How to Buy a Property in Panama
(shelteroffshore.com) There has been an increase of interest in investing in and retiring to Panama fuelled in part my more North Americans discovering how tax attractive and affordable a country it is. Britons have jumped on the bandwagon now too, and as a result more and more people are considering buying property in Panama.
Located between the Pacific Ocean and Caribbean Sea, Panama offers homebuyers stunning beachside properties, Panama City condos and mountain hideaways. But remember as with all property purchases, buying property overseas isn’t without its risks, and as ever it’s a case of buyer beware!
Before you buy real estate in Panama you need to read this ‘how to buy a property in Panama guide,’ carry out your own research and follow some of the following pointers…
Buying property overseas – in any country - is very different from buying a house in the UK. Before even entering the legal aspects of buying property in Panama you need to get to know your areas and visit them at different times of the year, if you’re buying a rural or island property you need to see it in the rainy season, how else are you going to find out if it floods annually.
Don’t be pressurised into buying, it’s a buyers market in Panama at the moment and you don’t want to act in haste only to have to repent at leisure. Also there’s no multiple listings service for property in Panama, so you will need to deal with a number of estate agents in order to find the best property for you.
There are no legal restrictions for foreigners buying property in Panama and overseas buyers have the same rights and protections as Panamanians. Property in Panama is either “titled” or “right of possession” real estate; a titled property means that you own the property freehold and a “right of possession” or ROP means that you have the right to occupy the property, similar to leasehold. However, there are a couple of things you need to be aware of with ROP properties. As you don’t own the property you can’t use it as collateral against a mortgage and it can’t be used in order to apply for an investment visa for example. Always physically ensure the property is vacant before signing or paying, especially with ROP property, if not you may end up with squatters’ claims against your property!
When choosing a lawyer to assist you in buying your property in Panama, talk to other expats who’ve gone through the same process, also get your lawyer to give you a precise cost for carrying out the transaction up front. Panama has a very comprehensive and organized land registry system so your lawyer will be able to check the condition of the property for liens and debts before any documentation is signed. Once the “due diligence” process has been carried out you then sign a “promise to buy contract”. This document details the sales process, what’s being bought, from whom, how much is being paid, the property details and purchase time frame. This document is registered in the public registry. By law it’ll be in Spanish, so get it translated by an independent party if needed. Promise to purchase agreements for property in Panama are legally binding so be sure you wish to go ahead with the purchase before signing. Generally a deposit of between 3% and 20% is paid on signing, and this may be forfeited if you don’t complete the purchase.
Following on from this, a survey is carried out on the property to ensure the physical aspects of it are representative of what’s laid down in the title document. After this the new owner’s title deed is issued and registration in the public registry, and this is carried out on receipt of final payment.
There are now a number of Panamanian mortgage brokers and banks willing to finance buying property in Panama. Terms can be up to 25 years and down payments are generally in the region of 20-30%. You’re likely to need to supply a credit report from your home country as well as tax returns for 2 years in order to secure a mortgage.
