PANAMA REAL ESTATE INFORMATION

It's Safe to Buy Real Estate in Panama

Foreigners, whether residents or non-residents, enjoy the same rights and privileges when purchasing and selling real property as do Panamanian citizens.

Foreign investors are given a 10-year stability guarantee that all legal, tax, customs, municipal and labor rules will remain identical to those in force at the time of the investment registration.

Law # 54 provides these guarantees: Foreign Investor Protection Law.

The U.S. Embassy published the U.S. Government Report on Buying Panama Real Estate:

"Titled land, and the process of buying this, is similar in concept to that in the U.S., and land and deeds are duly recorded with the Public Registry".

Buying real property in Panama is so safe that major U.S. Title Insurance companies provide policies in Panama like LandAmerica Lawyers Title.

Procedures for Acquiring Title

Titling Rights of Possession Property:
The Titling Process is the official administrative procedure to acquire and register ownership Title on a Rights of Possession Property.

Island Properties cannot be Titled according to the Constitution of the Republic of Panama (only main land can be Titled). If you find Titled Properties on an Island, it is because this is an old Title, which where originally registered before the restriction in the Constitution was approved.

On beachfront Properties, a set back of 22 meters is required, due to the high tide.

Titling process is a long procedure with the following requirements:
1. Power of Attorney (we will draft it).
2. Application or Titling request (we will draft it).
3. Prove how Possession was acquired, for example through Purchase Contract of Rights of Possession.
4. Certification from Government Authority certifying Rights of Possession (Catastro, Reforma Agraria, Mayor/Alcalde, Chief of Police/Corregidor, and/or witness).
5. Original Survey signed by official engineer.
6. Certification of Municipal Council that certifies that have no opposition with the Titling.

The Titling Procedure is the following:

1. All the necessary documents and requirements should put together and presented to apply for the Titling Process.

2. An official File will be created and all documents will be reviewed.

3. File will be sent to the respective local office to coordinate official Inspection of the Property.

4. Official Inspection on the Property will be done by the official government engineer, who will confirm the boundaries, neighbors consent, no opposition by third persons, area of property, etc.

5. Official government engineer will certify by official report possibilities of Titling.

6. Notices of Titling will be posted at the Government Institute official board, and will be published in a National newspaper.

7. Official Survey will be approved.

8. Official Appraisal will be certified through two Government Institutes (Catastro, of the Ministry of Economic and Finance and Treasurer Institute "Contraloria"), where value of the Property will be established.

9. Payment should be made to the government for the Titling of the Property (payment is based on a per square meter price that is set by the government).

10. Official Resolution that grants Title will be issued.

11. Official Resolution will be registered at the Public Registry.

Concession:
Administrative Concession is a Contract between you or your Entity (as possessor of the Rights of Possession Land) with the Government of the Republic of Panama (as owner of the Rights of Possession Land) where the Government grants you or your Entity protection on said Land.
If you wish to protect your investment on Rights of Possession land, you can apply for an Administrative Concession, which can be granted for a maximum of twenty (20) years, which is the maximum time according to the Constitution of Panama. This Contract can be revoked.

Requirements:
1. Power or Attorney (we will draft it)
2. Certification from the public registry (we will get it)
3. Minutes of the Board of Directors of the Corporation authorizing development of the Project and authorizing the President and Legal Representative to apply for the Administrative Concession (we will draft it)
4. One original and five (5) copies of Survey where the complete area and measurements are described (Client should provide the original, we'll make copies)
5. Drawing/survey of complete Project with exact area, measurements, size, etc. (Client should provide this)
6. Certification of proof of Rights of Possession (Client should provide this, and if you don't have it, then we can assist you with getting it)
7. Resolution from the Municipal Office (Concejo Municipal) that certifies that the Municipality is not opposing the Administrative Concession (We can assist you to get this).
8. Environmental Impact Study (Client should provide this, and if you do not have it, then we can assist you to get it). This is required, according to the Government, only if the Property area is more than one hectare (1Hec.).
9. Feasibility Study (Client should provide this, and if you do not have it, then we can assist you to get it). This is required, according to the Government, only if the Property area is more than one hectare (1Hec.).
10. Pictures of the Area and Property (Client should provide this, and if you do not have it, then we can assist you to get it).

