#305 – The Expat Files: Media, Retirement, and Legal Challenges in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wonder Hello there all you expat wannabes I'm Johnny Mueller and you're listening to the expat files living in Latin America the show that tells you just what it's like to live Work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great, and it's all right here, so let's get started You all know that the first world media pays very little attention to first world people leaving the states to become expats Especially dumping it all and moving to Latin America the first world media almost never reports on that The only expat press that comes out of the first world media is bad press that is until now in fact just today

[00:52] I noticed for the very first time in the mass first world media press a very positive article a main headline in Yahoo news on the Yahoo webpage that came originally no less from the Wall Street Journal about a retired couple That's living down in Granada, Nicaragua That is after living in Costa Rica a couple years and finding out it's just too expensive anyway I'm not gonna read that article to you But just to mention that it's a top story on the Yahoo news website and the Wall Street Journal of course and it tells nothing But good about this couples move to Latin America which to me is a first now of course you can find all kinds of stories all Over the internet about moving down to Latin America good stories very positive stuff But that's almost always on the fringe or in the alternative press anyway It looks like some people in mainstream media are finally getting a hint, huh?

[01:40] And in fact in this article the only two complaints that this retired couple has are one the heat because Granada Nicaragua is near sea level so it's always hot It's by the way not in the Altiplano which is my preferred destination But only about 1% of gringos and expanse even know that the Altiplano region exists But you guys and gals listening to this program know full well That's the place to be that is if you like permanent spring like I do and don't feel like sweating your ass off all day anyway number two The retired couple in that Wall Street Journal article point out that Nicaragua is a very poor country In other words a lot of poor indigenous people to which my reply is Why do you think you can get maize and gardeners for 250 bucks a month and they're glad to get the work?

[02:26] That's why it's a third world country You know now the most surprising thing about this article besides the fact that it's almost all positive Is that they don't mention crime or delinquency at all and by the way this retired first world couple? Point out that they're living in Nicaragua on 1,800 bucks a month for two people not one which is slightly over 20,000 bucks a year for two adults and of course they're living like first world people now that $1,800 a month is just a little bit more than one Social Security check So a retired couple with two Social Security checks bringing in around three grand a month allows retired Americans in Latin America To actually live a better lifestyle than they did up in the first world when they were on that treadmill working full-time Plus miracle of miracles. It'll actually be able to save some money every month now

[03:16] I know that sounds too good to be true, but on an upcoming program I'm gonna spend a whole segment on just retirement That is how to live like a first world around just a Social Security check And if you have that plus a not so spectacular pension coming in how to live like a king now like I said This is just about the first mainstream article I've seen that actually gives a hundred percent positive spin on leaving the first world sinking ship and coming down to Latin America Where for us the American dream is still alive and well and will be it for as long as I'm around at least now one of the scariest things I hear from first world people who are about to retire is that they've gone on a website and Have checked out a so-called retirement calculator And they realized by plugging their numbers in that they're never gonna have enough to retire in other words the gross amount

[04:04] They should have saved by age 65 is almost never within reach not only are these final numbers astounding But they're actually beyond depressing in fact very scary that is if you choose to believe them Which you surely must if you're gonna retire up in the first world It's depressing when you know that it's projected that only one in ten Americans if that that's 10% or less could ever hope to have that kind of number based on those retirement calculators in fact I just went to one of these websites myself, and I plugged in an age of 35 Just for grins along with an annual salary of 40 grand and an estimated three percent inflation rate per year And guess what it says for a single person at 35 this poor guy will need to have

[04:50] $900,000 saved not including Social Security now in order to live on 75% of what he was making when he had a real job before he was retired And that calculator page says in order for him to save that amount he'll have to put away about 20% of his gross income every year till age 65 or he'll never reach that 900,000 mark which is hopelessly optimistic because first of all according to recent figures Americans only save about three to four Percent of their income if that and speaking of hopelessly optimistic if this 35 year old guy thinks that inflation is gonna remain at three Percent till he's 65 well. He certainly believes in Santa Claus the Tooth Fairy Obamacare and the Easter Bunny not to mention Iron Man

