Fire at Latin America's tallest building

A fire started at the BICSA tower in Panama City's banking center, arguably Latin America's tallest building. The project originally started called as Ice Tower, then was restarted as Star Bay Tower and is expected to house a Hilton Panama hotel.

According to La Prensa, the fire started Oct. 10 at 5:30 pm and firemen were still trying to control it 12 hours later, resulting in the evacuation of adjacent buildings in the banking center.

The building is developed by F&F Properties , which was found liable by the Engineers Society SPIA for the collapse of a faulty wall which in May 2009 brought down one lane of traffic, broke a 16-inch tube of the IDAAN water utility and caused $400,000 in damages to the Union Fenosa utility .

Graph from Skyscraperpage.com

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Tubing collapses in Balboa  Ave. http://www.panamaamerica.com.pa/notas/780323-colapsa-tuber%C3%ADa-en--ave.-balboa

SPIA renders report on 2009 Balboa Avenue collapse http://www.tvn-2.com/noticias/noticias_detalle.asp?id_news=16672&categoria_news=Nacionales 

Videos show scenes  of 2012 fire  http://youtu.be/qacRko825aI

http://www.tvn-2.com/noticias/noticias_detalle.asp?id=90114

http://www.telemetro.com/noticias/2012/10/11/117362/intensa-labor-para-controlar-incendio-edificio-ave-balboa

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Clauses in real estate contracts confirmed as abusive

http://mensual.prensa.com/mensual/contenido/2007/12/01/hoy/negocios/1191494.html

After the 8th Circuit Judge rendered an initial May 31, 2007, decision in the Duque vs Neto S.A. case in favor of the buyer of a condo (see Tough times for sellers of Panama City skycrapers?), the Third Superior Tribunal confirmed the decision on appeal.

The Tribunal only considered as non-abusive a clause which allows the developer to charge 1% of the price until the registration of the sale, which leaves as abusive clauses:

• A 5% unilateral increase in the purchase price if the seller deems that building materials have increased in price,
• The seller to withhold all previous downpayments if it unilaterally considers that the buyer is in default of agreement obligations,
• The seller to unilaterally decide not to build and simply return all downpayments without interest and with the seller waiving all claims for said action,
• All disputes to be subject to arbitration excluding the consumer protection courts.

The defendants Neto, S.A., are entitled to file a cassation action before the Supreme Court. Although precedent is not fully binding on other judges and this case does not declare void clauses in other contracts, it provides powerful arguments to those buyers suing developers with contracts that have similar clauses.

This consumer protection case serves only those buyers - foreign or locals - who have a single home in Panama. Those who are buying several properties for resale are not protected by the concept of abusive clauses. Needless to say, the expense of having a contract in Spanish translated into the buyer's language goes a long way towards avoiding running into an abusive clause.

You can sue a builder after 1 year

Many contracts drafted in Spanish by Panamanian builders - and gladly accepted by many real estate agents claiming to act in best agent of the foreign buyer - have a clause which says:
THE APARTMENT shall include the following warranties FOR REPARATIONS: one (1) year from the date of the certificate of occupancy, except in cases of negligence due to THE PROMMISORY BUYER’s use or abuse.

The term may vary to read 1 year from the date of signing of the promise agreement or registration of the final deed.

When faced with claims for tiles popping up from the expansion of poorly dried floors, leaks into penthouses during heavy rains, plywood kitchen furniture bulging because of water dripping from substandard plumbing, many builders point to said clause to tell the buyer to go somewhere else.

Enter the old 1917 Civil Code, which in Article 1343 states:
"The contractor of a building which was damaged for construction defects ("vicios de la construcción"), is liable for the damages and injuries if the defect ("ruina") occurred within a term of 10 years, counted from the date when the construction ended; the same liability, and for the same time, will have the architect who directs it, if he knows that the defect is due to the soil or the management.
"If the cause was the breach of the contractor to the contract conditions, the action for indemnization may last 15 years."