Procedure:
1. Once Right of Possession is acquired, and all documents are completed for Administrative Concession, application request will be presented to the National Direction of Catastro and Patrimonial Properties (Direccion Nacional de Catastro y Bienes Patrimoniales), of the Ministry of Economic and Finance (Ministerio de Economia y Finanzas).

2. An official inspection, done by the inspector of Catastro, will be conducted on the Property (this is done by sending someone to the specific Catastro Department of the area where the Property is located, to get and accompany the inspector to the Property). The inspector will confirm the area for the Concession, the boundaries, neighbors and possibility of opposition by third persons.

3. The inspector will draft a report of the inspection for the file of Concession request.

4. A Certification of Notice of the Concession request must be published (in order to confirm a possibility of opposition) in
a. The National Official Government News Paper (Gaceta Oficial)
b. A National Private Newspaper
c. At the Catastro Office Department board

5. A mandatory waiting period in case of any third person opposition.

6. An Official Survey will be conducted.

7. Communications will be sent to different Government Authorities (Ministry of Housing, Environmental National Association, etc.) depending on the type of Project, in order to confirm consent or disagreement for granting the Concession.

8. An Official appraisal will be done by:
a. Catastro of the Ministry of Economic and Finance
b. General Treasury of the Republic (Contraloria General de la Republica)
Depending on the calculated value of both appraisals, the value for the Concession Land will be determined.

9. The draft Contract will be done by Catastro Department of the Ministry of Economic and Finance.

10. The Administrative Concession Contract will be reviewed and signed by the Ministry of Economic and Finance.

11. The Administrative Concession Contract will be reviewed and signed by the General Treasury Director of the Republic (Contralor General de la Republica).

12. The Administrative Concession Contract will be reviewed and signed by the President of the Republic of Panama, the head of the Executive Organ (Organo Ejecutivo).

13. The Administrative Concession Contract will be published in the National Official Government News Paper (Gaceta Oficial).
Fees & Expenses:
Legal Fees: $2,500

Property Purchase Transaction Procedure:
If you are buying a Property in Panama, the following Procedure should apply:

FIRST: Buyer, Broker (if any) and Seller complete the negotiations and all the terms and conditions of the transaction.

SECOND: Client contacts POLS (PANAMA OFFSHORE LEGAL SERVICES - Law Firm) to retain their Legal Services.

THIRD: Client / Broker send to POLS the complete information on the transaction (property description, area, location, information of the Seller, purchase price, payment form, contingencies, etc.).

FOURTH: PT&E (PANAMA TITLE & ESCROW Inc.) drafts an estimate break down of the fees (for their Services), expenses (government expenses, taxes, notary stamps, etc.) and payments for the complete specific transaction.

FIFTH: Client sends wire transfer of funds to the escrow Account.

SIXTH: POLS starts Legal research at Government Institution where the Property is registered to confirm real ownership registered, mortgage and if taxes are owed to the Government.

SEVENTH: POLS draft Contracts, payment receipts, and necessary documents for the transfer of rights, for the entire transaction.

EIGHTH: With the approval of the Client and the consent of all parties involved (Buyer, Broker and Seller), POLS coordinates "The Closing" (payment to the Seller and Signature on the Contract and complete documents of the transaction).

NINETH: POLS starts the registration of transfer of rights procedure at the appropriate Government Institution in order to register the rights on the Property in the name of the Client (or Client's Corporation/Foundation).

TENTH: POLS sends to Client package of original documents (purchase Contract and documents of registration of rights on the Property) with a detailed invoice of the Services provided.

Rights of Possession Registration Procedure:
If your Property Transaction is a Rights of Possession, then the following Procedure will apply for the Registration of Transfer of Rights:

1. All papers for Registration should be presented (Purchase Contract, Power of Attorney, Survey, Transfer Authorization Request, etc.).
2. The Reforma Agraria will issue the Providence (Provisional Resolution) that starts the procedure of Registration.
3. The Providence should be notified to both parties (Seller and Buyer).
4. The Reforma Agraria will do an Official Inspection on the Property (this has to be coordinated with the Engineer in charge and have to take him to inspect the Property).
5. The Reforma Agraria will issue the "Ocular Inspection Act", were the Inspector certifies all the details of the Property.
6. The Ocular Inspection Act has to be notified to both parties (Seller and Buyer).
7. The Reforma Agraria will issue the Permanent Resolution that certifies and authorizes the transfer of Rights of Possession.
8. The Permanent Resolution has to be notified to both parties (Seller and Buyer).

