PURCHASING REAL PROPERTY IN PANAMA
Neither foreign persons nor Panama corporations with foreign ownership can purchase property located less than ten kilometers from the frontiers nor on islands under the jurisdiction of Panama.
By law, all beaches are public and all beach front properties must provide a right of way starting 22 lineal meters from the highest tide to the property line.
Titled Property (Propiedad Titulada)
The Public Registry Office keeps record of titled properties in the nine provinces of Panama.
.....Enter into a Promise to Purchase Agreement to provide sufficient time to execute due diligence on the property and obtain financing, if necessary. . This agreement can be recorded in the Public Registry in order to affect third parties.
.....Perform a complete due diligence of the property.
....Enter into a Purchase and Sale Agreement. Generally, payment is not delivered to the seller until the public deed is registered at the Public Registry. The parties may agree to appoint an escrow agent who receives the funds.
"Rights of Possession Property (Derechos posesorios)
Much of the land in Panama, particularly that outside of the cities and municipalities, is "rights of possession" property (derechos posesorios.) This property is owned and administered by national or local governmental authorities which grant the right of" use and possession" of the land under certain terms and conditions for a specified period of time. Duly executed rights of possession are recognized legal rights which can be transferred to third parties by executing the proper documents in the presence of the appropriate authorities.
Persons interested in buying derechos property should undertake a complete due diligence of the property. They should verify that the award of the possession right is duly granted by the pertinent government authorities and that the holder transferring the property to them is the legal owner of the right of possession. . They should also verify that their intended use of the land is permitted. A complete survey and blueprint of the property should be made.In most cases, persons holding derechos posesosorios may apply to title the property.
Other Alternatives for Purchasing Property
Purchase of a property by the acquisition of a Panamanian corporation which already owns the land is another way to purchase property. The buyer acquires the corporation which holds title to the land and then replaces the Board of Directors with his own people. In this case, a full due diligence should be undertaken on the corporation. It is advisable that the seller make substantial representations and assume full responsibility for the corporation's previous activities.
Special Concession Zones
Law 2 of January 7, 2006 has has been signed by the President. This law allows the government to grant long term concessions to foreign investors in certain island and beach front properties.
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