Prepare a Promise to Purchase Agreement: This agreement is to secure the property, through a down payment of a portion of the total purchase price, in order to have enough time to properly execute the due diligence regarding the property, obtain financing and arrange details to complete the transaction.
Prepare a Purchase and Sale Agreement: The seller shall process the Property Transfer Tax and the Capital Gaining Tax, and obtain a good standing property certificate, as well as a good standing water and sewage certificate. The buyer will pay for notaries and registration expenses of this agreement.
Ownership of the real estate property: once the public deed containing such an annotation is duly registered, title transfer has been completed. Generally, payment is not delivered to owner until the proper transfer of ownership is undertaken and duly recorded at the Public Registry Office.
These types of investments are the ones that benefit the most from the purchase of title insurance. Title insurance has been well received in Panama since it provides assurance of the investment on both the land and the improvements to be made on the same.
Rights of Possession Properties
Not all properties in the Republic of Panama are of private domain and are subject to registry in the Public Registry Office. Many beach front properties, islands and real estate located within special tourism zones are owned and managed by the Government and only “possession rights” are granted for a determined period of time over these lands.
Possession rights are basically land use acknowledgments, which are essentially recognized based on the occupation and use of a certain area of land, whereby the owner is the Government.
Persons interested in investing in projects located within these restricted areas should be very careful to ensure that the award of the “possession rights” or “limited ownership” be duly granted by the National Agrarian Reform or the Cadastral Office.
It is important to verify the following, before investing in this type of real estate
- The award of the piece of land is issued by Agrarian Reform of the Ministry of Agriculture.
- The award contains a complete description, including area, limits, boundaries, encumbrances, and other important details of the land.
- A complete blueprint should be drawn and approved.
- The activity to be undertaken by the purchaser is allowed, that is, that the construction or building to be made is acceptable to the national or local municipal government.
- The award will be extended for a period of time suitable for the purchaser and the award does not apply to properties restricted by the Agrarian Code (Art. 27).
- The length of the transaction process for the possession rights transfer will vary and can take up to 2 years, depending on many factors.
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