Title Property Registration Procedure:
If your Property Transaction is a Titled, then the following Procedure will apply for the Registration of Transfer of Title:

1. The Seller and Buyer Signs the Minutes of the Purchase Contract.
2. The 2% Transfer Tax will be paid to the Government (Ministry of Economic and Finance).
3. The Seller should provide (if not we would apply for) a Certification from the Ministry of Economic and Finance, for the Property Tax (Paz y Salvo de Inmueble). Some times the Property information of the Seller is not updated at the Ministry of Economic and Finance (Catastro Department), in this case, this would take around 2 to 3 weeks to update the information.
4. The Seller should provide (if not we would apply for) a Certification from the water company (I.D.A.A.N.).
5. All documents above mentioned will be presented to the Notary to draft the Public Deed of the Purchase Contract.
6. The Public Deed of the Purchase Contract will be signed by Seller and Buyer.
7. The Public Deed of the Purchase Contract will be presented at the Public Registry for the Transfer of Title registration.
8. At the Public Registry, the Purchase Contract goes through the following procedure:
(a) The Purchase Contract is "Calculated". This means that the Public Registry will calculate the Fees for the registration. These Fees vary according to the Property's registered value, the area to be purchased, the purchase price, etc.
(b) The Purchase Contract is filed at the Public Registry and paid.
(c) The Purchase Contract goes to the "Diary" Department, were it will be registered as a presentation, and a presentation number will be provided.
(d) The Purchase Contract goes to the "Scan" Department, were it will be completely scanned.
(e) The Purchase Contract goes to the specific "Section" (depending on the location of the Property) for the "Calification". This means that a complete and detailed analysis will be done for the transfer Registration.
(f) The Purchase Contract goes to the Legal Department for consultation and confirmation for the transfer Registration.
(g) The Purchase Contract, if is authorized, goes to the specific "Section" for the transfer Registration.
(h) The Purchase Contract goes to the "Scan" Department, were it will be scanned completely with the Registration seal.
(i) The Purchase Contract goes to the "Delivery" Department, were we would collect the document.

Title Property Mortgage Cancellation and Registration Procedure:
If the Property has a MORTGAGE from the Seller, the following procedure must be done, before starting all of the above:
1. The final payment should be done to the Bank or the Financial Institution.
2. The Bank or Financial Institution after the registration of the payment will issue the Minute of Cancellation of the Mortgage.
3. The Minute of Cancellation of the Mortgage will be presented at the Notary.
4. The Notary will draft the Public Deed of the Cancellation of the Mortgage.
5. The Public Deed of the Cancellation of the Mortgage will be signed by the Seller.
6. The Public Deed of the Cancellation of the Mortgage will be presented at the Bank or the Financial Institution for the signature of the General Manager or the authorized person.
7. The Public Deed with the signatures will be presented at the Notary and the Notary will "protocolize" it and issue the Public Deed of the Cancellation of the Mortgage for the Registration at the Public Registry.
8. At the Public Registry, the registration of the Public Deed of the Cancellation of the Mortgage goes through the following procedure:
(a) The Public Deed of the Cancellation of the Mortgage is "Calculated". This means that the Public Registry will calculate the Fees for the registration.
(b) The Public Deed of the Cancellation of the Mortgage is presented at the Public Registry and paid.
(c) The Public Deed of the Cancellation of the Mortgage goes to the "Diary" Department, were it will be registered the presentation, and a presentation number will be provided.
(d) The Public Deed of the Cancellation of the Mortgage goes to the "Scan" Department, were it will be scanned completely.
(e) The Public Deed of the Cancellation of the Mortgage goes to the specific "Section" (depending on the location of the Property) for the "Calification". This means that a complete and detailed analysis will be done for the Cancellation of the Mortgage.
(f) The Public Deed of the Cancellation of the Mortgage goes to the Legal Department for consultation and confirmation for the Cancellation of the Mortgage Registration.
(g) The Public Deed of the Cancellation of the Mortgage, if it is authorized, goes to the specific "Section" for the Cancellation of the Mortgage Registration.
(h) The Public Deed of the Cancellation of the Mortgage goes to the "Scan" Department, were it will be scanned completely with the Registration seal.
(i) The Public Deed of the Cancellation of the Mortgage goes to the "Delivery" Department, were we would collect the document.

