How to Buy a Property in Panama

For those that have wanted a retirement or holiday home in Panama, here are the basic steps to purchasing in beautiful Panama.

Difficulty: Moderate

Instructions

1. Begin your search for a property, check newspapers, classified sites and compare different agent's properties and the prices of similar properties. Visit the property and surrounding areas and make sure that you are comfortable with the location. A property can be listed with multiple agents so do a bit of research and see if you can find the property listed at a lower price or by the owner.

2. Once you have found a property, it is recommended that a title search be completed to ensure the property has a clear title, free or any liens or liabilities. This step is usually included in closing costs.

3. The first formal step in purchasing a property is the Carta de Promesa de Compra y Venta (Promise to Buy & Sell), which is usually accompanied with a deposit paid to the seller of typically 10% of the sale price. Included in the Buy & Sell contract are any stipulations agreed upon by the buyer & seller. These stipulations may include any improvements to the property & the time needed by the buyer or seller to close the property sale.

4. The Promise to Buy & Sell contract is a legally binding contract that formalizes the buyer's promise to purchase the property & the seller's promise to sell the property. The contract also stipulates the consequences to be had if either party does not follow through with the transaction. If the buyer backs out they will lose their deposit, if the seller backs out, they must return the deposit plus an equal amount. If the seller cannot provide this compensation, the buyer has the right to commence legal action & have the property sequestered by the courts. At this stage the seller would be forced to pay the compensation or honor the agreement in the original Promise to Buy & Sell contract.

5. In Panama the deposit payment is very important in securing a property. A seller has no legal obligation to hold a property if no deposit has been received & may back out of the deal if another or better offer is presented without consequence. Escrow is not commonly used in Panama however there are various agents that can provide that service.

6.  There are several obligations that a seller must adhere to once the deposit & Promise to Buy & Sell has been received to complete the transfer of the property. These include paying a 2% transfer tax, obtaining Paz y Salvos (Certificate of Good Standing) which indicated that all property taxes are paid up to date as well as any liens on the property.

7. Property transfers generally take 30 days depending on the complexity of the transaction as well as the stipulations in the Promise to Buy & Sell contract. The balance of the payment of the property is due once the deed is signed over & the new deed is generally released within 10 business days.

8. Commissions payable to agents are paid by the sellers & are generally 5% which can be negotiated.

Tips & Warnings

• It is recommended to contract a lawyer to oversee all steps and documents of a property sale & transfer in Panama. Check over all details, ask questions & if you cannot speak Spanish, it is advised to pay that bit extra for an official translation of all documents so that you know exactly what you are signing.
• When buying in Panama, it is recommended to purchase Titled property.