Right of ownership by non Panamanians (Foreign Ownership)
Foreign investments in all real estate areas are welcome and present in Panama. The procedures to adjust to the legal requirements in this area are simple and easy to implement. In the particular case of retirees (pensioners) who rent, Panamanian legislation provides for tax exemptions when taking cars as well as household items into the country and discounts on the cost of bureaucratic processing regarding moving and getting settled in Panamanian territory. Furthermore, it grants many other prerogatives and privileges to said retired persons (pensioners), as well as ample financial opportunities in Panama’s modern banking center.
Land Registration System
All transactions pertaining to the sale and purchase of real estate should be registered with the Public Registry General Office (“Dirección General de Registro Público”) of the Republic of Panama. A Notary Public executes this registration, and that officer is responsible for verifying all the necessary steps and data. This serves as a guaranty to all investors.
Requirements to practice as a Real Estate Agent (Broker)
It is necessary to have a professional capability license, issued by the Real Estate Technical Board (“Junta Técnica de Bienes Raíces”) of the Republic of Panama. Panamanian citizens and foreign nationals who have resided in Panama for over 5 years are eligible to request this license, as long as they pass the professional examinations required by the technical board in a satisfactory manner and further do not have any problems complying with the other mandatory requirements.
Other Industry Professionals
In the case of condominiums and/or communities regulated under the Horizontal Property (cooperative apartment house) system, they are regulated by Law 13 dated April 28th, 1993, and by Executive Decree No. 39 dated November 7th, 2001. Many members of ACOBIR are dedicated to the administration of horizontal properties (cooperative apartment houses).
Practitioner Dispute Resolution Systems
In accordance with Executive Order (Decree Law) No. 6 dated July 8th, 1999, the Real Estate Technical Board of the Republic of Panama is empowered to listen to the arguments presented regarding any conflict that arises between contracting parties in a real estate sale (or purchase) transaction, and to impose the corresponding sanctions, should that be necessary. The Panamanian Association of Real Estate Agents (Brokers) and Promoters (“Asociación Panameña de Corredores y Promotores de Bienes Raíces / ACOBIR”) has a strict code of ethics for its members. The ethics committee may act as a conflict mediator, applying the corrective measures it may deem appropriate. This is an additional Guaranty to those who do business through members belonging to ACOBIR.
Real estate agents (brokers) in Panama are trained to offer other services that go beyond the conventional real estate market, such as:
- Property appraisals.
- Periodic reports on concrete marketing actions.
- Counseling on legal and financial matters.
- General counseling services.
- Negotiation and closing of commercial transactions.
- Preparation and processing of the corresponding legal documents.
- Procedures after the closing of the transaction, such as: collections, payments, registrations with the Public Registry, etc.
The business agreements between two agents (brokers) based on a property for sale or for rent may be established after prior consultation with the owner. Nevertheless, any purchase offer on a property represented by another agent (broker) has to be channeled through the latter and not directly to the property owner.
Relationship of Buyer/Seller to Practitioner
The Promissory Letter of Purchase (“Carta de Promesa de Compra Venta”) constitutes the basic document from which the parameters for the commercial transaction between the buyer and the seller, as well as between the seller and the real estate agent (broker) are established. This document reflects the obligation contracted by the seller in the event a sale is carried out without the direct participation of the real estate agent (broker). In turn, the latter shall not present any formal proposal to purchase a property, nor shall he/she engage in negotiations regarding the price of the property, without having been duly authorized to do so by the potential buyer. Likewise, the real estate agent (broker) is not authorized to formulate sale proposals regarding a property without the prior authorization of the property owner. Should there be irreconcilable differences between an ACOBIR member and his/her client, the trade union recommends the use of the arbitration mechanism put in place to solve them.
It is customary in the Panamanian market to set the commission level at 5%, to be credited to the real estate agent (broker) for the sale of a property. Nevertheless, setting the amount of the commission is free for negotiation between the parties. Except in the case of an agreement to the contrary, said commission shall be discounted from the payment received by the seller of the property.