[05:38] Because get this I just took the same data for that 35 year old guy and plugged in a six percent inflation rate Which is still in the long run? Stupidly optimistic anyway at six percent inflation this poor jerk needs to save $2,500,000 by age 65 and in order to do that that old retirement calculator says he's got to put away 32% of every paycheck until he's 65 and if you think the average American has that kind of discipline We wouldn't need things like ab crunchers fast food restaurants gastric bypass surgery credit cards car loans second third and fourth mortgages Liposuction and shows like the biggest loser now would we so bottom line if you plan on retiring up in the first world

[06:26] Click on to one of those retirement calculators put in your dad's and grab a bottle of Prozac cuz you'll need it Oh, and by the way on those retirement calculator figures I plugged in an eight percent return on investment to which is also terribly optimistic You're lucky if you get three or even four percent these days, but the good news is in fact It's great news you can throw away those retirement calculators when you move down here to Latin America They just do not apply at all. So my advice to you guys and gals up in Boston and Cleveland Well, you know what my advice is Let everybody else stress out and worry about their retirement up there because when you're down here You can just sit back with a glass of wine and relax Enough said about that now for all of you wondering about my next expat wisdom seminar in January 2014

[07:14] Well as of today, I'm over half filled with what I presume is an estimated 24 or 25 seats That's all I can really accommodate. Anyway, if you're interested, especially in light of that very sad retirement information I just gave you you can come down here with me holding your hand off the tourist trail and see just what it would be like To retire like a first-world person down here on nothing but a crummy Social Security check more and more people are doing that You know and they're really glad they made the leap but to do that, of course and get on the fast track I'm talking about getting your own personal guided tour by yours truly and my staff You have to sign up for the seminar So just go to expat wisdom comm click on the Latin American seminar on the top row and you'll get all the information I promise you'll see and hear things you'll never experience on your own unless you hang around down here 5 10 or 15 years

[08:06] Okay Changing gears a bit Here's something else you really should know a lot of gringles and expats come down here to Latin America Looking for cheap land in the wide open spaces and many times when they're out in a boonies Just taken in the sights they often find a piece of properties That's just outstanding for the view and they think hell if I built here This is something I could never afford up in the first world in a million years They know that because they realize that prices up in the first world for any property with a great outstanding view is way out Of most people's price range and yet down here, especially when you're out in the boonies Outstanding views like that are everywhere and could be had so cheap that you almost can't believe it Yes, like I mentioned before there is a real estate bubble going but that's mostly in the cities and towns when you get way out

[08:51] In the boonies where there are just huge expanses of land. There are many places that still seem to have 1960s and 70s prices and in fact a lot of expats that I know after coming back from long trips in the boonies looking for Productive farmland or a place to grow avocados or coffee or put a solar panel farm or whatever In other words, they don't want to exactly live so far out, but they have a great business idea And they crunch the numbers and it really seems to be a winner anyway, many times after a scouting trip like that a green gringo or expat will come back to the big city so excited that They'll spend a sizable chunk of change on a deposit or whatever only to find out doing the deal is just full of snags And then unfortunately sometimes when you find out it might be better to back out You can't get your money back

[09:38] The fact is many gringos and expats rush into land deals without doing due diligence trusting everyone and all the legal documents are correct because they don't speak Spanish and they think it's like up in the first world meaning you Go down to the property registry office and everything's on the up-and-up and everything's in order But this is Latin America the third world and out in the boonies, especially it's more like organized chaos The files are a mess sometimes impossible to find and well, let me go on Sooner or later sometimes much later way after you've spent the money attractive land way out in the boonies will have title problems Even though when you did the deal and it was all signed sealed and delivered at the property registry office. Everything was a okay Now I know plenty of gringos and expats in many Latin countries from Costa Rica to Peru who bought property and started building

[10:30] Projects only to find some years down the road title disputes popping up with the neighbors And what does that mean? Well, either go to court which will keep your title tied up for years perhaps or you do what most people do you pay? the necessary bribes to the necessary people and that always includes paying off a handful of government functionaries, too and Still after going through something like that You can never be sure that someone else in the future won't try to go for a gringo's so-called deep pocket again Now in the first world they call those nuisance lawsuits, you know if they do get to court the judge throws them out But when insurance companies are involved a lot of times they'll pay out a small sum even if it is a nuisance suit because it's easier Than setting court dates and bringing lawyers in insurance companies would rather pay a guy five grand and get it over with then bring a bunch

