalized up to ten times the cost of the policy, and of course the policy is completely invalid. You can click this link to download a copy of Resolution Number CTS 01 of 23 April 2009, which authorizes the Latinamerica Title Company S.A. to legally operate in Panama and to sell title insurance, required under Article 111 of Law 59:
- Article 111. Entities, companies, or individuals contracting or selling any insurance on assets or individuals located in the Republic of Panama with companies unauthorized to operate in the country shall be subject to a fine equal o ten times the value of the premium which, on the same risk, would correspond to an authorized company, and the insurance contract shall be deemed null and void. Provisions of article 26 of this Law shall be exempted.
A Growing Problem in Panama: Registry frauds and problems with properties and land owners in Panama continue increaisng day by day, this is the time to project your investment.
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TITLE INSURANCE: Real estate has traditionally been a family's most valuable asset. It is a form of wealth that is protected by many laws. These laws have been enacted to protect one's ownership of real estate and the improvements located on the land. The owner, the owner's family, and the owner's heirs may have rights or claims in and to the property that you are buying. Those who have an interest in or lien upon the property could be governmental bodies, contractors, lenders, judgment creditors, or various other individuals or corporations. The real estate may be sold to you without the knowledge of the party having a right or claim in and to the property. In addition, you may purchase the real estate without having any knowledge of these rights or claims. In either event, these rights or claims remain attached to the title to the property that you are buying until they are extinguished.
- Why do you need Title Insurance? To protect possibly the most important investment you'll ever make - the investment in your land. With a title insurance policy, you as owner, have an indemnity contract that will reimburse you for loss in the event someone asserts a claim against your property that is covered by the policy.
- How can there be a title defect if the title has been searched? Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.
- What protection does title insurance provide against defects and hidden risks? Title insurance will pay for defending against any lawsuit attacking your title as insuranced, and will either clear up title problems or pay for any losses. For a one-time premium, an owner's title guaranty policy remains in effect as long as you, or your heirs, retain an interest in the property.
With regards to Title Insurance, when issuing the policy we are of the agreement with the buyer of the insured title, that all title defects that are found and fully determined as one not only the buyer but by our company as well, are risks that the buyer is willingly entering into being fully aware of the consequences of still going through with the purchase. We, as the buyer’s Title Company, will be there covering for any other matter or off record defect not found and not arising from the currently known risks, that in the future may turn into an adverse matter challenging the title. At the mere hint of a claim adverse to the title, Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim, claims litigation, arbitration, mediation, coverage opinions and defense in all courts.
No client wants to pay the potentially ruinous cost of defending your property rights in court which would definitely go beyond the total fees or our services, should a valid claim arise.
This is the point of Title Insurance (on a specific outlined definition): that potential title defects, can remain hidden despite the most thorough search of public records and the most careful escrow or closing. For a one-time premium, it reimburse you for loss due to defects existing prior to the issue date of your policy, up to the policy amount, and of legal defense of your title, with a coverage that protects against potential defects such as:
Our clients that have had their attorneys found no title defects, and at the same time insured their title as found and described on the search dates, share the peace of mind of those who under the same circumstances insured and were later on able to file their claims, getting both legal fees and insured amount paid for their losses. While others very much convinced that there is no point in insuring a title or a concession where the title search shows no defect, have had to face their disputes or losses without a Title Company behind them.
Registry Fraud in Panama: It should be mentioned that now registration is done electromagnetically or digitally. A property id or finca number system (leaving behind traditional tomes and using a computerized registry) has been set up, documents are scanned when submitted, screens are available for consulting, the Internet is used to access information, and information is kept in digital formats. There are those who complain about the loss of history and tradition, as well as the mechanical security offered by the old system.
Nevertheless, some anomalies or crimes, known as registry fraud, have started to crop up in Panama specially in the provinces. It turns out that the real estate property is not stolen or usurped through squatting, but by theft at the Registry itself, at precisely the moment we are required by the State to record it in the system and also they are cases of corruption in the local entities and governmental institutions.
The modus operandi is relatively simple. An identity substitution or a bogus notary gives rise to a deed in which the property is transferred to an untraceable person (a foreigner or a pauper). The property is then transferred or sold to a “third party in good faith” (generally before another notary, since this second sale is apparently “irreproachable”).
Generally, the properties chosen are somewhat abandoned, undeveloped, or unused, or have characteristics that haven’t changed over time. That is to say, the owner is not aware of what might be happening or doesn’t even realize when signs have been put up offering the property for sale, and has not been checking the status of the property in the Public Registry.
The operation may even be more complicated, in order to eliminate any trails and make appropriate use of the information and the principle of public access to the Registry.
Hundreds of expats from the Unites States and Canada and also from Europe have been made victims of this kind of registry fraud. They fought with all their might to recover a property that had been taken from them, and proposed a simple formula to stop much of the abuse, a simple process such as the Title Insurance. This way there would be more security, transparency and peace of mind for thousand of investors in Panama. Unfortunately, theirs a lot of people that they don’t know the existence of Latinamerica Title Co in Panama.
In some cases the speed with which fraudulent transactions are recorded is amazing. Notaries’ complaints against the Public Registry are proverbial, that it is slow to act and excessively strict in qualifying documents (forcing amendments and additional paperwork), so the speed with which fraudulent documents are recorded has called attention.
This matter, then, is one of the concerns landowners in Panama now have. From the ancient Roman concepts giving full dominion, which in addition to possession conceded the traditional power to use, enjoy the fruits and consume, with this power extending from Heaven to Hell, we have now entered into a few ambiguous concepts that exaggerate possible social interest limitations for the property. The even comes down on some landowners, water laws impose serious limitations, some municipal governments have zoning plans that prohibit unrestricted use, and the proximity of specific circumstances (rivers, beaches, the border, schools, churches, mangrove forests, and several other “creative” things) subjects the property to specific rules.
Thankfully, just as there have been unscrupulous professionals abusing of their protocol and the situation, the system has begun to produce solutions such as a known Title Insurance Company in the country like LATCO representative of the biggest title provider in the world CHICAGO TITLE.
In addition, LATCO, that offer monitoring and investigation, legal professionals who commit to their clients with reasonable consulting and monitoring services.
Neighbors who unofficially defend neighboring properties even without knowing who the owners are, several politicians who have started to insist on the issue, potential buyers and honest notaries who refuse to purchase properties with suspected fraudulent registry entries or backgrounds, and even, lately, companies that have imported insurance and logistics services that – although they apparently seem to be more for non-registry systems – actually supplement security and provide potential buyers with terms ensuring their purchases and investment.
The advice for all is to look for good professionals, be vigilant with your properties, get advisory on them, not make suspicious purchases and make sure – through vigilance or insurance – you have guarantees on what you are buying and what you have.
LATCO ESCROW SERVICES: ESCROW ACCOUNT - What happens in escrow?
An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer's and seller's instructions.
People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller's requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.
The escrow process was developed to help facilitate the sale or purchase of your home. The escrow holder accomplishes this by:
- Efficiency in the managing of funds
- Acting as the impartial "stake-holder," or depository of documents and funds
- Keeping all parties informed of progress on the escrow
- Maintaining security and accountability of monies owed and owing.
- THE ESCROW SERVICES ARE PROVIDED BY LATINAMERICA TITLE COMPANY AND THEIR AGENTS CLOSING SERVICES: This service will be executed under the highest quality standards through our CTCA Attorney Alliance Group, providing our costumers the closing and notary services by them requested, in complete harmony with the professional ethics that should rule this subject matter.