---

Real Estate Panama Law

Republic of Panama - Law 6 of 1999 - Establishes the creation of the profession of Corredor de Bienes Raices (Broker of Real Estate), and the creation of the governing body Junta Tecnica de Bienes Raices (Technical Board of Real Estate) in the Ministerio de Comercio e Industria (Ministry of Commerce and Industry). Corredor de Bienes y Raices - Defined: The legal entity (natural person or legal), granted the License and the Authority by the Ministry of Industry and Commerce to bring together the seller and the buyer to realize a contractually binding agreement. The Corredor is entitled to charge a commission - typically 5% on a sale - and one months rent on a rental property, for this service. A Corredor de Bienes Raices is one who habitually and professionally operates as a: Mediator, Intermediary, Agent, Representative, Commissioner (one who extends service and receives a commission); Between an owner of a property and third parties.

For the effects of Sales and Rental, the following are excluded from this definition. They are people who work as: Promoters, Administrators, Rent Collectors, Maintenance and similar.

Requirements: To become a Corredor de Bienes y Raices and qualify for a license, you must:

- Pass an exam administered by the Ministry of Industry and Commerce
- Obtain a bond in the amount of $10,000 per year
- Obtain Power of Attorney, presented by an attorney to a notary public
- Pay Fiscal Stamps (Timbres Fiscales) yearly of $25.00
- In addition, all solicitors of the license for Corredor de Bienes Raices must be:
- Panamanian nationals or foreigners with 5 years legally established residency
- Police Record stating you have never committed a felony against; the nation, public faith, the admission of justice, honor.

Governing Body; The Junta Tecnica de Ministerio de Commercio y Indistria (Technical Board of the Ministry of Industry and Commerce) is the governing body over Corredor de Bienes Raices and has the following functions:
Receive and Review the documentation from solicitors of the license
Ensure compliance - provide continuing education programs
Adopt Code of Ethics
Approve, program and regulate the exams
Receive and grade exams
Apply sanctions
Recommend reforms
Dictate internal order
To legally receive a commission on the sale or rental of a property, one must have a license.

Sanctions Imposed: All individuals who operate without a license, can be imposed a fine of $10,000 per incident.
Republic of Panama - Law 002-2001 of July 25, 2001
Establishes the creation of the code of ethics for Corredors (Brokers) of Real Estate.

Considering:
Law 6 of July 8, 1999 (which creates the profession), in Article 10 Numeral 3 stipulates that: Functions of the Junta Tecnica de Bienes Raices (Technical Board of Real Estate) are to adopt a Code of Ethics for the profession.
In session, July 25, 2001, the Junta Tecnica approved the text presented by different associations.
Title 1 - The Disciplinary Regimen
Chapter I - The Norms Of General Conduct

Article 1:
Comply with the current laws of Panama and the resolutions and requirements of the Junta Tecnica.

Article 2: A Corredor of Bienes Raices (Broker of Real Estate) will possess a license that is to be issued by the Junta Tecnica.

Article 3: A Corredor should act in good faith in dealing with their contractors (buyer and or seller), and inform them of all the factors that affect the property as it relates to: Sales, Contracts, Zoning, Financing, Any other matter in relation to the activity of Real Estate.

Article 4: Corredors must make sure their actions are completed within an enthusiastic practice and professional manner that strengthens the sentiment of overall solidarity. They should avoid all illegal practices, practices of fraud or scams, in relation to the ethics of other colleagues and third parties.

Article 5: They should avoid: Fraud, False Representations, Misleading Advertising, Exaggerations, and Malicious Practices - that can damage the public and the image of the profession.

