Properties in Panama
Below we have prepared a summary of general procedures for buying property in Panama. Please take into account that there are variations in the different procurement procedures for different types of properties. This is only a summary and does not detail the steps for the purchase of different types of properties. If you want to invest in a property here in Panama we recommend you contact us to put you in touch with a real estate expert and a lawyer, which we will explain in detail what it means to buy a property in Panama, according to your specific case .
1. Promise to Purchase Contract: A small down payment is required upon signing the contract. The down payment ensures that you reserve the property and establishes the length of time it takes the coordination of monthly payments and re-examination of title.
2. Examination title: Once you’ve decided to buy a property, it is recommended to complete title examination to ensure that the property purchased has a clean title (not as stated). An examination of owner is:
a) verify that the seller really did not have possession of the property and the property is not subject to encumbrances, liens, or any other problems which may prevent them from transferring the title to the new owner.
b) an official survey of the property and that a professional appraiser physically check the property to set the boundaries of the land (to avoid conflicts later)
c) verify if there are debts to utilities (water and sewerage)
d) verification of payments of property taxes and / or tax exemption. This step usually includes closing costs ranging between 1.5 and 3 percent of the purchase price of the property.
3. Purchase-Sale Contract: The Sale and Purchase Agreement is recorded in the Public Registry and is a document that states (since all requirements are carried out) that the seller has the obligation to sell the property to the buyer (and not another person to propose a higher bid for the same property) and the buyer promises to buy the property. If any of the persons mentioned in the contract you decide to cancel the transaction, this leads to certain consequences. If the buyer decides not to buy immediately lose your deposit, and if the seller decides not to sell is required to return the deposit plus an amount equal to the reservoir. In other words, if the seller received an initial payment of 10%, the law states that the buyer must pay the deposit plus a penalty of 10%. The initial payment to the seller is a very important step in the process of buying real estate in Panama. Without receiving a payment, the seller may decide to offer the property to another buyer before closing, and at any time may change your mind or choose to accept a better offer without having any negative consequence.
In other words, if the seller has not received any payment, any offer is valid prior to closing, and the law requires to return the down payment of zero dollars plus another equal amount of zero dollars, which gives a total of zero dollars. The Purchase and Sale Agreement includes terms or conditions of agreements between the buyer and the seller, such as physical arrangements for the property. Once the Copra-Sale Agreement is signed, payment is made and the seller must comply with certain obligations which are necessary in order to perform the transfer of ownership from seller to buyer. These obligations include payment of 2% of transfer fee and the purchase of peace and salvation, which indicates that property taxes have been canceled and are current at the same time there is if there is a lien on the property , which may include delinquent utility accounts.
4. Transfer of title: The buyer is officially own the property once the title has been transferred to his name. This transfer occurs when the contract of sale is signed as both buyer and seller and is registered in the Public Registry. When the title is transferred to the buyer pays the final balance is the dealer or an agent to retain the guarantee funds. Although the words “guarantee fund” does not officially exist in Panama and legal terminology, there are several lawyers who provide such services locally. Payments can be sent through a bank, with the expectation of receiving the title of the property. The buyer can open a bank account (or get a mortgage) and then formally ask the bank to remit payment immediately after submitting a public document which indicates that the title has been transferred to the buyer. The real estate agents usually charge their commission once the closure is finalized.
If the title is under the name of a corporation, does not transfer the title, only a transfer of shares of the corporation. The buyer is entitled to retain the same members of the corporation or appoint new members. Buyers of corporate titled properties as that obtained title to the property by purchasing the corporation and has a duty to ensure that the annual corporate tax (Tasa Unica) this balance. The change of members of the corporation can not be officially registered in the Public Registry if the tax is not balance. The property transfer process usually takes 30 days but can vary depending on the degree of difficulty presented by the case or if there is any specific provision to meet as it is written in the purchase and sale agreement before closing.
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