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If you are planning to relocate to Panama, one consideration when purchasing a new home is whether or not to live in a gated community. While there are many benefits to this lifestyle, there may also be restrictions and limitations. In this short post, we highlight some of the questions to ask while deciding whether your home in Panama should be gated or not.
Property values
When purchasing in a gated community consider the property values – are they increasing or decreasing in this area? When done well, gated community property values increase, as they provide:
- more amenities
- better security
- a sense of belonging
You should expect higher HOA dues for a gated community, but these are worth it if the property values are increasing. These dues go to pay for the roads within the community, and maintaining certain standards of «looks».
However, if you notice that property prices for a certain community are dropping, then look further into the history and financials. For example, I know of one gated community in Panama (possibly more than one), where the developer in 2006 used a tax loophole, currently costing the homeowners high property taxes. Even with the recent property tax cuts, these homeowners are still unable to reduce their property taxes.
Who will be my neighbours?
In some parts of Panama, living in a gated community means that you are surrounded by expats. Nonetheless, this is not always the case. For example, if you purchase in Santa Maria, just over from Costa del Este, your neighbours will be of all backgrounds, including many Panamanians. On the other hand, if you choose something like Valle Escondido, you will find a greater enclave of foreigners. Somewhere like Playa Blanca, which is a gated community that has been around for more than ten years will have many Panamanian neighbours, as well as a smattering of foreigners.
Visitor restrictions & condominium association rules:
An important benefit of living in a gated community is that everyone has to abide by the rules. Including you. So, before you purchase, it’s a good idea to ask for a copy of the HOA rules and make sure that you actually agree to them. Don’t think that once you become an owner you’ll be able to convince people to change things you don’t like. Changing HOA rules is an arduous task, just to get the quorum to vote on the issue!
Just remember, the HOA rules could even include details regarding the type and number of dogs you could have! There are rules, more rules, and then rules for visitors, tenants, gatherings, exterior paint colour, siding, yard, and fencing.
Who will be living in the house?
Moreover, this can be particularly important if you plan to rent your home out while you are away. Some HOAs restrict the type of rentals, particularly any «short-term» rental. Does this gated community allow short-term rentals, long-term rentals, or both? What constitutes long-term – 6 or 12 months? What do the HOA rules say about renting for less than six months?
Can I put this on AirBnB in the months I am away?
It is quite likely that the HOA rules will completely prohibit AirBnB rental of a home within a gated community. This is for a number of reasons:
- security and identification of them at the gate
- use of the amenities (such as swimming pool, beach club, etc)
- restrictions of who can be in the gated community.
Balance sheet, reserve funds & financial strength:
This is possibly one of the most important points when considering a gated community. Ask to see the latest balance sheet for the community. A financially distressed community is dangerous – so you want to know about delinquencies (owners and/or the developer) and how the accepted budget compares with actual expenses.
Associated with this point is the issue of reserve funds – Ask how much is in the reserve account. Is a reserve set aside for major repairs or purchases? Does the community have the funds for fixing the swimming pool, storm damage clean-up, rebuilding the gazebo, or redoing the roads next summer?
Are there any issues with the developer or the administrator that I should be aware of?
Additionally, ask around about the developer or the company in charge of the day-to-day administration. Find out if there is any owner dissatisfaction or unrest with the HOA board that has oversight of the administrator. Is everyone satisfied with the developer? Has the developer held up to promises as marketed?
If the community no longer relies on the developer, because it has been in existence for a number of years already – Has there been any infighting between owners?
It’s your responsibility before you purchase to make sure your dream community is full of and run by people who share your core beliefs.
Which services & amenities are included in the gated community fees?
Another important aspect of the HOA will be your monthly fees. Ask to see a breakdown of fees that you are expected to pay – how many gardeners and workers are on the payroll?
Make sure you know whether you can pay monthly or yearly. Can you pay online? Or will you need to send in a wire transfer? Do you have a local bank account in Panama?
Also, find out when the last time they increased the HOA fees. Have there been any special assessments in recent years or are any expected? What specifically were the special assessments for? When do they expect to increase the HOA fees again? Who sets these fees?
Maintenance requirements in a gated community:
Walk around the neighbourhood and have a quick look at the common areas. Check that the roads are in good repair. Ask to see the beach club or social areas and make sure that the pool is not mouldy. Are the street signs are legible? All of these small details should give you an idea of how things are in the long run.
Who does the maintenance of my garden while I’m away?
You should not assume that this service is included, as most likely it is not. However, in some cases, the administration of the community may offer side services for the individual maintenance of your property – such as gardening and landscaping.
Which gardens belong to the community?
It’s particularly important to know who is responsible for looking after the property by the curb. Is this like a regular community, where the homeowner looks after the grass lawn outside of their fence? Or does the HOA take care of all that mowing or landscaping?
Who does the maintenance on the roads, sidewalks and other common areas?
Obviously, the HOA is responsible for the maintenance of the roads, sidewalks and other common areas. But before you buy, check with other residents:
- Have there been any recent changes in who does the maintenance?
- Are there any noticeable changes in the quality of the maintenance work being done?
Architectural standards and guidelines:
A few years ago, two neighbours disputed a window installed in an adjacent wall. The office had no exterior windows, and so the neighbour decided to add a window. Nonetheless, this particular wall backed onto the neighbour’s bedroom. She got upset about a new window installed in a wall that was «not supposed» to have any windows. Outcome – the neighbour that put in the window had to either get rid of the window or increase the height of the wall between the houses (quite expensive).
What architectural standards and guidelines are included in the HOA rules?
Are there restrictions on painting and modifications to the exterior of my home?
Another possible restriction is on exterior colours. What colours are used for painting and decorating the exteriors of your home? For example, some neighbourhoods restrict the colour of paint to a specific colour (number provided) or a range of colours. Additionally, they may restrict you to a certain type of carport or roofing materials.
If you intend to add solar panels to your house – Are solar panels permitted?
Security standards of your gated community:
While you are walking around the neighbourhood, check whether there are modern cameras and security patrols. Notice, as you enter the community – what is the gate protocol for visitors and workers? How will your guests and visitors feel when they arrive at the gate? What are the protocols for announcing to the gate that you are expecting visitors? How will they treat unexpected arrivals when you are not expecting visitors?
What are the crime levels in this community?
Additionally – ask around about the crime levels in the community – both inside the gated community as well as neighbouring areas.
What relationship does the community have with local law enforcement?
If something happens within the HOA, what is the general response time on 911 and emergency services? How easy is it for an ambulance to arrive? Where will the nearest ambulance be travelling from? This is particularly important if you are living in one of the more remote beach communities.
For legal advice, review of the sale & purchase agreement, preparation of any rental agreements, or other legal services when you are relocating to Panama, please contact us!