Panama condo association fees, otherwise referred to as building association fees, home owners association fees, or common area maintenance charges vary substantially from condo to condo in Panama. These fees are generally calculated based on the size of the individual condo unit multiplied by a set rate that the building association has determined. That rate generally varies from $.80 – $3.50 per square meter, or $.07 – $.32 per square foot. So for example, if your Panama condo is 100 meters or roughly 1,080 square feet and the building charges $1.50/meter, then you will be paying $150.00 per month. The rates depend on a number of factors, including how many total units there are in each building (costs get spread out amongst a larger number of owners), what type of amenities the building has, number of elevators to maintain, total number of staff in the building, etc. The average rate for a building with a standard level of amenities (pool, gym, and security) is anywhere from $1.00 – $1.80 per meter.
What do these building association fees cover? Most if not all buildings will have some sort of front desk/security/concierge position. The staff’s salary will be covered by the association fees. Also included is maintenance of the common areas like the pool, front lobby, elevators, and in some (but not all cases) maintenance of the rooftop. Depending on the building and how they are set up, gas is usually included in the common area charges, meaning owners do not have separate gas meters so cooking and heating water are covered. In some cases, water is also included. Several condo developments in Panama also offer things like free wireless internet, towel service, icemakers at the pool, and other benefits to owners. This is on a case by case basis and varies based on the administration and owner’s willingness to pay for such services. Most if not all buildings also have some general liability and structural insurance policies which are available to all residents for review from the building administration.
What about special assessments? The most common special assessment, or “extraordinary quota” occurs once every few years and is assessed to cover extra charges associated with repainting the façade of the building. Depending on how efficiently the building’s been run, quotes from anywhere between $300 per resident to as high as several thousand dollars may be levied to cover the cost. Other reasons for a special assessment may be to replace old furniture in the lobby, retile the pool or redecorate the building.
What is an Initial Capital contribution? This is a one time contribution to the home owners association required of all first time buyers in the building. These funds are used to start the association.
Who establishes the building associations? Developers are required to administer the building for the first year of operation. After that, the homeowners vote to determine a president, treasurer, and secretary of the board. A quorum is required for any new rules to pass within the administration. Most home owner boards usually select a third party building administrator.
What about Due diligence for new buyers? It is important to get a good feel for the current building administration, and a good real estate agent is key to this process, as the typical work of an attorney does not include anything other than a general statement of good standing on the property to be purchased. Important factors to consider are: how is the collection rate of the building, if there are any special assessments pending, how money has been spent in the past, how any third party providers are performing (security staff, general maintenance staff, etc), what percentage of the ownership are absentee owners, are there any issues with the building that may require special assessments in the future, etc.
Certain buildings in Panama are run very well, while others are run poorly to the point that owners have had to force out administrations and replace them. For an investor looking for income producing properties, it is important to know how the administration is being run and what kind of costs to expect as a part of ownership.