You do not have to be in Panama buy property. You can appoint your lawyer, or someone else, as your Power of Attorney.
You can even sign the Power of Attorney document while you are out of the country. However, that process does take time and involves a Panamanian consulate.
If the seller says the property is titled, you must confirm that it really is titled.
The seller should provide you with 2 documents.
It is possible that the seller does not have these documents. If they don't, ask for the assigned property number, which is often called the finca number. Finca translates as ranch.
With the finca number you, or your lawyer, can search for the title.
The Public Registry now has a website that greatly assists this search. Go to the Public Registry's website at www.registro-publico.gob.pa.
If the seller doesn't have these documents, I recommend an even more careful examination of the title to ensure the property you are buying is the same as the one you are researching.
If the property is titled, you should request an updated Certifiado de Registracion from the Public Registry.
When you receive a signed and stamped Certificado de Registracion, it means you have verified the property's ownership, its location, and that it has no liens or other complications.
Unless you have alot of experience buying property in Panama, you will want to hire a lawyer to help you. Real estate transactions anywhere can have unexpected complications. A good real estate lawyer can avoid or guide you through those easily. Plus, all the paperwork is in Spanish "legalize" which Panamanian lawyers are very familiar with.
Getting a good lawyer
A lawyer can help with many tasks: review and ask for changes to the sale contracts, assist in setting up an escrow account (or other payment option), assist with the title search, research ROP properties, register the title once the property is yours, and obtain English translations of all documents.
If a survey has never been done, get one done by a licensed surveyor. Place survey markers at each corner of the property. Walk the entire property and make visual contact with these survey markers. This is especially important with ROP property particularly if it has never been surveyed before.
You should be aware of the dimensions of the property you are buying.
We advise you to only buy land that has been surveyed. If it hasn't been surveyed before, get it done before you purchase it.
Real estate purchases in Panama typically involve 2 contracts.
The promise contract states:
Both types of contracts are binding for both parties.
Only enter into a Promise To Buy Contract if you are positive you want to go ahead with the transaction, subject to any contingencies.
Make sure all those contingencies are clearly described in the contract.
Keep in mind that the contract will be in Spanish. This is true even though the law does not require contracts to be in Spanish .
What is done in practice and what is law in Panama are often not the same thing. To ensure you know what you are signing, it is important that you obtain a good English (or whatever your native tongue is) translation of the contract.
Sometimes the purchase & sale contract will be written with a purchase price that is less than the amount actually paid to the seller for the property.
This is sometimes done to decrease the tax bill, for both the seller and buyer. If someone asks you to do that, you must think carefully about whether you think it is in your interest or not.
Property Tax = 1.75% of value for property at $30K -$50K & up to 2.10% for property over $75K
Important - If you buy titled property, it is up to you to remember to pay your yearly property taxes. You will not receive a property tax bill or reminder. If you don't pay your property taxes, they will be collected when you sell - plus a fine.
UPDATE - On Oct. 18, 2017, Panama passed Property tax reform. Starting Jan. 2019, the rates and exempts will change. Overall, it means big savings for Panama property owners. Find out about the 2019 Panama property tax rates and exemptions here.
FYI: All of these taxes are avoided if you are buying or selling ROP land.
However, if you plan to title your ROP land, then the sales price of your ROP property will be used for tax purposes.
Click to discover how you can safely buy ROP property.
If you form a corporation to buy or sell property, you can avoid the title transfer and capital gains tax. However, you will pay a 5% share transfer tax. So tax-wise the cost is the same. But of course, you will also have to pay to create a corporation and then pay an annual fee to keep it current.
Waiting in Notary Office To Finalize Property Paperwork - David, Panama
If you have a lawyer, he or she will draft the final purchase and sale contract. The Notary Public can do this as well.
You will need to submit the old title, all previous land documents, and the new tax form to the Notary Public. There is a minimal fee to do this.