[11:18] Of lawyers in it hundreds of dollars an hour apiece. Well, the same thing happens down here I've seen it happen a number of times. Of course down here There's never insurance companies involved and because this is Latin America The amounts are ridiculously small compared to the first world For example a gringo friend of mine in Panama who built a textile mill on formerly agricultural property three years into the business He got sued by a neighbor for property title infringement and the guy was asking for ten thousand bucks to settle it And by the way in Panama, they use US dollars Well, my friend and his lawyer kept going back and forth and they ended up settling for a thousand bucks That's ten cents on the dollar for what the guy was asking and by the way There was nothing wrong in the paperwork at the registry My gringo friend was perfectly in the right but his evil neighbor who filed an injunction in court tied up this guy's title

[12:06] Completely putting the ownership of his factory in limbo for the moment So by paying the guy the thousand bucks the guy pulled his claim and he got clear title back again Now I know that doesn't quite seem fair But let me assure you it does happen and when it does happen It's almost always in rural farm areas almost never in the cities or towns because you see most farmland in Latin America That's been undeveloped has never been measured precisely or properly recorded at the land registry Unless of course there are public roads going through it in that case the municipality did the surveys and the land acquisition for the roads So the lands all been surveyed and registered properly at least on the parts of the property where the road or roads go through Now that's opposed to Latin American cities and more populated areas where the titles and title registries have been modernized for some years

[12:55] That's why you'll never have a problem if you buy into a gated Subdivision pretty much anywhere in Latin America, or if you buy any land or improve properties at all within city limits But the problem is way out in the boonies in Latin America where things are beautiful and cheap It's common to find a beautiful plot of land Locate the owner go to a local lawyer's office and try to put together a deal and think you've really hit pay dirt By the way Even a simple process like buying some raw land in Latin America could take a month or two of jockeying around until you get it Put together anyway as you're just about ready to get the deal done well word and rumor are traveling through the grapevine of that little community and you can bet that every shoestring relative of the guy that's selling that land to You is jealous as hell that this guy's getting cash for his property since nearly all these guys are very land-rich and cash poor

[13:46] In fact cash destitute, and that's where the trouble begins now you see well all that's happening It's not uncommon for another guy to pop up out of the woodwork with a local lawyer in tow Saying he's a legitimate owner And he's got the agrarian title and he's got a private and public deed and a supplementary title The guy just might have a folder full of ragged dog-geared moth-eaten moldy paperwork as well as funky-looking Surveys and last wills and testaments going way way back Claiming that he and his family are the rightful owners that's why you have to have your own lawyer who you've had a long-term relationship with do the deed and the title search for you because He'll know about all that kind of trickery and he'll make sure that it's all done right and even if in the future

[14:35] New claims pop up again He'll know just how to handle them because you see in most of Latin America There's no such thing as title insurance in other words. You'll have to trust your lawyer completely Which means you should really never trust the seller's lawyer and in countries like Chile and Mexico Argentina Costa Rica and Panama where they do have so-called title insurance companies They're really only useful in determining clear title for land and property and cities and towns and developed areas And that's because city registries mostly are computerized these days Which makes records easy to search and verify now, they're not perfect, but they're much more organized They have to be because properties are bought and sold in the cities all the time whereas out in the boonies There are really very few farmland transfers and transactions to speak of and even when farmers die

[15:25] The land almost always passes down to their kids and they don't sell it They just keep farming it like their fathers and grandfathers before them That is until some wise-ass expat or gringo comes along like you or me So remember this property registries out in the boonies are usually a mess and though at the property registries You might see computers here and there. They don't handle property scans or property register data They're just basically there for cash years so you can pay your municipal fees and property taxes In other words just because you see a computer or two don't think that these slugs have any pertinent data at their fingertips They don't I know I've been in some of these government buildings myself ones in the cities and towns and ones in the boonies too and there's a world of difference I've seen overloaded

[16:12] waterlogged buckling shelves just loaded with deteriorating files and decomposing stacks of paperwork and I mean waterlogged and moldy because as you know down here in Latin America They love to build flat roofs and naturally flat roofs will leak and if you think private building owners Neglect their leaks you ought to see government buildings even brand new government buildings leak like sieves because basically it's government property So no one really cares in fact you just have to see this photo I took of the brand new Guatemalan International Airport They built a whole new international wing for about 50 million dollars and the very first flight I took out of that place about three months after it was built kind of shocked me But I guess I really shouldn't have been surprised as I walked down that long expansive brand new Copa Airline wing

