Panama New Properties Price Increase Verification Procedure

Authority: Cost Increase Analysis Unit (UAAC) of the Authority for the Protection of Consumers and Defense of Competition (Acodeco)

Legislation: Resolution No. 028-20 of June 25, 2020.

Objective of the Law:  To validate or not the increases in housing prices that developer inform buyers about when acquiring a new real estate unit.

The law ensure that the increment is not arbitrary and the percentage increase notified by the developer in the unit's price does not exceed the percentage established in the promise of sale contract signed by the parties.

In addition, the law seeks to verify that the price adjustment is related to the increase in the costs of construction materials, labor, and interest rates, among others.

The developer may only increment the sale price once. Moreover, it is just allowed to notify the buyer after the project reaches 80% of construction progress. The developer must present the certification signed by the resident engineer that supports said advance. In addition, the original budget of the work is requested, duly certified by the bank that grants the financing or by the person or persons who have contributed the capital, as well as the updated cost structure.

On the other hand, to support the increase in costs when it comes to construction materials, the developer must present the relationship between the initially budgeted costs versus the actual costs to determine the corresponding variation, which must be based on or supported by three copies of quarterly invoices or purchase orders of the project to be validated. The materials considered are concrete (standard mix), steel, wood, high-strength concrete, windows, electrical wires and cables, pipes and parts, cement, blocks, paint, and sand.

Acodeco will verify the increases for labor as long as said salary adjustments are duly justified in the collective labor agreement, agreed upon after the original contract date. In addition, price adjustments due to new taxes or increases in bank interest rates in the financing of the project will be taken into account if they occur before the work reaches 80% progress and after being corroborated with the information previously supplied and certified by the financing bank.

In the UAAC, in charge of carrying out the verification, the data is reviewed. If the developer does not provide the requested information, it is considered that the information is insufficient, the validation is rejected, and it is communicated to the company that the lack of information prevents the verification of the adjustment; as a consequence, the increase should not be collected.

Note: Every case will be analyzed individually.