In Part 1 of our Buying Property in Panama series, we discuss the attraction of Panama as a location for property investors. In this part, we will briefly look at the process and steps involved when purchasing Panamanian real estate as well as make suggestions towards the best approach to take so that you could make the process of making your investment as smooth and efficient as possible Property purchase in Panama. Discover more about property purchase in Panama here!
How difficult is it for foreigners to buy property in Panama?
Simply put, not difficult at all with the caveat that there are a few extra steps in the purchase process a foreigner has to take compared to Panamanians. There are very few restrictions that forbid an extranjero (foreign person) from buying real estate and foreign investment is welcomed in Panama.
Property purchase in Panama is likely not so different to the purchase process in your own home country and does not have to be intimidating or overly complex at all, as long as you have done your own due diligence and have the right people around you who can guide you through the process.
Below we have outlined a list of the recommended steps one can take to experience a smooth and positive acquisition process. In our next part of this series, we explore each of these steps in greater detail.
8 Steps to Panama Property Purchase Success
Step 1 – Establish what type of property you want and how much you want to pay.
Dependent on your intentions for the property you wish to purpose, whether it be as a commercial investment, to retire in at a later date or to fully relocate to, you will want to decide on whether your property will be in the busy capital city or for a more relaxed pace of life, out in the country where you can find homes on the sun-splashed coast or up in the mountains for a fresher, greener climate.
There are plentiful resources to be found online for you to conduct your research at this early stage, and this time can be spent establishing your budget and estimating a ballpark figure of a fair market value for the type of property you are looking for.
Normally, there is always some flexibility in terms of the asking price so you may be able to negotiate a reduction on the price listed.
Step 2 – Build your team.
Once the location and type of property is decided, it is best to seek professional guidance from an experienced lawyer and local real estate agent or broker as even the most experienced expat in Panama can suffer complications when purchasing property.
Working with a good real estate agent can be invaluable as the experienced, knowledgeable agent keeps up with the laws, regulation and news in the local property sector, enabling them to double check the work of the lawyer and structure the deal to legitimately reduce taxes and ensure the transfer deed is correct and free of risk for their client.
Step 3 – Verify the Title.
The most complete and secure form of ownership is titled property and if the property seller states that the property is titled it is important to check that it is, especially in rural area. Your lawyer will do this for you. Untitled property in Panama cannot be owned by a foreign person.
Step 4 – Confirm a Survey and /or Inspection Has Been Done.
Wise advice would be to check if a survey has ever been carried out on the property. If you
find that a survey has never been carried out, or it was last done a long time ago then it is worth having a new survey done. Additionally, it is also best practice to not rely on the seller´s word in regards to the condition of the property. A good building report can confirm that the property is in the condition which was originally agreed upon.
Step 5 – The Promise to Buy Agreement.
This next stage is the entering into an agreement in order to set out the terms and conditions of the purchase which is legally binding on both the buyer and the seller. It is usual procedure for the deposit to be paid at this point.
This promise to buy contract sets out the conditions in terms of price, closing date, property description, deposit, and penalty clauses for both parties.
Step 6 – Transfer of the Property Title & the Purchase and Sale Contract.
At this stage, your lawyer in Panama can draft the final purchase and sale contract as a public deed but before they do it is advisable to have them conduct a final check to ensure no liens or mortgages have been filed on the property since they conducted their provisional search, as mentioned in step 3 above.
The old title, and all related documents to it, will need to be submitted to a Public Notary and the new title will then be drafted by the Notary´s office for signing by both the buyer and the seller.
Step 7 – Payment for the Property & Transfer of Funds.
One of, if not THE most important tips is to never to pay the seller directly without a witness. Below are the most common payment methods for property in Panama:
- Cash
- Through an irrevocable letter of payment
- Certified cheque or money order from your bank account in Panama
- Have your lawyer hold your purchase funds in escrow.
Step 8 – Record the purchase at the Public Registry and the tax records department.
Important to note that the purchase of the property is not complete until it has been registered at the Public Registry and the tax records department in Panama.
The recording of the purchase process can take between 10 days and a few weeks and once complete your lawyer will provide you with a registered title deed. The one last important step is to file a copy of the title deed with the tax records department as this completes the transfer of the property.
Timelines for purchasing your real estate in Panama
Usually, the process of purchasing property in Panama from start to finish takes approximately six weeks. However, this timeframe can take longer due to a number of factors such as a prolonged negotiation, slow work progress by the buyer´s and/or seller´s lawyer or a delay in the public registry system.
How we can help you with making your property purchase in Panama!
At Topaz Services we can assist you with all of the services you need to buy your real estate in Panama including due diligence reviews and the drafting, negotiating, implementing and enforcing of real estate contracts. Additionally, we can assist with the transfer of the purchase funds, attend to the registering of the purchase with the local authorities and take care of all property tax obligations on your behalf.
By being your “boots on the ground,” we can provide you with the confidence and peace of mind as we take care of the process. Our team of experts, with proficiency in Spanish and English, as well as our long-established local network of recommended service providers, can be of invaluable assistance.
Topaz Services has been providing quality advice and expertise for over forty years and our experience in Panama is accompanied by the reliability, understanding, personal approach and responsibility you could expect from a British-run professional company.
Contact us today and let out experience be your guide!