The Notary then types up the new title with the new owner's name, the seller, a description of the property, the location of the property, and any special terms that may apply.
Once the new title is approved by the Notary’s office, both the buyer and seller need to sign it.
If you want, you can skip the promise to buy and sell contract and go immediately to the final purchase and sale agreement. It all depends upon how you and the seller have negotiated payment. In Panama it is common to do both of these contracts.
NOTE: A Notary Public in Panama is not the same as a Notary in the States or Canada. In Panama, a Notary Public is a high ranking official. Notary Publics have the final authority when buying property.
There are a number of ways to pay for property in Panama.
4 common methods are below.
1) You can pay in cash. If you do so, make sure you pay the seller in front of the Notary. That way there is an official witness of your payment to the seller. This method is very common in Panama.
2) Pay with a certified check or money order from the Panama bank that you wired the money to. A wire transfer from a U.S. bank is simple and fast, especially since there’s no currency exchange. A wire transfer from other countries are also relatively easy. You can then pay the seller, in the form of a certified check, once all obligations of the purchase contract have been met. Again, it is a good idea to present the check or money order in front of the Notary Public. If you don't have a bank in Panama, you can also use option 3 below.
3) Through a bank or escrow company in Panama. (Until recently there was no escrow in Panama. But escrow services are increasingly popular and growing.) The bank or escrow company issues an irrevocable letter of payment at the time of your deposit. In this letter, the bank or company irrevocably promises to pay the amount owed to the seller immediately upon the transfer of the title or completed conditions. This is mostly used if an earnest money deposit is made for the property. But it can also be used if the buyer does not have a Panama bank account. The bank or escrow company will help ensure that every thing is in order before they turn over the money to the seller.
4) Provide your lawyer with the money, and have him or her distribute the property payment(s).If you feel confident in your lawyer, this is an excellent method since they are very familiar with the terms of the contract. However, some attorneys aren’t willing to be involved in this step. In such cases, a bank or private escrow company, is a good option.
Given the potential for corruption as well as the need to avoid using the slow and questionable Panama legal system, you should generally avoid giving money directly to the seller, and especially to the real estate agent. However, it ultimately depends on the reputation of the people involved in the real estate transaction.
Caution when buying from an anonymous corporation (Sociedad Anonima) in Panama
Read our "warning about signing a property contract with an Anonymous Corporation in Panama" before you buy a property directly from one.
Your purchase is not final until you register it at the public registry.
If you are doing your transaction in David, Panama, the Public Registry is next door to the Public Notary pictured in the photo above.
After about 10 days to a few weeks you will get a signed and stamped title to your property.
Your Panama real estate agent is one of the biggest differences.
That said, it is a good idea to have a realtor in Panama. Mostly, because, without an agent, it can be hard to learn about all the property for sale in an area. In Panama, some sellers never list their properties online, especially Panamanian sellers. It is all word of mouth, which is why having a reputable real estate agent is a very good idea. Also, a good agent can help you successfully navigate the buying process. Of course, your lawyer can help with the purchase process as well.
There are good real estate agents in Panama. But you need to do your due diligence before working with one. You want to choose a real estate professional who is reputable, who understands your goals, and will help protect your interests. We advise you to run a google search on a realtor to see if his or her name turns up any negative information. Also, we are happy to give you a recommendation for a local realtor.
However, you can also buy property without a realtor. Many real estate transactions in Panama are done privately, without an agent.
Another difference is that most property in Panama is right of possession (ROP) property. You are much more likely to have the option of buying non-titled, or ROP property in Panama than in your home country.
You may have heard that there is no title insurance in Panama, but that is not correct.
There are several places where you can get excellent title insurance in Panama these days. Ask your lawyer, or Google it, if you want title insurance.
Overall, the property buying process in Panama is similar to the process in the US and Canada. However, it is complicated by the documents being produced in Spanish, as well as the differences in how real estate agents operate here.
For more on buying ROP Land in Panama, click here.
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