The real estate market in Panama is dynamic, with properties ranging from beachfront condos to urban apartments and rural land. Whether you’re a first-time buyer or an experienced investor, understanding the process of buying and selling real estate in Panama is crucial.
1. Initial Research and Due Diligence
Before diving into a transaction, thorough research is essential. This includes understanding the market trends, property values, and potential growth areas. It’s also important to verify the property’s legal status, including its title and any liens or encumbrances. Engaging a reputable lawyer at this stage can help ensure that the property is free of legal issues.
2. Negotiating the Terms
Once you’ve identified a property of interest, the next step is negotiating the terms of the sale. This includes agreeing on the purchase price, payment terms, and any conditions of the sale. In Panama, it’s common for the buyer to make a formal offer through a “Promissory Purchase Agreement”, which outlines the main terms and conditions of the sale.
3. Securing Financing
If financing is needed, this is the time to secure it. Panama offers various mortgage options for both residents and non-residents, though the requirements can vary. It’s important to ensure that the financing is in place before proceeding with the transaction.
4. The Promissory Purchase Agreement
Once the terms are agreed upon, a formal Promissory Purchase Agreement is drafted. This contract outlines all the details of the transaction, including the responsibilities of both parties, the payment schedule, and the penalties for breach of contract. Both parties sign this document, and it is usually followed by the payment of a deposit.
5. Title Transfer and Final Payment
The final step in the process is the transfer of the property’s title. The process will, be completed signing Deed of Sale in a Notary. In Panama the law establishes that real estate transfer transactions must be made in person in front of a notary public. If any of the parties cannot be present, they may opt for the registration of a power of attorney. Once it is signed, the Deed must be registered, in the Panama Public Registry, where the sale is officially recorded. The buyer must ensure that all taxes and fees related to the transaction are paid. Once the title is transferred, the final payment is made, and the buyer takes possession of the property.
6. Closing Costs
It’s important to be aware of the closing costs involved in a real estate transaction in Panama. These can include real esate broker, legal fees, notary fees, registration fees, real estate taxes, and transfer taxes, which will be 2% as transfer taxes and 3% as Capital Gains Tax. Some costs are the obligation of the buyer and some are the obligation of the seller.
Conclusion
Buying and selling real estate in Panama can be a rewarding investment, but it’s important to navigate the process carefully. By conducting thorough due diligence, securing proper financing, and understanding the legal requirements, both buyers and sellers can ensure a smooth transaction. Engaging with a knowledgeable real estate lawyer can provide peace of mind and protect your interests throughout the process.
Need assistance? Contact roxana@roxanarangel.com
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