(International Living) Purchasing property in Panama is very similar to the process in the United States, but there are some important differences.
Step 1: Confirm the Title
The first thing you need to do is confirm the legal owner of the property. After you’ve found the property you want to buy, ask the owner for two important documents: the public deed containing the title ( escritura) and the ownership and encumbrances certificate ( certificado de registro publico) from the public registry. You should then give these to your lawyer for an updated search. Even if these documents are not available, ask the seller for a property ( finca) number. With this information, your lawyer will be able to search for the title. The escritura states the owner and carries a description of the property. The c ertificado de registro publico document indicates whether there are any liens against the property or other legal complications. Make sure all the documents are originals and bear the signatures, as well as official stamps, of the registration office. An updated search is advisable in any case. The seller must also provide copies of the survey plans of the property and any buildings thereon, describing the size and location of the property.
Step 2: Promise to Buy
Enter into a promise to buy-sell agreement, whereby you give the seller a down payment and set a date for the transfer of title. Normally, there is a penalty if either party backs out. During the period set out in the agreement, the seller pays the transfer tax and obtains the clearance certificates necessary to transfer title, and the buyer arranges for payment. At the agreed-upon time, both parties sign the final contract.
Step 3: Transfer the Title
Your lawyer will draft the final purchase and sale contract. He will gather all documents and make an additional search to ensure that no liens or mortgages have been filed in the meantime. The lawyer will then put the contract into final form and draw it up as a public deed, at which time all parties will go to a notary public to sign the deed. A notary public in Panama is not like the notaries you may have used in America. Panama’s notaries are high-ranking officials and are granted far more responsibility than their American counterparts. They represent neither the buyer nor the seller.
Step 4: Transfer the Funds
The safest thing is to pay the balance of the purchase price through an irrevocable letter of payment from a local bank in Panama. Your lawyer should be able to assist you in obtaining such a document in which the bank irrevocably promises the seller to pay the balance of the sale price upon the transfer of the title to the buyer. The other, riskier way to pay the balance of the purchase price is to give the seller a bank draft drawn on a bank in Panama upon the signing of the public deed at the notary public. This draft can be obtained from one of Panama’s international banks that are used to dealing with English-speaking foreigners. The risk is making the payment before you obtain the registered deed—usually the next step in the process.
Step 5: Record Your Purchase at the Public Registry
It will not be final until you do so. This process normally takes a few weeks, but can be done in about 10 days by having your attorney file the documents directly at the main office of the public registry in Panama City. If you are in a great hurry, the public registry charges an additional fee of $250 for next-day registrations (provided all documents are in order). Once the registration process is complete, your lawyer will give you the registered deed and make sure that a copy is filed with the tax records department ( catastro), at which time the property will be yours.