Panama Real Estate

A property in Panama with a red tile roof, bright green lawn, and beautiful blue sky

The Panama Real Estate and Property Market

The Panama real estate market was one of the few in the world that did not crumble in the wake of the 2008 meltdown, and neither did its economy. Panama Canal revenues have surged these past several years, continuing to keep this country cash comfortable. In addition, Panama is enjoying growth in both its financial services and tourism sectors and has established itself as a top tourist shopping destination.

But if you come to purchase real estate in Panama leave all your ideas of how to buy behind and just bring your wits with you. Remember, this is a different world, with a different legal system and one that is sometimes fraught with fraud and con men. The worst of the con men speak excellent English and will help you purchase things at great prices… that do not even exist. Do not expect the legal system in Panama to help you; once your money is gone it is gone. That said there is a right way to do things so that you can avoid the pitfalls.

Start by investigating the whole area you are interested in. Speak to real estate people—all of them. Panama has no multiple listing service (MLS) and everyone and their sister sells real estate, but most people are not licensed. If they are not licensed then there is no accountability if things go wrong. Panama real estate is also allowed to have net listings, which means prices may vary on the same property from office to office.

One of the biggest surprises for North Americans, who are accustomed to walking into a real estate agent’s office, detailing the specs for what they seek (two bedrooms, 2 ½ baths, US$200,000, in a nice school district, for example), then sitting back to watch as the agent types those details into his system to generate a series of listing sheets for every property currently available to suit.

In Panama, to get an idea of what’s available for sale anywhere in the country, you must meet with as many real estate agents operating in that area as possible. Not only do they not share listings, neither do they share commissions. Property listings are proprietary.

That is not to say, however, that a particular piece of real estate might not be listed with more than one agent. But this is not because the agents are sharing listings. It’s because the seller has listed the property separately, agent to agent, often at differing prices.

If you find a property in Panama be sure to refer to this simplified check list:

Is the property on titled or ROP land?

ROP or Right of Possession is where a person or family has effectively homesteaded land/property in Panama. They have a right to possess it, and they can legally transfer that right, but the owner is the government. The issue is who has that right and who else in that family, or even a neighbor, is going to also claim the same right. If you buy the property can you obtain title? It is a risky business proposition. The government has a program to title ROP land, they want it all titled because titled land pays taxes, ROP land does not.

Titled land is registered at the Registro Publico, the public registry of Panama. All legal liens against titled property are also in this database. Before you do anything regarding property you should find an attorney, not the same attorney as the seller, and have them research the property. If you are fluent in Spanish you can do this part yourself.

All titled land is taxed in Panama, except for land under condominiums, there’s no exemption. To help keep land values below the taxable threshold many sellers transfer the property into a corporation and then sell the corporation. The value of the corporation might increase but the land value does not.

How is the property owned in Panama, by a person or as a corporation?

Many parcels of titled land are corporate property. People sell the corporation not the land. This device avoids revaluation of the property to market value.

Is title clear or are there liens in Panama?

There are people who have gone through the entire process of acquisition only to discover a lien was on file. Any legal lien must be recorded in the Registro Publico, another good reason for having complete research done by a lawyer.

Is the person claiming to own the property really the owner?

This one seems obvious but once again it’s not uncommon to hear of people who have bought property here based upon the word of another expat; big mistake. Do not purchase anything before your lawyer carries out an investigation of title.

Untitled land must be owned by a Panamanian for at least two years before it can be owned by a foreigner. After this period it can be titled and resold. Foreigners cannot own within 10 kilometers of international borders. All Panamanian beaches and waters are public land and cannot be bought or sold. Foreigners cannot own within 10 meters of the Atlantic Ocean or within 22 meters of the Pacific Ocean (from the high-tide line). Special permits are needed in cases of some types of waterfront construction. Rights of possession is common in some parts of Panama. While this is not the same as title, it can be converted to title in some cases. To do this, you need the help of an attorney familiar with the process.

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