| Foreigners have the same rights in Panama as | | | | made. If the seller requires the buyer to secure |
| natural citizens. Buying real estate is easy if you | | | | the amount due, the buyer may deposit the total |
| understand the slight differences. | | | | amount in a bank, which in turn will issue an |
| Under Panama Civil Law one can have control | | | | irrevocable letter of payment, whereby the bank |
| over a land parcel or property not only as a duly | | | | guarantees the payment to the seller once the |
| recorded owner but as a possessor. Generally | | | | deed has been duly recorded in the Public Registry |
| speaking, if a title of transfer is deeded before a | | | | free and clear from encumbrances. Bank Letters |
| Public Notary and said title is duly recorded in the | | | | to secure payments are common place in the |
| Public Registry, the individual or entity who | | | | Panamanian legal environment. If the seller asks |
| appears in said deed as the transferee will | | | | for a partial payment in advance in order to close |
| become the owner, in other words, Deed + | | | | the bill of sale, the buyer may agree with a partial |
| Proper Recording in the Public Registry = | | | | payment following the rest of the advice herein |
| Ownership of Real Estate. If one follows the chain | | | | mentioned, in order to reduce legal risks. Another |
| of titles of a property back to the original owner, | | | | method to withhold payment of the balance owed |
| the first transfer, when the first owner acquired | | | | to Seller until the transfer has been completed, |
| the property, -this is to say, when the property | | | | while still securing the payment to the Seller, is to |
| was born in the Public Registry- is a transfer from | | | | put the balance of the purchase price in an |
| a government entity - Municipality, Cadastre or | | | | escrow account managed by a reputed licensed |
| Agrarian Reform, for instance- to the individual or | | | | Trust Company or Law Firm. The Trust |
| entity that was holding said property without title. | | | | Company or Law Firm will be obliged to release |
| There are still land parcels and properties in | | | | the balance of the purchase price once the |
| Panama that are under the control of individuals or | | | | transfer deed is recorded in the Public Registry |
| entities who have never filed an application before | | | | free and clear, but will withhold said sum, if the |
| the competent authority to obtain title. Those in | | | | transfer deed is not recorded. |
| this situation have rights of possession. According | | | | 4- Easements. An easement is the right, attached |
| to the Civil Law System an individual -or entity- | | | | to real estate, to use the real property of |
| has rights of possession over a property when he | | | | another person for a specific benefit, for example: |
| she occupies/controls/holds a piece of land or a | | | | entry and exit easement in favour of a land |
| property, under certain conditions, and considers | | | | locked lot, use of a water spring, not to build |
| him/herself the owner of said property, without | | | | where the view is obstructed, etc. Title reports |
| having title. In general terms, rights of possession | | | | and title abstracts will usually describe all existing |
| can be transferred, inherited, attached, | | | | easements affecting a property; but, in some |
| encumbered, foreclosed and titled subject to the | | | | cases, depending on the structure, location and |
| law in affect at the time. They are protected by | | | | nature of the land, some neighbours or others |
| law as a stage prior to titled property. Those who | | | | could have a right (not to be found in the Public |
| hold rights of possession are entitled to file | | | | Registry) to claim for an easement, and so it |
| lawsuits against squatters, build improvements, | | | | might be useful to check all possible easements in |
| apply for title, prevent/demolish improvements | | | | the civil code to see if one could apply to the |
| from third parties, etc. | | | | particular piece of land that the buyer is trying to |
| Note: The following refers only to titled property, | | | | acquire. |
| not to rights of possession. | | | | 5- Latent/Hidden Defects. Be sure that the bill of |
| The Panamanian Public Registry is one of the | | | | sale includes a "latent defect clause" by which the |
| world's largest open registries of merchant | | | | buyer is entitled to rescind the contract and claim |
| vessels and offshore companies. Both the | | | | damages if a latent or hidden defect (i.e. a hidden |
| maritime industry and the international business | | | | flaw or a legal weakness of the title) entails |
| community together with the Panamanian | | | | significant loss of property to the buyer. |
| authorities have established one of the most | | | | 6- Real Property Taxes. Although most land in |
