Buying Real Estate in Panama

10 Easy steps to buying or selling real estate in Panama

By: Lic. Lorena Velasquez Martinez

PATTON, MORENO & ASVAT

Who can purchase in Panama?

According to the Panamanian constitution, when it comes to buying real estate, foreigners and Panamanian citizens alike have the same rights and obligations. The only restriction is that foreigners cannot purchase land within 10 miles of the country’s borders with Costa Rica or Columbia.

Detailed investigation of the property and its owner.

Before going through with the promise of sale contract, it is essential that you fully investigate the property and its owner in the records of Panama’s Public Registry and also with the Ministry of Economy and Finance (MEF) to check if either the property or its owner have any financial burdens, limitations or restrictions that could affect the transfer of title.

Promise of sale contract.

The promise of sale contract includes all the terms and conditions that regulate the relationship between the promissory buyer and the promissory seller. This contract is a private document and varies, depending on whether it is a pre-sale or re-sale contract. The most important clauses are the payment method, the obligations of each party, the penalties in the case of breach of contract and any other condition on which the final transfer of the title deed may depend.

Language of the promise of sale contract.

If the promise of sale contract has been drawn up in Spanish, and one of the parties does not understand the language, they may request an authorized public translation of the document to the required language.

Free of Debt (Paz y Salvo).

The promissory seller is obliged to supply the corresponding documents that certify the property is free of debts and liabilities, such as the title transfer tax (which is calculated at 2%) and the property tax. Also, you must ensure the property doesn’t owe any money to the IDAAN (the Panamanian Water Authority) for water or sewage fees and, if you are purchasing an apartment, ensure that there are no maintenance fees outstanding to the building.

 Payment of the property’s mortgage.

In the case that the property is mortgaged by a local bank, the seller must pay all outstanding payments to the bank in order to receive the mortgage payment record which must be transcribed within the public deed of sale and also registered, together with the deed, in the Public Registry

Bank financing.

In the case that a local bank is financing the purchase of a property, the policy of most Panamanian banks is for them to do draw up the public deed which, as well as containing the sales contract will also contain the loan contract with a mortgage guarantee. The bank ill only require a copy of the promise of sale contract, the proof that the property has no debts or liabilities and the respective official documents, where applicable.

Public deed of sale.

The public deed of sale must be stamped by a Notary Public in the Republic of Panama in order to be included in the Public Registry. It should be attached to the relevant debt-free certificates.

Inscription in the Public Registry.

Once the public deed of sale is included in the Public Registry, the property title is passed to the buyer. The inscription process takes approximately 10 working days, unless you pay an extra $250 to expedite the process.

 Change of owner in the property register.

Once the public deed is sale is included in the Public Registry, you must take a copy to the Property Registry (catastro) and to the Registry of Government Property in the Ministry of Economy and Finance so that the change is made in their system. This change process takes around 15 working days.