Panama's Basic Real Estate Laws and How They Affect Buyers

(targetpanama.com) The basic real estate laws revolve around four areas: down payment, the Promise to Purchase contract, Titled land and Right of Possession land. Each covers a different aspect of the process, but the laws behind them help to shape the entire transaction.

A down payment is exactly what its name suggests; it is a cash payment that signifies a buyer’s earnest intent to purchase a property. In Panama, the typical down payment is 10% of the purchase price. Panamanian law takes an interesting approach to down payments. If a seller backs out of a purchase agreement, the law entitles the buyer to double the down payment for “damages”. If for example, no down payment was made, double that amount is obviously zero.

The Promise to Purchase agreement is critical to the entire process. This is the legal description of both the transaction being executed and the parties involved. All pertinent information is included in this document; property description, terms of the purchase and legal identification of both the buyer and seller. This document is later conveyed to the escrow company and both the title work and the names for the disbursements are taken from its pages.

Titled land is land that is recorded in the Public Registry. A formal history of ownership is available and any liens or other claims to the property are included. Titled land in Panama cannot be sold without a clear title, making this an important step in the process. It is wise to note that you can purchase title insurance and it is as strongly suggested for real estate in Panama as it is for real estate in the United States.

Right to Possess property is a precedent established by the Panamanian government in 1971 to encourage inhabitation of unclaimed, untitled land. While “squatter’s rights” haven’t been used in the US for quite some time, it is still valid in Panama. Having a good attorney becomes very important here as legal issues could arise if proper procedures have not been followed by the previous owners. While this is concept is somewhat strange to Americans, don’t be scared away if the property you want is Right to Possess. Just make sure that you and your attorney pay due diligence and you can still securely get a great deal on your new real estate!

Everything you need to know about Panama is in the FREE multi media magazine Panama Magazine