How To Protect Yourself When Buying Real Property in Panama

Print Friendly

Panama Real Estate Purchase Protection

Buying real estate in any foreign country can be stressful especially when you do not speak the native language.

It is highly recommended that you hire a good Panama real estate lawyer and purchase title insurance to protect yourself from getting scammed or buying
real property with title defects or other problems.

To understand the difficulty involved with assuring no problems exist in a Panama real estate purchase requires taking 9 steps.

1. Obtaining a Title Report: The real property owner or a real estate agent can provide you with the property’s title number.  The Panama Public Registry website (www.registro-publico.gob.pa) contains Abstracts of Title (“Historias de la Fincas”) which are written reports showing the history of ownership changes for specific real estate parcels (“Fincas”) including the borders, area, encumbrances claims which affect the property like mortgages, liens, court orders, attachments, etc.  All of these will be in Spanish.

2. Get a Survey: Many titled Panama real estate never had precise surveys conducted especially in the 1940’s through the 1960’s.  That means the boundaries recorded in the Public Registry may be in error.  When purchasing raw land in Panama it is safer to spend the money hiring a surveyor to make sure the area and boundaries are correct.  Given that the land’s area may change it is recommended to put the price per square meter in the purchase contract rather than just the full sales price so the price can be changed to reflect the actual square meters being sold.  Make sure there is sufficient time to do a survey in the due diligence period in the purchase agreement.

3. Title before Full Payment: Some sellers may insist on being paid in full prior to filing the title deed with the Public Registry.  This is a bad idea because once the seller is paid in full his motivation to record the deed becomes of minor importance.  When the seller insists on being paid first one way to resolve this conflict is through a Panama bank’s Promise to Pay Letter which guarantees the seller will be paid when he transfers title because the bank is holding the buyer’s funds to complete the sale.  Another way to accomplish this is to set up an Escrow account with a reputable escrow company which will be required to pay the seller once the tile is transferred to the buyer.  Only when title is transferred which is free and clear of all encumbrances should the seller be paid.

4. Latent Hidden Defects: The Purchase Contract should contain a clause regarding “latent defects” allowing the buyer to cancel the contract if a hidden flaw or legal problem with the title is discovered.

5. Easements: An easement is attached to a real property giving a 3rd party the right to use the land for a specific benefit.  Such benefits include the right of a neighbor to enter and exit the land to access real property which is land locked.  Other benefits could include usage of a water spring or non-obstruction of a neighbor’s view.  Utility companies and government agencies could have easements, as well.  Most easements can be found in the title report or title abstract.  There are cases where easements exist by law and are not formally filed with the Public Registry.  Reading the Panama Civil Code of laws may be required to make sure one does not apply to the property.

6. Double Titles: Sometimes a property can have two titles held by two people overlapping partially or totally on the same land.  The surveyor should contact the
neighbors to ensure neither have any claims or disputes regarding the boundaries.  Contact the local authorities to see if any issues regarding claims to real estate titles exist such as the Municipality, Agrarian Reform Directorate, and the Cadastre.  Someone other than the seller may have filed a title petition with one of these government agencies.

7. Real Property Taxes: Real Property taxes are collected by the Panama Revenue agency called the Dirección General de Ingresos.  If any back taxes are owed it will be the current owner who must pay them.  A buyer must investigate that all property taxes are paid up before transferring the title.

8. Protecting Your Assets: Protect your property from future creditors.  The best method would be to hold title in a Panama corporation whose shares are held by a Panama Private Interest Foundation.  This ensures complete anonymity of ownership and provides double insulation from personal future creditors looking for assets to be seized as assets owned by these legal entities cannot be attached or seized.  This also provides a cost effective method for Estate Planning and Probate avoidance so your heirs can receive your properties quickly and cheaply.

9. Title Insurance: If the first 8 steps seem burdensome the best way to protect your purchase is to obtain title insurance which protects you from defects in the title, liens, encumbrances, double title, and boundary problems.  Some U.S. title insurance companies operate in Panama offering the same types of title protection as they do in the USA.

Contact Us for all of your Panama Real Estate and Panama Relocation needs.

Corporation Name Search


  • Follow Us