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Acquisition of Real Estate in Panama

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What must be done and considered when buying Real Estate in Panama If you want to invest in Immovable Assets we detail the steps to be followed in order to make a good investment.

• Verify the Ownership: The process is simple and it is necessary to make a small payment when requesting this report. It is important to provide the number of the Plot along with any information that you have regarding the property in which you are interested. This Report of Ownership will show any encumbrances (mortgages or embargoes) over the property and clearly shows the relation of the owners. It is also useful to confirm the registered surface of the property and offers evidence that the person who is selling the property is the real owner. Please ask for our services of Report of Ownership.

• Request measurements or blueprints of segregation of the Property: This is relevant in rural areas and also if the inspection of the property proves that there are problems with the boundaries (i.e. fences, overlapping, and rights of way). It is also appropriate if you are taking into account a minimum size of lots for future segregations or for other reasons.

• Verify the references of the surveyor of the property: Not all surveyors are 100% qualified. Please ask us for references of the surveyors.

• Get feedback from the neighbors: The best source of references is asking the neighbors how they feel, in order to assess their appreciation and experience with the project (whether positive or negative).

• Ask for the construction Permit and relation of the certificate of occupancy: This becomes especially important for older houses with additions or modifications. Consult the office of the local construction inspector or call us.

• Valuation of the property: We recommend you to request a valuation whenever it is feasible.

• Request blueprints and specifications: If you are acquiring a house, apartment or office already constructed, ask for the blueprints of all improvements to the property and a blueprint of the original building. Get and keep copies.

• Request the Articles of Association of Joint Owners of the Building: Agreements, conditions and restrictions (“CC&Rs” – acronym in Spanish), articles, including articles of incorporation of the association, summary of the cash reserves and financial statements.

• Make an inspection of the house and request reports of pest control: This is highly recommended for all properties. It may reveal a defective construction event in new houses.

• Verify the reputation of the constructor, seller and real estate professionals involved: Talk to other persons (e.g. real estate agents, attorneys, local town/city council). Ask how long they have been in the community and how they manage problems that may arise.

• Familiarize yourself with the mortgage process: Provide your credit and tax reports of the last two years and two letters of banking references. We have very good relations with banks that give mortgages to foreign buyers and we will gladly assist you.

• Seek real estate agents: Seek a real estate agent who is trustworthy. A good real estate Agent may help you through all the steps involved in buying a property (land, condominium, house, office, etc.), but he is not entitled to offer legal advice. You must insist that the purchase and sale is to be closed only when you are completely satisfied and all questions have been answered. You should also remember that the real estate agent only receives his/her payment when the sale is closed. Ask also the real estate agent to write down all explanations and promises.

• Drafting the Buy-Sell Agreement: This is a preliminary agreement between the buyer and seller that establishes some commitments and conditions that must be complied with in order to purchase the property. This agreement is a good instrument to enumerate the list of “contingencies” under which you may be released from the obligation of purchasing. The writing and verification of this agreement is very important and our firm may assist you in reviewing it.

• Closure: Generally, for a closure to take place (when the client is the buyer), the following steps are necessary:

  • » Seeking a complete ownership
  • » Investigation in the General Directorate of Revenues
  • » Drafting the Buy-Sell Agreement (jointly with the client)
  • » Writing the Public Document for the purchase, with assistance in the closure
  • » Updating the registrations in the Department of tax collection after the purchase. In addition to the above, when we represent the seller, or when the buyer has agreed with the seller that our firm is to be in charge of all details of the closure, the following steps are necessary:
  • » Investigation in the General Directorate of Revenues (to find out about any unpaid taxes on the property).
  • » When we represent the purchaser: To seek out the ownership of the Property.
  • » In some cases, the seller was never registered in the General Directorate of Revenues, in such case we must update the registrations in such Institution before being able to proceed to pay the taxes involved in the closure.
  • » If the above is true, after registering the seller in the General Directorate of Revenues we then have to register in that Directorate the document that shows that the seller purchased that property.
  • » Paying any unpaid taxes according to the investigation in point 1. Obtaining certifications of validity (National Institute of Aqueducts and Sewage Systems (IDAAN – acronym in Spanish), taxes)
  • » Preparing the forms, calculating and organizing the payment of the tax for transfer of immovable assets (2%) and tax over capital gains (10%) as it may be applicable.
  • » Writing down the Buy-Sell Contract and the final Public Document on the transfer of the title of ownership.
  • » When we represent the purchaser: updating the registrations in the General Directorate of Revenues after the sale has ended.