Leasing Apartments in Panama
(targetpanama.com) Panama’s laws regulating real property leases are old (1917 & 1973). Here are the basics of both laws.
The Civil Code of 1917 adopted the Spanish Civil Code regulating leases in urban and rural real properties. Privately owned real properties used for residences, commercial, professional services, industrial and educational activities come under this law.
Law 93 of 1973 regulates urban residential leases, sub-leases and the leasing of rooms and furnished apartments up to $150 month. Thirty years ago, $150 a month was a large payment and this law only covers that maximum amount. Vacation (holiday) apartments with leases more than six months come under this law as well. This law affords greater protection to tenants from rental increases and evictions.
Hybrid of both laws applies to most leases in Panama. Leases of furnished homes in private properties that are permanent or occasional rentals fall under both laws. Leases of properties for more than $150 month use the hybrid.
Tenant’s rights under both laws include:
Rents: The parties are free to negotiate whatever lease amounts and rent increases as they wish. Rents for less than $150 fall under Law 93 of 1973 prohibiting rental increases without the express approval of the Ministry of Housing. The Ministry is supposed to weigh the fairness of the price increase to the tenant and the reasonableness of the landlord’s return on investment.
Security Deposits: A security deposit equal to one month rent submitted to the Ministry of Housing returned to the tenant when the lease expires unless the landlord files a claim for past due rent or property damage by the tenant.
Term of the Contract: There are no restrictions in regards to the term of a lease agreement, or extensions. The tenant can terminate the contract any time, with a thirty-calendar day notice to the landlord. The only exceptions are for monthly rents less than $150 where the Ministry of Housing must approve any changes. While landlords cannot evict a paying tenant prior to the lease expiring, the tenant is free to break the lease with 30-calendar day’s prior notice. Leases regulated by Law 93 of 1973 must be for a minimum of three years with automatic three-year renewals at the option of the tenant as long as the tenant is up to date on rental payments.
Triplicate: Prepare the Rental Agreement in triplicate. The landlord or lawful agent gets one copy, the tenant gets another copy, and the Panama Housing Ministry gets the third copy. The Panama Housing Ministry also holds the security deposit. There is a $10.20 fee for the Ministry of Housing stamps.
Foreigners usually provide damage and first month’s security deposits. A personal reference letter from a Panamanian are often requested. Upon signing the lease, submit a copy of your passport information page. Cash or local bank checks are preferred. The Ministry of Housing records the lease for around $10.
Evictions for properties subject to Law 93 of 1973 must be filed with the Housing Commission of the Ministry of Housing. All other evictions filed before the municipal or circuit courts of the Panama Judicial Branch. Court orders are enforced by the Corregidor, the highest authority of the borough (district) where the tenant resides. Due to large caseloads, it takes several months for a hearing on evictions.
Eviction Process usually takes 120 days including 30 days after Service of Process; Duration of Proceeding 60 days; Duration of Enforcement 30 days. Collection of past rents owed come under the jurisdiction of the municipal or civil circuit courts.
Collecting unpaid rent takes even longer. Process of Service 30 days; Duration of Proceedings takes 180 days; Enforcement duration another 30 days; Total duration of the collection process takes 270 days.
In conclusion, these very old laws and function slowly with lots of discretion for the Ministry of Housing and the courts. Tenants have greater rights under Law 93 of 1973. Yet, all tenants have the right to break the lease with at least 30 days prior notice. Landlords learn patience trying to evict and collect back rents from tenants. New landlord/tenant laws are needed in Panama.
