Today we will be providing essential information on buying real estate in Panama. Whether you’re a foreign investor or a local buyer, understanding the legal aspects of property acquisition is crucial to a successful transaction.
RESEARCH AND DUE DILIGENCE
1.1 Property Search
Before embarking on your real estate journey in Panama, start your property search with a clear understanding of your needs and budget. Research various regions and neighborhoods in Panama to find the best fit for your requirements.
1.2 Due Diligence
Due diligence is the backbone of a secure property investment. Here’s what you should do:
- Verify the property’s ownership and title deeds.
- Ensure that the property is free from liens, encumbrances, or legal disputes.
- Review zoning regulations and land use restrictions that may affect your intended use of the property.
WORKING WITH A REAL ESTATE AGENT
2.1 Hire a Licensed Real Estate Agent
Navigating the Panama real estate market can be challenging. Engage a licensed real estate agent who is knowledgeable about the local market. The agent can help you find suitable properties, negotiate prices, and navigate the buying process with ease.
We partner with trusted real estate agents and will be very happy to recommend some of them.
CONTRACTS AND AGREEMENTS
3.1 Offer to Purchase
When you find a property, it’s time to make an Offer to Purchase. In Panama, in some cases, a reservation agreement is signed to secure the property. This document outlines the purchase price, deposit, and conditions. Keep in mind that this is usually non-binding until both parties agree and sign it.
3.2 Promissory Purchase and Sale Agreement
Once the offer is accepted, a formal Purchase and Sale Agreement is drafted and signed. This contract specifies the terms and conditions of the sale, including the payment schedule, closing date, and responsibilities of both parties. Once signed the document is notarized before a Panama notary public (if the signatories are in Panama).
FINANCING
4.1 Financing Options
If you require financing for your property purchase, investigate the available options. Panamanian banks and international lenders may offer financing for real estate. It’s crucial to explore these options to determine the most suitable financing solution for your needs.
CLOSING THE DEAL
5.1 Secure your money
In Panama, it’s not common to use an escrow agent to hold funds during the closing process. Although there are professionals and trustee companies that will assist in this matter. Also, you can ask your bank to issue an irrevocable payment letter so when the property is in your name the bank will pay the seller. This plays a critical role in ensuring that all conditions of the sale are met before releasing the funds, providing security to both parties.
Securing the transaction through those options will bring additional costs and some investors will wire electronically the funds directly to the seller.
5.2 Title Transfer
The final step in the property purchase process is the transfer of the property’s title deed from the seller to the buyer. This transaction takes place at any Notary Public Office and requires the presence of both parties or their authorized representatives. Once the title deed is signed by all the parties the deed is registered at the Public Registry of Panama.
COSTS AND TAXES
6.1 Costs
Be aware of additional costs associated with your property purchase, such as transfer taxes, notary fees, and registration fees. These expenses can vary based on the property’s value, so it’s essential to budget accordingly.
6.2 Taxes
In the transaction, the transfer taxes and capital gain taxes are paid by the seller. Also the property taxes need to by paid accordingly before closure.
Please feel free to learn more about how to buy property in Panama we share some tips and answer some of the top questions in these videos – go ahead and watch the videos today.
CONCLUSION
Buying real estate in Panama can be a rewarding investment, but it’s essential to navigate the legal complexities wisely. Always consult with a qualified attorney to ensure your interests are protected throughout the process. If you have any questions or need legal assistance, please don’t hesitate to contact our office.
Disclaimer: This blog post is meant for informational purposes only and should not be considered legal or tax advice. For personalized advice tailored to your situation, it’s recommended to consult with us.
