You arrive in Panama looking for a safe place to escape from harsh winters and noisy cities. A few weeks later you find paradise: a gentle mountain slope in Boquete with a view of the Pacific Ocean. Or maybe a beach front lot in an archipelago, for instance, Bocas Del Toro: clear blue waters and silent nights. Good for you. But suddenly a question arises in your mind: “How can I buy my well deserved piece of paradise without legal risks?” Let me give you some pieces of advice. But before we get there, let me say that the Panamanian Public Registry accounts for one of the world´s largest open registries of merchant vessels and offshore companies. Both the maritime industry and the international business community together with the Panamanian authorities have established one of the most efficient and secure Public Registries of the Americas. The real estate investor benefits from these developments that create a safe environment in which to do business. Now, back to the real estate legal advice: 1- Get a title report. Ask for the number of the real estate property to the owner or broker, then go to the Public Registry (www.registro-publico.gob.pa) and apply for an abstract of title (historia de la finca, in Spanish), which is a written report that shows the history of subsequent changes of ownership on a piece of real estate as well as the area, borders, and any claim against the property such as liens, mortgages, seizures, court rulings and the like. 2-Pay for what you get. Sometimes, due to fraudulent practices or the lack of cadastre expertise, the area in the plans –hence in the Public Registry- is more than the de facto area you are receiving and paying for, so it is highly advisable to hire an expert in order to measure the property on site and then compare the figures with the ones (that you) found in the Public Registry and/or recent official plans. 3- No conveyance, no payment. Once the bill of sale is duly signed before the Public Notary and registered with the Public Registry, the buyer becomes the land owner, hence, any payment can be made. If the seller requires the buyer to secure the amount due, the latter might deposit the total amount in a bank, which in turn issues a letter of payment, whereby the bank guarantees the payment to the seller against proof of the transfer of the title. Bank Letters to secure payments are common place in the Panamanian legal trade. If the seller asks for a partial payment in advance in order to close the bill of sale, the buyer might agree with a partial payment following the rest of the advice herein mentioned, in order to reduce legal risks. 4- Watch for easements. An easement is the right, attached to a real estate, to use the real property of another person for a specific benefit. For example, entry and exit easement in favour of a land locked lot, use of spring water, not to build where the view is obstructed, etc. Title reports and title abstracts will usually describe all existing easements upon a parcel of real property, but, in some cases, depending on the structure, location and nature of the land, some neighbours or others could have a right -not to be found in the Public Registry- to claim for an easement, and so it might be useful to check all possible easements in the civil code to see if one could apply to the particular piece of land that the buyer is trying to acquire. 5- Latent Defects. Be sure that the bill of sale includes a “latent defect clause” by which the buyer is entitled to rescind the contract and claim damages if a latent defect – i.e. a hidden flaw or a legal weakness of the title - entails significant loss of property to the buyer.
6- Real Property Taxes. Although most land in Panama is tax exempted, Real Estate Taxes are charged on a quarterly basis to some real properties by the Dirección General de Ingresos, the Panamanian IRS. The current owner is liable for any unpaid real property taxes and, to that end, the real property can be auctioned and foreclose by the government. As a consequence, check that the quarterly payments are within your budget limits and be sure that the land is free from all real estate tax encumbrances. 7- Double titles. It is not frequent I must say, but some times the buyer might encounter two titles, held by different persons, that overlap, totally or partially, upon the same piece of land. It follows, that the buyer could acquire from one owner and the other owner will contend to have a better right. To reduce this risk, ask the neighbours if they have any contentions regarding the official boundaries of the lot. You could search with the authorities in charge of issuing real estate titles –Agrarian Reform Directorate, Municipality and National Cadastre- , in order to determine if someone, other than the seller, has filed and completed a title petition, in order to acquire a title over the land in question. 8- Possession is not full ownership or a registered property title. Possession, in secular terms, is the act of holding or having under control a piece of land together with the self conviction of being the owner. Possession, in some cases, should it be peaceable, notorious and continuous, might be enough to obtain a registered property title from the competent land authority or to claim property from a private owner. Real property, on the other hand, is configured by a title duly registered with the competent authority, i.e., the Public Registry. One should carefully consider buying possession rights and payment must be made only after the registration of the title in favour of the buyer. 9- Protect your Assets. Once you have found your own private haven, protect it from unknown future creditors. One of the best legal entities to protect and transfer assets is the Panamanian Private Interest Foundation. The assets belonging to these legal entities, in principle, cannot be seized. In addition, it is easy and cost effective to transfer assets to the next generation when held by a Private Interest Foundation. The buyer can also mortgage the real estate to a local bank, since this encumbrance in most cases deflects other creditors. 10- Insure your title from eviction risks. An insurance company in Panama, Aseguradora Mundial, S.A., has issued collaterals to the buyers of villas in a beach front development in Playa Blanca, in order to protect buyers from certain risks concerning real property titles. A couple of US title insurers have set up subsidiaries in Costa Rica to service clients in Central America and Panama.

Now you are ready to enjoy your own private tropical retreat. As a matter of fact, I am enjoying mine here in the Chiriquí Highlands, while I write this article.