Legal basis for investing and owning

The law welcomes foreign capital and imposes only minor restrictions on investments: Non-Panamanians are not able to purchase Panama real estate that lies within 6 miles (10 km.) of international borders and there are some restrictions on waterfront property and certain islands unless these are located within one of Panama’s Tourism Zones.  The Investment Stability Law, passed in 1998, protects foreign investors from any change in tax, customs, municipal and labor rules for a period of 10 years after an investment is registered. Residents and non-residents may hold foreign exchange accounts. There are no restrictions or controls on payments, transactions, transfers or repatriation of profits.

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Types of property ownership

There are two main ways in which real estate can be held in Panama: (1) Titled property (fee simple) and (2) Purchase rights of possession (derecho posesorio).  Rights of possession are not the same as fee simple title.  It may be possible to 'perfect' a right of possession and convert this to titled property but this is not always the case.  In some areas of Panama, property is owned by the Government, defined as 'non-adjudicable' and for the most part this form of Panama real estate cannot be purchased privately.

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Purchasing and registering property

Panama real estate transactions require the services of an attorney and notary. (In Panama attorneys can also be notaries.) Once the price and terms have been negotiated a sales contract is signed and generally a good faith deposit is made by the buyer.  This is a conditional contract allowing time for due diligence before a full commitment to buy is established. 

For the legal due diligence process the buyer’s attorney reviews the property documents, obtains a certificate of good standing from the Catastral office and a non-encumbrance certificate from the Public Registry.  If a technical due diligence is required, this runs as a parallel process. 

When all conditions for the sale have been met, a sale agreement is signed and notarized, a public deed is drawn up, and funds transferred.  The attorney co-ordinates the payment of transfer taxes and files the deed at the Public Registry under the name of the buyer.  A copy of the registered deed is also filed at the Catastral office.

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Closing costs and property taxes

The costs assocated with Panama real estate purchases include transfer tax, registration fee, legal fees, realtor commissions and annual property taxes.

• Transfer tax - 2% based ether on the registered value or on the official property value, whichever is higher.


• Registration (or recording) fee - US $200-40.


• Legal fees (title search, escrow closing and registration) - Up to 3% of purchase price.


• Realtors commission - Between 3.5-7% of purchase price.


• Property taxes - levied on properties that have a registered value of US$30,000 or more at a rate of 1.75% - 2.10%.  Tax exemptions can exist on building improvements and new homes for up to 20 years, although these incentives are bring gradually rolled back. Tourism investments have 20-year tax and import duty exemptions.

The Doing business project by The World Bank Group calculated the official costs for registering Panama real estate in 2008 as 2.4% of purchase price, based on a business to business purchase.  The time taken to register a property was found to be 44 days.

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Title insurance

International Title Insurance, designed to provide title coverages for citizens of one country purchasing or lending on real estate in another country, is available in Panama.  The policy offered by the main firms afford essentially the same protection as a standard policy in the United States.   There are three main companies offering title insurance for Panama real estate: Stuart (NYSE-STC), First American Title Insurance Company (NYSE-FAF) and LandAmerica (NYSE-LFG).

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