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home > frequently asked questions > buying property in panama

BUYING PROPERTY IN PANAMA


TYPES OF PROPERTY:

Titled: Same as in the U.S. This type of property is registered in the Panamanian central registry. Property taxes are payable.

Rights of Possession (ROP): This is where the land is available under long-term rights granted by the government of Panama for the use of the land. No property taxes are due. Holders of ROP lands must apply for concessions (see below).

Please click on this link for more information: http://emergingterrains.com/rop/

The new titling law for ROP has passed and has been implemented. Read about the requirements:


http://www.bocaslaw.com/titling-process/

Titleable: This is ROP land and depending on type of usage, it may be possible to apply for and receive title from the government. All mainland properties fall into this category and can be titled.

Concessions: These are specifically designated usage applications for areas over or next to the water on ROP land that is then registered to the owners. An example would be a dock on a coastal property or home within the legal setback area. No annual fees are due until concessions are granted. When the concession is granted, it is given a registry number that is associated with the property. It is common practice to apply for the concession and then build the structure. Many concessions have been in the system backlog for several years, so in many cases structures are in existence long before the concession is granted. You can get a permit to build by presenting your concession application.

Please click on this link for more information: http://www.bocaslaw.com/maritime-concessions/

Paradise Found Real Estate Disclaimer: Laws frequently change so you need to confirm this information with your attorney.

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Q: Is it safe for foreigners to buy property in Panama?
A: Absolutely. Buying property in Panama is very safe. There are over a dozen laws in Panama established specifically for protecting foreign investments, not to mention that private property in Panama is protected by the constitution of the Republic of Panama. Thousands of foreigners own property in Panama.

Q: Is it legal for foreigners to buy property in Panama?
A: Yes, it is legal for foreigners to own titled property in Panama in their personal names, although we normally recommend that clients hold all property in the name of a Panamanian corporation for asset protection and income tax reasons. Panama "possession rights" (as opposed to titled) property, however, should always be held in the name of a Panamanian corporation, where the foreign person is the shareholder (or a Panama private interest foundation or trust can be appointed as the shareholder in place of the foreign person) of the corporation.

Q: Is it safe to buy a Panamanian corporation's shares which hold title to property in Panama?
A: Yes, as long as a proper due diligence investigation is done on the corporation and a proper title search is done on the property that the corporation holds, then it is generally safe to buy property this way in Panama. It is important to hire qualified attorneys to handle the due diligence, and put the proper clauses in the Buy/Sell Contract of Shares of the corporation, such as; (1) a clause that guarantees the buyer that the corporation does not have any pending debt or liability other than that established in the contract and indemnifies the buyer from any such liability, (2) a clause that makes the seller responsible for any liability for previous actions of the corporation and/or it's directors, and (3) a clause that guarantees the buyer that the purchase is for 100% of the corporations shares as well as for 100% of the property title number xxx (with the description of the property), which is duly owned by the corporation, whose shares are owned by (the seller).

Q: Who normally pays for the closing costs on Panama real estate transactions, the buyer or the seller?
A: Generally, each party pays for their own closing costs. For example, the seller pays his/her attorney to draft the buy/sell contract, and the buyer pays his/her attorney for reviewing the buy/sell contract, doing the title search, title transfer, and escrow services. However, in some cases, buyers and sellers negotiate special terms whereby the buyer or the seller pays all closing costs, so it really depends on the particular negotiation between buyer and seller.

Q: How long does it normally take to register a property title transfer in the Public Registry of Panama?
A: In some cases, it can be done within 2 business days, if you pay extra for quick expediting. However, in normal circumstances, it takes from 1 to 3 weeks, depending on the volume of transactions at the Public Registry.

Q: How long does it normally take, from start to finish, to purchase property in Panama?
A: A typical closing takes around 45 days from the Promise to Buy/Sale Contract. Some closings can be as little as 15 days and some take over 60 days to complete.

Q: What is normally accepted as a down payment for purchasing property in Panama?
A: Generally, sellers will accept 10% as a down payment upon signing the promise to buy/sell contract. The down payment is shown as "good faith" on behalf of the buyer, so that the seller knows that the buyer is serious. However, the down payment really depends on the particular transaction and the negotiation that takes place. In some cases, sellers will demand as much as 50%, and in other cases, sellers will ask for as little as 5% or less.

Q: Do sellers offer owner financing or leases with purchase options in Panama?
A: Yes, leases with purchase options are common in Panama, although most sellers are interested in simply selling, not lease optioning. However, please note that rental or lease contracts must be registered with the MIVI (Ministerio de Vivienda), which is the "Ministry of Housing" in order for the lease to be legal in Panama.

Q: Is it legal to block public access to the beach if I own beach front property?
A: The laws in Panama offer public access to all beaches, oceans, lakes and rivers in Panama. Unless there is access within 1000 meters from your property, you must allow public access, according to the law.


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