business

Unapproved real estate projects may be fined

The government has identified 23 projects that developers promoted before they received permission to start.

The promoters could face fines of up to $100,000 for violating the law, which was passed last year.

The government is cracking down on real estate developers who are marketing projects that have not received regulatory approval.

For the first time, the Dirección de Obras y Construcciones Municipales del Municipio de Panama is releasing the names of developers who have allegedly violated the law regarding advertising pre-construction projects.

The government passed a law last year that prohibits the "advertising of the sale of land, parcels, housing and buildings" which have not received approval from regulatory agencies.

Developers could be fined up to $100,000 for violating the law.

Some of the developers on the list issued by the government said the matter is in the hands of their lawyers and declined further comment.

Others said they were not aware of any complaints filed against them.

The government passed the law to prevent real estate developers from marketing projects to foreign investors that may not be approved by the government. It was done to protect investors as well as to prevent bad publicity for the country's real estate industry if a heavily-promoted project has to be cancelled because it fails to obtain government approval.

The law was passed after problems arose with several projects, the most prominent of which was Palacio de la Bahia. That building was promoted as the tallest building in Central America.

It was heavily hyped on the Internet, but it’s plans were never approved by the government.

Later, the building’s design had to be radically altered.

The end result was a nasty legal dispute between the developer and the building’s architect, which eventually lead to the project’s cancellation.

While the project has resurfaced, the incident generated a large amount of bad publicity for the country’s real estate industry.

Even though the government passed a law last year to prevent such scenarios from being repeated, it has apparently not prevented developers from hyping unapproved projects, as evidenced by the hefty fines that many are now facing.