Saturday, February 17, 2007

How to buy a Property in Panama

Step 1. Promise to Purchase Contract: A small down payment is made at the signing of the promise to purchase contract, usually about 10%. The down payment secures the property and establishes time for the title search and to coordinate payment arrangements for the closing. Registering this contract at the Public Registry ensures the property cannot be sold to another party during the escrow period. It should be stressed, however, that the down payment to the seller is a very important step in the process of securing real estate in Panama . Without having received any down payment, the seller has no legal obligation to hold a property before the actual close is made, and at any point can either change his mind, or opt for a better deal that may happen along, without any consequence.

Step 2. Title Search: To ensure that the property in question has clear title, free of any liens or liabilities we encourage a proper title search. For a price of 1.5-3% of the worth of the property it includes: a) verification that the seller in fact has title to the property and it is free and clear of encumbrances, liens, or other issues that could affect the free disposition or transfer of the title; b) a review of the official survey map, and a professional surveyor to physically verify the map points on the property (to avoid future boundary conflicts); c) verification of utility debts (water and sewage d) verification of payment of property taxes and/or of the tax exemption.

Step 3. Buy-Sell Contract: This contract is registered at the Public Registry and the final balance is paid to the seller, or an escrow agent. Payment is made when the title is transferred to the buyers' name. Payment can be issued by a bank, contingent on receiving from the seller proper title to the property. The buyer can open a bank account (or get a mortgage) and then formally request that the bank issue payment as soon as it is presented with the registered public deed transferring title to the buyer. Real estate agents normally get paid only when the sale closes.

Step 4. Title Transfer: The buyer officially owns the property when the title is transferred to the buyers' name. The transfer occurs when the buy-sell contract is signed by each party and registered at the Public Registry. If the title is in the name of a corporation, there is no transfer of title, only a transfer of shares of the corporation. The buyer can keep the same officers in the corporation or appoint new members. Buyers of corporate titled properties through the purchase of the corporation itself, should ensure the annual corporation tax (Tasa Unica) is up to date. A change of corporate officers cannot be officially recorded at the Public Registry if the Tasa Unica is in arrears.


Patrick said...

Thanks so much for the information. Great real estate stuff.

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pjeary said...

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