(Panama Gringo) Thinking of buying real estate in Panama? This posts gives a concise summary of the purchasing process. *Laws are always changing, so make sure you work closely with your real estate agent and lawyer during the purchasing process.
- 1. Qualifications for buying real estate. The Panamanian constitution says that when it comes to buying real estate in Panama foreigners have the same rights and obligations as Panamanian citizens. The only difference is that foreigners can’t buy property within ten miles of the country’s Costa Rican and Colombian borders.
- 2. Detailed investigation of the property and its owner. The transfer of the title can be affected by financial burdens, limitations or restrictions on the property, so a thorough investigation needs to be done before going through with the promise of sale contract. This is done through the records in Panama’s Public Register and in the Ministry of Economics and Finance (MEF).
- 3. Promise of sale contract. The promise of sale contract is a private document and varies depending on whether the it is a pre-sale or re-sale contract. It includes all the terms and conditions of the relationship between the buyer and the seller. The most important clauses included in this document are the payment method, the penalties in case of breach of contract, the obligations of each party and any other conditions that may affect the final transfer of the deed.
- 4. Translation of the promise of sale contract. If the contract has been drawn up in Spanish and you are not comfortable with the language, you can request an authorized public translation to the language of your choice.
- 5. Paz y Salvo (Free of debt). The promissory seller must provide documentation proving that the property is free of debt and liabilities, such as the title transfer tax and the property tax. Proof must also be given that nothing is owed to IDAAN, the Panamanian Water Authority, or any sewage or electrical fees, and that there are no outstanding maintenance fees, if applicable.
- 6. Payment of the property’s mortgage. If the property is mortgaged by a local bank, the seller has to pay any outstanding payments to the bank to obtain the mortgage payment record. This record needs to be transcribed in the public deed of sale and registered with the deed in the Public Registry.
- 7. Bank financing. If the purchase of property needs to be financed by a local bank they will most likely draw up the public deed. This will contain the sales contract as well as the loan contract with a mortgage guarantee. The bank will require proof that the property has no debts or liabilities, known as the minute of the promise sale contract, and the respective official sales documents, where applicable.
- 8. Public deed of sale. The deed needs to be stamped by a Notary Public in the Republic of Panama to be included in the Public Registry, and attached to the corresponding debt-free certificates.
- 9. Inscription in the Public Registry. After the deed of sale is included in the Public Registry the property title is passed to the buyer. The process of entering it can take about 10 working days, or you can pay a fee to expedite the process.
- 10. Change of the owner in the property register. After the deed of sale is entered in the Public Registry a copy of it needs to be delivery to the Property Registry, known as the catastro, and to the Registry of Government Property in the Ministry of Economics and Finance so that the change in ownership is made in their system as well. This can take about 15 working days.
The process may seem complicated, but it is necessary in order to ensure legal sales of debt-free property. A good real estate agent and lawyer team will help you through the process, especially in regards to navigating the language barrier.