Below is an outline on the process of purchasing real estate in Panama.
Purchasing property in Panama is usually done in two different stages.
Stage 1: The Promise of Sale and Purchase
This contract is performed preliminary to the sale and purchase contract. In this particular contract the seller agrees to sell to the buyer at an established price. It is common that the buyer consigns a down payment directly to the seller to ratify his commitment to the sale. This agreement will establish the closing timeframe and also establish penalties, among other issues such as what is included in the sale, how the property is to convey (the sale of a corporation that may own the property or the sale of the property itself), how the final payment will be made, etc.
Stage 2: The Final Contract
This contract is done in the form of a public deed and has to be registered at the Public Registry of Panama. Prices for registration will depend on the value of the property or on the price of the sale, but generally range from $1,000 – $3,000 depending on the price of the real estate. When the contract is registered, the change in the ownership of the property is done.
As of the time of the registration, you become the owner. The most common way to pay the remainder of the purchase price to the seller is by an irrevocable letter of payment issued by a bank. The bank holding the funds issues the irrevocable letter of payment to the seller and pays it as soon as it is presented with the registered public deed transferring title to the buyer. It is no required to have a local account if you are planning on purchasing real estate in Panama, as most attorneys provide this service.
Please be advised that the law establishes that the seller pays the transfer tax and the buyer pays for the legal and registration costs.