[17:03] I photographed no less than 27 plastic buckets placed in Strategic locations along the causeway catching the drips from the leaking ceiling so everyone embarking in Disembarking had to dodge those things and those buckets still weren't enough There were patches of water everywhere and by the way if you slipped and fell on your can this is Latin America So there's no one to sue and I don't know how you feel about that but for me and so many expats I know it's a good thing the way I look at it you enter life at your own risk, right? Not somebody else's life is buyer beware and you should remember that that is unless you're glued to the nanny state And in that case you should just stay back home in Cleveland So anyway, like I said after the president and all the bigwigs had the ribbon-cutting ceremony at the brand new airport wing the place

[17:50] Started to leak like a sieve Yep, that's why you gotta love it down here up north. We all know that government can't do anything, right? But down here they absolutely broadcast it Where was I? Oh, yeah I was talking about stacks of moldy dingy land registry data Piled to the ceiling in dingy humid leaky rooms and the thing is you see in some Jurisdictions in Latin America the boonies again, there are actually overlapping governmental jurisdictions Especially when there's a lot of indigenous people involved and way back when there were many tribal disputes and much friction For example, I know for a fact in Nicaragua in some parts of that country There are two title registries In other words two different people can own the same plot of land and not even know it now

[18:38] I know that sounds strange But fact is within indigenous communities, especially and you know, some of these Latin countries have more than 50% indigenous population anyway within their culture They often buy sell and transfer land without documents or without legal documents in what we might call a gentleman's agreement and over time when that kind of stuff's not legally registered people tend to forget those things and Witnesses have a knack of disappearing So a lot of these big farm properties were cut up a long time ago Based on some kind of contract written up at a kitchen table that was not registered at all or not registered properly Not to mention a good percentage of some of the really big properties have not been properly surveyed either At least not with modern survey techniques I mean descriptions like two meters from the base of the white boulder aren't quite accurate enough for computer work these days

[19:28] Besides it'd be easy for a guy with a bobcat or a horse to move that boulder, but people don't do that. Nah So like I said, there are a lot of ancient kitchen table documents floating around and even though at some future date that document may be legal when brought into court because it is a contract oftentimes and I've seen this myself a gringo or an expattle by a big tract of land for farming or development or whatever Only to find out much later that part of that land was an indigenous right away for passing through to yet another piece of property Or maybe it's been a traditional water hole and no one's ever disputed it For example an unpaved road right away to another farm or indigenous settlement is a very common occurrence with large tracts of land in Latin

[20:13] America often some tract of land will be used for traditional cattle grazing ground And if that's been going on for dozens or hundreds of years It's almost impossible to fight it and of course things like that are never spelled out in a hastily written contract on a kitchen Table those are what you might call inherited land rights Which certain local indigenous people might know about but you never will until one day you discover that 60 or 70 cows have decided to move in and fertilize a certain corner of your lot and Get this even if you have your lawyer and a local lawyer who kind of knows the area check out the titles and the registries And the deeds that's not to say that sometime later some other local guys gonna pop up and dispute it now I know for sure for example that in Nicaragua There are some parts of the country that have overlapping

[21:00] Jurisdictions for the title registry that doesn't mean you shouldn't buy anything that shouldn't bother you if you're buying in a city or a town But if you're buying farmland or empty land out in the boonies, and you're buying it from a family That's had that land for generations and generations Well, that's when you should start to worry because then you're gonna be the one that is your lawyer or lawyers Who are gonna have to sift through all that rotting paperwork in the land registry and even that might not be good enough to Guarantee a clear clean title for you and that's not to say if you go through that process and hand over your money You won't get new ownership in title papers yourself. You will it's just that at some later date Somebody might come along not to dispute your title paperwork But the paperwork of the guy or family you bought it from now if you remember I told the story word

[21:46] Just that thing happened in Costa Rica some 20 years ago when I was there And I was really close to that situation and though I didn't get burned personally a few of my expat gringo friends Did that show aired a couple years ago? But you might remember when I said that I bought into a beach subdivision complex developed by a gringo married to a Costa Rican lady And after he sold out that project he added a phase two and after that was all built and sold out There were about 20 very nice units in the complex Anyway, all those new owners mostly Canadian absentee owners who only came down a couple months a year now I'm talking about the second phase of that subdivision Anyway, one day they were served notice that the land they were on wasn't theirs in fact There was a title dispute brought up by a local dirt poor Costa Rican guy living in a tin shack down the road

