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Buying Panama Property
Decide where you would like to buy property in Panama. Panama has nine provinces with a diverse landscape including mountains, rainforests, sandy beaches and metropolitan areas such as the capital, Panama City.
Work with an excellent real estate company in Panama. If possible, travel to Panama, tour areas of interest and go look at condos, real estate, and luxury apartments in Panama.
Prequalify for a loan, and shop for mortgage rates and terms
Buying TITLED Property
Negotiate a Promise to Purchase contract. All titled property in Panama must have this contract with a down payment at the signing of the agreement. Register at the Public Registry to hold your Panama real estate. A small down payment is made at the signing of the "promise to purchase" contract. The down payment secures the property and establishes time for the title search and to coordinate payment arrangements for the closing. Registering this contract at the Public Registry ensures the property cannot be sold to another party during the escrow period.
Arrange for a title search. The purchase of titled property in Panama is similar to that in the United States. This includes doing a proper title search to verify free title, survey, utility debts and property taxes. Titled property is not unlike "fee-simple" titles in the USA. The Panamanian Public Registry has jurisdiction over the registration of titled properties throughout the country. Titled property is verifiable through the Public Registry system and is guaranteed by the constitution of the Republic of Panama. Titled property can also be mortgaged. The bank will register a lien against the title as collateral on the loan. Titled properties are subject to annual property taxes when the registered value is over US$30,000 unless the buyer has obtained an exemption for the construction of a new dwelling.
A proper title search includes: a) verification that the seller in fact has title to the property and it is free and clear of encumbrances, liens, or other issues that could affect the free disposition or transfer of the title; b) a review of the official survey map, and a professional surveyor to physically verify the map points on the property (to avoid future boundary conflicts); c) verification of utility debts (water and sewage); d) verification of payment of property taxes and/or of the tax exemption.
Sign a Buy-Sell Contract. Register the contract at the Public Registry. The seller or escrow agent receives the money when the title is transferred into the buyer's name. This contract is registered at the Public Registry and the final balance is paid to the seller, or an escrow agent. Payment is made when the title is transferred to the buyer's name. Payment can be issued by a bank, contingent on receiving from the seller proper title to the property in Panama. The buyer can open a bank account (or get a mortgage) and then formally request that the bank issue payment as soon as it is presented with the registered public deed transferring title to the buyer. Panama real estate agents normally get paid only when the sale closes.
Perform a due diligence investigation if considering a Possession Rights property. This is a property that the government owns. Due diligence includes a valid Certification of Rights of Possession, a survey and an inspection.
Get a residency visa. The recent boom in Panama has brought about new types of visas. These include the Retired Tourist, Retirement, Self-Economic Solvency and the Small Business Investor Visa.
Buying Possession Rights Property
Possession Rights Property is not unlike "squatters rights" common in the USA many years ago. This property is government owned but is "occupied" or "used" by a Panamanian individual (or Panamanian organization) for some time. Possession rights are generally certified by either municipal mayors, sheriffs, or other government organizations, such as the Agricultural Reform Department. Possession rights do not incur property taxes, although registered improvements on possession rights property may incur taxes at a municipal and/or national level. Most Possession Rights properties can become titled through a procedure of purchasing the land from the government, however, the law prohibits titling of possession rights properties in some areas such as certain coastal areas, national parks, or islands. In these cases, as an alternative, the "possessor" of the property can apply for an administrative concession over the land to guarantee the pacific use of it. There is an entire specific process for buying property in Panama this way, but we advise a full consultation with attorneys before considering it.
CONTRACTS IN ENGLISH HOLD NO LEGAL WEIGHT IN PANAMA.
Contracts signed are legally binding documents, and you should ensure that you have read and understood them completely before signing. All judicial processes in Panama are conducted in Spanish. For any Panama real estate transaction, a contract written solely in English carries no legal weight, and is generally not recognized. All contracts for property in Panama must be in Spanish on a formal public deed, and signed before a public notary, in order to be legally enforceable and where applicable, be filed at the Public Registry.
GET PROFESSIONAL LEGAL HELP
As when purchasing real estate in the U.S., common sense should be the guiding factor with Panama property. Engage a reputable attorney. While a good Panama real estate agent can help you through the steps of buying, he cannot provide you with legal advice; an attorney does. Even some Panama City-based real estate lawyers might not be fully familiar with such intricacies as land law in certain areas, such as Bocas del Toro.
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