Get a Residency Visa.
The recent boom in Panama real estate investments from foreigners, has brought about new types of visas. These include the Retired Tourist, Retirement, Self-Economic Solvency and the Small Business Investor Visa. Panama has nine provinces, all with common practices, but some like Bocas Del Torro an island community have some other intricacies so its important to define where you want to live FIRST so your lawyers can engage in providing the perfect advice ensuring no hold ups in the buying process.
Prequalify for a loan or confirm to us you have funds.
Always the best advice is to shop around for mortgage rates and terms. We will be happy to make an introduction for you, so before you visit us here in Panama, we know you’re in buying mode and can align and motivate developers to your time line and expectations accordingly.
Buying TITLED Property
Negotiate a Promise to Purchase contract.
All titled property must have this contract with a down payment at the signing of the agreement. Register at the Public Registry to hold your real estate. A small down payment is made at the signing of the promise to purchase contract. The down payment secures the property and establishes time for the title search and to coordinate payment arrangements for the closing. Registering this contract at the Public Registry ensures the property cannot be sold to another party during the escrow period.
Obtain a title search - through a Panamanian lawyer.
The purchase of titled property in Panama is similar to that in the United States. This includes doing a proper title search to verify free title, survey, utility debts and property taxes. Titled property is not unlike “fee-simple” titles in the USA. The Panamanian Public Registry has jurisdiction over the registration of titled properties throughout the country. Titled property is verifiable through the Public Registry system and is guaranteed by the constitution of the Republic of Panama.
A title search includes:
a) verification that the seller in fact has title to the property and it is free and clear of encumbrances, liens, or other issues that could affect the free disposition or transfer of the title.
b) a review of the official survey map, and a professional surveyor to physically verify the map points on the property (to avoid future boundary conflicts)
c) verification of utility debts (water and sewage)
d) verification of payment of property taxes and/or of the tax exemption.
Titled property can be mortgaged.
The bank will register a lien against the title as collateral on the loan. Titled properties are subject to annual property taxes when the registered value is over US$30,000 unless the buyer has obtained an exemption for the construction of a new dwelling.
Sign a Buy-Sell Contract.
Register the contract at the Public Registry. The seller or escrow agent receives the money when the title is transferred into the buyer’s name. This contract is registered at the Public Registry and the final balance is paid to the seller, or an escrow agent. Payment is made when the title is transferred to the buyer’s name. Payment can be issued by a bank, contingent on receiving from the seller proper title to the property. The buyer can open a bank account (or get a mortgage) and then formally request that the bank issue payment as soon as it is presented with the registered public deed transferring title to the buyer. Real estate agents normally get paid only when the sale closes.
If buying Government owned property.
Perform a due diligence investigation if considering a Possession Rights property. This is a property that the government owns. Due diligence includes a valid Certification of Rights of Possession, a survey and an actual property / investment inspection.
Buying Possession Rights Property
Possession Rights Property is not unlike “squatters rights” common in the USA many years ago. This property is government owned but is “occupied” or “used” by a Panamanian individual (or Panamanian organization) for some time. Possession rights are generally certified by either municipal mayors, sheriffs, or other government organizations such as the Agricultural Reform Department . Possession rights do not incur property taxes, although registered improvements on possession rights property may incur taxes at a municipal and/or national level. Most Possession Rights properties can become titled through a procedure of purchasing the land from the government, however, the law prohibits titling of possession rights properties in some areas such as certain coastal areas, national parks, or islands. In these cases, as an alternative, the “possessor” of the property can apply for an administrative concession over the land to guarantee the pacific use of it. There is an entire specific process for buying property this way, but we advise a full consultation with attorneys before considering it.