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Property in Panama

 Panama is an emerging market for international real estate investors and has much to offer, including a tropical climate and low prices. Foreigners may buy and sell land in Panama freely and there are no restrictions. There are a few things that should be understood about the purchase process in Panama, though, before jumping in.  

A lawyer or solicitor is very important in order to do the proper title and deed searches, and the fees will usually run from 1.5%-3% of the purchase price. Often, investors will purchase and sell property through a Panama corporation, which can be set up by a lawyer.

 

There are two types of property that investors will usually look at in Panama, freehold and right of possession, or ROP. Most of the properties for sale are freehold and you should not have any problems as long as the proper due diligence is done. Right of possession land or property is much like squatter’s rights though. There is no official title to the property and it can not be used as collateral for a mortgage. It is perfectly legitimate to buy and sell this property as long as the legal claims are clear, but be aware of it before doing so.

 

Once the buyer or investor has located the ideal property, an offer is made and terms agreed to. At this point a preliminary contract called a Promise to Buy and Sell is drawn up and signed. This contract is conditional on any specifics that have to be met, and it is also legally binding. Usually the investor will put a 10% deposit down at this point. It is a good idea to put this money in an escrow account managed by the buyer’s lawyer.

 

Once the Promise to Buy has been signed, the investor’s lawyer will carry out due diligence and title searches. Panama has a Public Registry for titles and is pretty reliable, but a good lawyer will look further than that to make sure everything is okay. If the title search is okay and all conditions have been met, then the final contract is drawn up and closing takes place.

 

The final contract must be in Spanish to be legal in Panama – contracts in other languages are unenforceable. The 2% transfer tax is usually paid by the vendor, and once the property has been closed the title is registered at the Public Registry. ROP property is not registered with the Public Registry and does not qualify for a residency visa.

 

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