Real Estate: Purchasing Property in Panama

Panama has three different types of property:

1) Titled property
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. Titled property can also 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. This is a pro-rated tax exoneration based on the value of the dwelling.

2) Right of Possession property
Possession Rights Property is not unlike "squatters rights" common in North America 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 (Reforma Agraria). 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.

3) Concession Property
Concession property is not unlike land lease arrangements, common in Mexico or Hawaii. Concession Property is government owned property, where the government has granted a concession to an individual or organization for a specific purpose, such as a real estate development, hotel, or marina. Concessions in Panama are generally granted for a maximum of 20 year (renewable) periods. Some concessions are granted for up to 40 years (renewable) in specially designated areas such as the Amador Causeway or where there are commercial and condominium developments currently being sold (Naos Harbor, for example).

Concession Property is often located on islands, in special coastal or other protected areas where titles are not permitted by law. Real estate developments over concession property often offer investors time share or fractional ownership arrangements. Unlike Possession Rights property, Concession property is guaranteed by the government through a specific contractual agreement.


All judicial processes in Panama are conducted in Spanish. For any real estate transaction in Panama, a contract written solely in English carries no legal weight, and is generally not recognized. All contracts for property must be in Spanish on a formal public deed, and signed before a public notary, in order to be legally enforceable and where applicable, be filed at the Public Registry.


Below is a summary of the general process of purchasing property. Be aware that there are variations in the purchase procedures for each different type of property. The summary we have provided here is meant to give an overview of the process, but is not meant to be a step-by-step guide for individual property purchases. if you are intending to invest in property here in Panama we recommend that you contact us, so that we can put you in touch with expert help, a realtor and lawyer, who will be able to advise you in the context of your own specific case.

1. Promise to Purchase Contract: 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.

2. Title Search: Once you've decided to purchase a property, it is highly recommended that a title search be completed to ensure that the property in question has clear title. A proper 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. This step is usually included in closing costs which vary from attorney to attorney, but are generally within range of 1.5 - 3 percent of the sales price of the property.

3. Buy-Sell Contract: The Promise to Buy-Sell Contract is registered at the Public Registry and is a legally binding document that stipulates (provided agreed upon conditions are met) that the Seller must sell the property to the contracted Buyer (and not to someone who afterwards makes a higher bid) and that the Buyer promises to buy the property. Should either party decide to back out of the transaction there are certain consequences to be had. Should the buyer back out they will lose their deposit, and should the seller back out they must return the deposit, plus an equal amount. In other words, if the seller received a down payment of 10%, they would be required by law to return the 10%, plus another 10% as a penalty.

The down payment to the seller is a very important step in the process of securing real estate in Panama. Without having received any down payment, the seller has no incentive to hold a property before the actual close is made, and at any point can either change his mind, or opt for a better deal that may happen along, without any consequence.

In other words, if the seller received 0 down on a property and a better deal came along before the property closesure took place, by law they would be required to return the down payment of 0 plus an equal amount of 0, which totals 0.

Also included in the Promise to Buy-Sell Contract are any stipulations or conditions agreed upon by the Buyer and Seller, such as, for example, certain improvements to the property.

Once the Promise to Buy and Sell Contact is signed, and initial down payment made, the Seller must comply with a few obligations necessary to complete the transfer of the property from the seller to the buyer. These obligations include paying a 2% transfer fee, as well as obtaining several paz y salvos, or certificates of good standing, which indicate that the property taxes are paid up to date, as well as any liens on the property, including water bills, have or will be paid off.

4. Title Transfer: The buyer officially owns the property when the title is transferred to the buyers' name. The transfer occurs when the buy-sell contract is signed by each party and registered at the Public Registry. When the title is transferred to the buyers' name the final balance is paid to the seller, or an escrow agent. Although the word "escrow" does not specifically exist as a legal term in Panama, there are various attorneys who provide such a service locally. 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 the title is in the name of a corporation, there is no transfer of title, only a transfer of shares of the corporation. The buyer can keep the same officers in the corporation or appoint new members. Buyers of corporate titled properties through the purchase of the corporation itself, should ensure the annual corporation tax (Tasa Unica) is up to date. A change of corporate officers cannot be officially recorded at the Public Registry if the tasa Unica is in arrears.

The property transfer process generally takes about 30 days, but can vary depending on the complexity of the real estate transaction as well as any stipulations outlined in the Promise to Buy Sell Contract.