The process of purchasing real property in Panama involves selecting the property, conducting due diligence (including verification of title, liens and encumbrances, measurements, and boundaries), executing a Promise to Purchase Agreement with the owner (typically accompanied by an initial deposit of 10%, executing the Public Deed before a Notary Public, and recording the property with the Public Registry in order to formalize the transfer of ownership, a process that may take between 30 and 60 days.
Detailed steps of the process:
- Search of property and reservation
- Due Diligence
- Preliminary Agreement
- Escrow Agreement (optional)
- Formalization of transfer of property
- Registration
- Update of Property at the Land Authority (ANATI)
- Property tax payment (DGI)
SEARCH OF PROPERTY AND RESERVATION
- Identify the desired property and negotiate the price and terms with the seller.
- Enter into a reservation or holding agreement, supported by a deposit, to secure the
property. - Engage legal counsel with K&B for assistance with real estate purchase
DUE DILIGENCE
- K&B will verify the legal status of the title, including the existence of any liens or
encumbrances, as well as the property’s measurements, boundaries, and related
matters according to Public Registry. - The buyer conducts inspections of the property, and it is recommended to obtain a
topographic survey to confirm on site that the land measurements match the
information recorded in the Public Registry.
PRELIMINARY AGREEMENT
- K&B will draft or review a Promise to Purchase Agreement setting forth the purchase price, payment
terms, and closing date. - The best structure for acquiring the property will be evaluated and defined (as an individual, through
a Panamanian Corporation or Private Interest Foundation). - Sign of the Promise to Purchase Agreement
- Buyer will make an initial deposit (typically 10%).
ESCROW AGREEMENT (OPTIONAL)
- Recommended if the buyer does not maintain a bank account in Panama.
- K&B´s fiduciary entity acts as an intermediary to receive and hold the purchase
funds in escrow. - K&B´s fiduciary entity issues a letter undertaking to release the funds to the seller
once the transfer deed has been duly recorded with the Public Registry.
FORMALIZATION OF THE TRANSFER
- The seller pays the applicable transfer taxes and provides good standing certificates
for the property to K&B for preparation of the Public Deed. - The parties sign the Public Deed before a Notary Public.
- Payment of the remaining balance of the purchase price to the seller.
REGISTRATION
- K&B will register the deed with the Public Registry of Panama to formally and legally
transfer ownership to the buyer. - Release of the escrowed funds to the seller by K&B´s fiduciary entity (if an Escrow
Agreement is in place).
UPDATE OF PROPERTY
- K&B will submit a copy of the deed duly recorded with the Public Registry of Panama
for the update of ownership and cadastral value before the Land Authority (ANATI). - The purchase price becomes the new cadastral value of the property, which serves as
the basis for calculating the property tax.
PROPERTY TAX PAYMENT
- The buyer must ensure compliance with the payment of real property tax before the
Tax Authority (DGI), which is assessed quarterly, although annual payment is also
available. - K&B will advise you on the available property tax benefits for which you may qualify
if your new property will be used as your primary residence in Panama.
LEGAL ASSISTANCE FEE:
- K&B´s professional fees for legal assistance in the purchase of real estate are calculated at a rate of 1% of the purchase price.
- We can issue you a quote that includes notary and registration fees in the Public Registry, once buyer confirm us the purchase price.
ESCROW AGENT FEE:
- Professional fees of the Escrow Agent (K&B Trust Services, Corp.) are calculated at a rate of 1% of the amount to be held in custody, with a minimum of US$1,000.00.