Article 6: Do not offer or announce, a property without previous authority to do so.
Chapter II - Relations With Clients

Article 7: The Corredor should verify and ensure that the property or business contains the essential requirements for the future validation and initiation of a contract.

Article 8: Confidentiality will be maintained over the information the client provides.

Article 9: Never offer properties at a greater price than the pact agreed with the client, unless that pact has been stated in writing with the owner or client explaining the change.

Article 10: When there is interest on behalf of the Corredor to buy a property to which they have been given the right to show, they must inform the client of their interest.

Article 11: A formal offer presented by a client must be relayed to the owner immediately for their consideration.

Article 12: In order to approach two or more people for the initiation of a deal, it should be taken into account that: The Corredor must have the approval of the owner to receive a payment. The Corredor must have the approval of the owner to receive a payment as deposit.

Article 13: All previous representation will be respected in the event of sharing a client with another Corredor. There should be no solicitation for cooperation from a third party without approval from the other Corredor.

Article 14: The rights of other colleagues will be respected in relation to a property owner or client, until their business is concluded.

Article 15: It is important to maintain good relations with your colleagues as it relates to the avoidance of taking advantage of a situation, or unjustifiably discrediting another Corredor.

Article 16: Signs stating "For Sale" or "For Rent" should be respected when there is exclusive authorization in writing, and another Corredor should not place similar signs. It is prohibited to remove any sign posted on a property by another Corredor. A solicitation must be made to the owner for the owner to remove any sign placed by another Corredor.

Article 17: Commissions and payments between two Corredors should always be based on terms agreed to previously, to avoid disputes. In the absence of written agreement, the total commission will be divided in two equal parts: between the Corredor, the seller, and their group, and between Corredor, the buyer, and their group, if such groups exist.

Article 18: The principles of a free market will guarantee excellent service to clients. Relations between colleagues will be based on equity and mutual respect, to assure that no Corredor can utilize falsehoods to demerit, or discredit another colleague.

Chapter III- Professional Fees And Honoraries

Article 19: All negotiations between a Corredor and their client will be in writing to avoid doubts and conflicts. Verbal contracts between a Corredor and their client will be considered valid as it relates to the application of payments for commissions.

Article 20: If no previous contract exists between a Corredor and their client, the Corredor should never try to charge for commissions or fees for their professional services that are outside of the customary rates.

Article 21: The minimum tariff will be 5% of the final selling price of a property, and a sum equivalent to one months rent in the case of a rental property.

Article 22: In transactions that involve two Corredors, one Corredor cannot unjustifiably retain the part of the commission that corresponds to the other, unless there is a previous contract that states this.
Chapter IV- Ethics Tribunal
Article 23: Accusations of disloyal competition are to be evaluated by the Junta Tecnica or the Ethics Tribunal, through written correspondence.
Article 24: The Ethics Tribunal will ensure that this law is followed, and enforced.
Article 25: The Ethics Tribunal is facilitated and empowered to sanction and ventilate (inform).
Article 26: Third party mediation is allowed provided the two parties agree.
Article 27: Lack of Ethics include: Violations of the present Code of Ethics, Giving client information to one Corredor without the previous consent of the other Corredor, Initiating contact with a client previously presented by a colleague, without their authorization (exchange your business card, send letters, proposals, etc.), Not sharing the customary commission with a colleague who helped you realize business with a client.
Title II - Disciplinary Regimen
Chapter I - General Norms For The Regimen Of Discipline
Article 28: The violation of norms and ethics, independent of the civil or penal responsibilities or damages created by the act committed, subject the Corredor to disciplinary sanctions established in this law and subsequent special modifications to the law.
Article 29: Accusations made against another Corredor, must be presented before the Junta Tecnica in writing.
Article 30: Disciplinary Sanctions of this law are the following: A verbal reprimand in private, A written reprimand in private or public, Suspension of the Corredor's license, Cancellation of the Corredor's license.

---

Law Governing Real Estate Agents in Panama

From the Panama Guide website.
Saturday, March 03 2007 @ 10:04 AM EST
Contributed by: Don Winner

---