[22:35] Who together with a Costa Rican lawyer filed claim against every one of those houses on that property and in the end? Each one of them ended up paying the guy 25,000 us dollars which instantly made him the richest guy with two goats in a tin shack in Costa Rica And surely the lawyer got 50% or more of that And sure all those canadians were thoroughly pissed off that they'd have to kick in 25 grand to keep their property And finally get clear title, but they all kicked in and why because each property was worth five to ten times that And if those canadians didn't kick that 25 grand in That lawyer for the local guy in the tin shack was going to put what they call an embargo on all their titles Meaning they didn't have to pay up but they'd never be able to sell the units either

[23:22] In fact since it was all the land in the second phase of that subdivision that was in dispute Every single one of those canadian owners had to kick in 25 grand or all of their properties would have been embargoed So for example, if one or two of them decided screw it i'm not going to do it On principle or whatever the rest of the canadian owners would have had to kick in the rest of the missing dough Or their titles wouldn't be clear that would have made for good neighbors, huh? Yes, even big-hearted canadians have their limits So basically that scumbag lawyer for the tin roof client really knew what he was doing He knew just how much money he could push those guys for to avoid bringing the thing to court in which case he might have lost But in the meantime, he'd have tied up all their land for years because that's how court cases like this drag on

[24:09] In fact, I was told by a local lawyer that for a hundred bucks us you could approach a judge and have any case delayed That is rescheduled for another date pushed ahead a month or two on the docket now imagine how inconvenient that can be For part-time or absentee gringos who own property down in a place like costa rica because in a case like that You just might have to appear along with your lawyer Which is going to cost you time off and at least a grand for the flight and all your troubles And by the way judges who take little bribes like that to delay cases Don't think of it as a bribe at all because they still think justice is being served They're just delaying it a bit after all they haven't nixed the process completely They just moved it ahead a few months

[24:54] And then as you might guess if it serves a purpose in a few months time it can be moved ahead again And again, meanwhile the title to your property and the house you've already built and are living in is technically in limbo Oh, and by the way, that's not to say that you can bribe a judge You can't even if your spanish is perfect down here bribes like that have to go through channels In other words your lawyer will ask you for some money and he'll pass it on to the right people in the court system For example, if it's a judge The judge too will have to spread a little of that door around amongst the people working in his office Which might include the bailiff and all those guys too. So for example in one case I know of personally where a korean factory owner was in jail for threatening another korean business owner Basically putting a hit out on him which was in fact unsuccessful and he found out who did it one of his own

[25:43] Countrymen no less and by the way though, there aren't a lot of koreans There are a lot of korean business owners down here and they don't seem to like each other Obviously if they're gonna put hits out on each other, right? Anyway in this case, I didn't know the korean guy I only know one korean businessman, but I do know the lawyer for the korean guy And he told me that it cost this wealthy korean guy who was in jail 10 grand to pay off the circuit court judge to get him bumped out of jail on a technicality Which he did and he also told me that normally it would never cost that much except the other korean businessman who put the hit Out on him was paying another judge slightly less to keep the guy in jail Now I know this sounds awful confusing and I can't go into it all right here But suffice it to say whatever you've heard about the latin american justice system and jails in latin america

[26:33] Which i'm going to talk about on a future show very soon Anyway, the fact is if you've got a personal lawyer that you've bonded with a guy that does all your legal work for you A guy who's basically become your personal friend You have very little to worry about Regarding jail in court as long as you haven't actually killed anyone Because remember in these latin american countries though Some of them might have awful big populations like brazil, argentina, columbia and such Only a very very small percentage of people are educated and have college degrees and are professionals and your lawyer is one of those And he'll have connections family or otherwise with other lawyers and judges in the system And again, the legal system is very small in each of these countries because latin americans rarely sue each other

[27:19] So if latin's sue each other about 1 20th as much as first world people do that means per capita There are 1 20th as many lawyers. So who wouldn't want to live there and next week. We'll talk about land squatters You've been listening to the expat files living in latin america coming to you twice a week from somewhere south of the border Email me the expat files at gmail.com And don't forget to check out expatwisdom.com to sign up for your free reports on latin america See you next time nos vemos