| efficient, transparent and secure Public Registries | | | | Panama is tax exempted, Real Estate Taxes are |
| in the Americas. Since the real estate buyer | | | | charged on a quarterly basis to some real |
| becomes the owner when the transfer deed is | | | | properties by the Dirección General de Ingresos, |
| recorded in the Public Registry, foreign real estate | | | | the Panamanian IRS. The current owner is liable |
| investors benefit from these developments in the | | | | for any unpaid real property taxes. As a |
| Public Registry as they create a safe, expeditious | | | | consequence, it is important that the Buyer |
| and open environment in which to conduct real | | | | checks that the quarterly payments are within his |
| estate transactions. The Public Registry allows you | | | | her budget and that the property is free from |
| to review online not only the status and history | | | | previous real estate tax debts. |
| of every legal entity, vessel or property therein | | | | 7- Double titles. It is a very rare event I must |
| recorded, but the deeds and documents related | | | | say, but some times the buyer may encounter |
| to any of them. | | | | two titles, held by different persons, that overlap, |
| Here is a list of nine steps that will help you finalize | | | | totally or partially, upon the same piece of land. It |
| your real estate transaction successfully: | | | | follows, that the buyer could acquire from one |
| 1- Get a title report. Ask for the number of the | | | | owner and the other owner will contend to have |
| real estate property from the owner or broker. | | | | a better right. To reduce this risk, your surveyor |
| Then go to the Public Registry ( and apply for an | | | | should ask the neighbors if they have any |
| abstract of title (historia de la finca, in Spanish), | | | | contentions regarding the official boundaries of the |
| which is a written report that shows the history | | | | lot or parcel. You could search with the authorities |
| of subsequent changes of ownership on a piece | | | | in charge of issuing real estate titles (Agrarian |
| of real estate as well as the area, borders, and | | | | Reform Directorate, Municipality and National |
| any claim or encumbrances affecting the property | | | | Cadastre), in order to determine if someone, |
| such as liens, mortgages, attachments, court | | | | other than the seller, has filed and completed a |
| rulings and the like. | | | | title petition, in order to acquire a title over the |
| 2- Pay for what you get. Sometimes, due to the | | | | land in question. |
| use of not so precise surveying tools, especially | | | | 8- Protect your Assets. Once you have found |
| when properties were titled in the 40s, 50s and | | | | your own private haven, protect it from unknown |
| 60s, the area in the official surveys (hence in the | | | | future creditors. One of the best legal entities to |
| Public Registry) is more than the de facto area | | | | protect and transfer assets is the Panamanian |
| you are receiving and for which you are paying. | | | | Private Interest Foundation. The assets belonging |
| Therefore it is advisable that the Buyer hires an | | | | to these legal entities, in principle, cannot be seized |
| expert in order to conduct a survey of the | | | | or attached. In addition, it is easy and cost |
| property and then compare the figures with the | | | | effective to transfer assets to the next |
| ones found in the Public Registry and/or official | | | | generation when held by a Private Interest |
| surveys. For the same reasons, it is also | | | | Foundation. The buyer can also put a mortgage |
| recommended to establish a price per square | | | | on a property to secure loans with Banks or third |
| meter in the purchase contract, not a lump sum | | | | parties. This encumbrance in most cases deflects |
| price, so that if the amount of land is less than | | | | the attacks from future unknown creditors. |
| the area represented by the official survey, the | | | | 9- Insure your title from eviction risks. Several |
| Buyer will be entitled to a proportional price | | | | insurance companies offer title insurance and |
| reduction. A due diligence period in the | | | | several US title insurers have established |
| pre-purchase contract will allow the Buyer to | | | | operations in Panama. Make sure that the |
| conduct the survey of the property. | | | | insurance covers not only risks or situations that |
| 3- No conveyance, no payment. Once the bill of | | | | are recorded in the Public Registry but also those |
| sale is duly signed before the Public Notary and | | | | that are in connection with elements or facts that |
| recorded in the Public Registry, the buyer | | | | are not recorded in the Public Registry. |
| becomes the owner; hence, payment can be | | | | |