An essay RESPONSABILIDAD CIVIL POR DEFECTOS EN LA INDUSTRIA DE LA CONSTRUCCIÓN by Dr. Pedro Barsallo points out how the Spanish Supreme Tribunal has been holding that the developer must also be liable for thos contractor liability, under Article 1591 of the Spanish Civil Code, which has the same text as Article 1343. This is specially important in Panama, where a buyer may sign a promise to purchase agreement with one corporation (for example: LANDHOLDING, S.A.), at the offices of a developer (PROMOTOR DEVELOPMENTS, S.A.), which in turns hires another company to be the contractor and get construction permits (BUILDER ENGINEER, S.A.) and another corporation is subcontracted to do windows and/or kitchens (INCOMPETENT SUBCONTRACTORS, S.A.), usually all with the same directors and most likely the same shareholders.

The Panama Supreme Court has been quoting the essay in several decision against builders, such as :
ROBERT TOLEDANO et al v PROVENCO, S. A., VENTAS Y PROYECTOS, S. A., PROYECTOS Y EDIFICACIONES, S. A. and CIELO RASO, DIVISIONES Y AISLAMIENTO, S. A. (July 3, 2001): PROVENCO, S. A. and PROYECTOS Y EDIFICACIONES, S. A. were found liable for US$33,222K in damages, out of US$60K claimed for losses during 14 months of repairs at the Mar Plaza condo in Marbella.
PRODUCTOS DEL MAR Y DEL CAMPO, S. A. and PASTAS FRESCAS, S.A. vs BASTIDAS, S.A. and CONSTRUCTORA VILLARREAL, S.A. (January 30, 2003): CONSTRUCTORA VILLARREAL, S.A., was found liable for US$40K in damages caused to neighboring complainants while working in the land of BASTIDAS, S.A.

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Tough times for sellers of Panama City skycrapers?

http://mensual.prensa.com/mensual/contenido/2007/07/15/hoy/negocios/1048739.html

120 draft construction proyects have been approved for buildings above 25 stories and 80 more have been applied for.

The value of construction permits in Panama City for Jan-Apr 2007 is of 321.9 million - 30% more than for the same 2006 period. 15 skyscrapers above 50-stories are already in the pipeline.

Ministry of Labor Executive Decree 15 of 2007 seeks to address the increasing number of worker fatalities in skycrapers by requiring that builders of projects above US$1million have an independent Safety Official. The issue was brought to the public's attention after several days of small demonstrations by trade unions.

The Executive Decree imposes a US$10,000 contribution to an Occupational Safety, Higiene and Health at Work for the Construction Industry Fund, run by the Ministry of Labor. Where I come from, that is called a tax, which cannot be enacted by Executive Decree, and is therefore unconstitutional.

Builders are not happy...

In a related story, the Minister of Housing signed July 13 a resolution imposing a 14-story limit on buildings around the Andres Bello park of the El Cangrejo neighborhood, as well as 5-meter clearance.

Residents of the 60-year old neighborhood lobbied the government for this limitation, being the first time residents succesfully curb the current construction boom. Destruction of sidewalks, debris (or workers) falling off construction sites, noise of machinery during evenings, cement poured unto streets and sewers (with the resulting overflow of fecal matter) and other inconveniences have made Panama City construction companies a very unwelcome corporate citizen, affecting current neighbors and even incoming snowbirds seeking their balcony in paradise.

In the meantime, the III Justice Tribunal has to decide on the appeal filed by a Panama corporation against a May 31 judgment of the 8th Civil Circuit Judge, whereby some clauses of a purchase agreement are deemed "abusive". The case started when the Consumer Protection Authority received the complaint of the buyer of a San Francisco apartment who signed a form agreement prepared solely by the seller with no negotiation. The judgment deemed as abusive 5 clauses which provide for:

• A 5% unilateral increase in the purchase price if the seller deems that building materials have increased in price,
• The seller to withhold all previous downpayments if it unilaterally considers that the buyer is in default of agreement obligations,
• Billing the buyer a 1% monthly charge on the amount outstanding after issuance of the occupation permit, whether the buyer uses the apartment or not,
• The seller to unilaterally decide not to build and simply return all downpayments without interest and with the seller waiving all claims for said action,
• All disputes to be subject to arbitration excluding the consumer protection courts.

We can expect that after the appeal is decided, the defendant sellers will file a cassation action before the Supreme Court, so a final decision will take years to be effective.

URLs (Yahoo registration required):
http://groups.yahoo.com/group/Live_in_Panama/files/Jurisprudencia/Sentencia_55_07_promesa_inmueble1.pdf

http://groups.yahoo.com/group/Live_in_Panama/files/Jurisprudencia/Sentencia_55_07_promesa_inmueble1.pdf
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