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Below is are extensive answers to common questions
regarding investing and retiring in Panama. The information
provided is graciously done so by Paradise4Boomers.com,
a comprehensive online resource for navigating the legal and
economic advantages of the hottest tropical paradise retirement
spots in the Caribbean and Latin America.
Your future depends on the decisions you make today. Make the
right decision: contact Paradise4Boomers.com today.
Sit back, relax and leave us your worries; we will take care
of the rest.
SECTION 1:
BUYING
PROPERTY IN PANAMA
Click on a question below to jump to the answer:
Q: Is it safe for foreigners to buy property in Panama?
Q: Is it legal for foreigners to buy property in
Panama?
Q: What are the procedures to buy real estate in
Panama?
Q: Is it safe to buy a Panamanian corporation's shares
which hold title to property in Panama?
Q: Who normally pays for the property title transfer
tax in Panama, the buyer or the seller?
Q: Who normally pays for the closing costs on Panama
real estate transactions, the buyer or the seller?
Q: What are the average closing costs for Panama
property transactions?
Q: How long does it normally take to register a property
title transfer in the Public Registry of Panama?
Q: How long does it normally take, from start to
finish, purchasing property in Panama?
Q: What are the normal legal fees for property transactions?
Q: Are escrow companies normally used in Panama for
property transactions?
Q: Do purchase contracts for Panama real estate transactions
need to be in Spanish, in order for them to be legally enforceable
in Panama?
Q: What is normally accepted as a down payment for
purchasing property in Panama?
Q: If I am a US citizen, can I use my IRA or 401K
money to buy property in Panama?
Q: Do sellers offer owner-financing or leases with
purchase options in Panama?
Q: Is it legal to block public access to the beach
if I own beach front property?
Q: What is the liability for real estate investors
that "flip" (buy & immediately sell) properties?
Q: Is it safe for foreigners to
buy property in Panama?
A:
Absolutely. Buying property in Panama is very safe. There are
over a dozen laws in Panama established specifically for protecting
foreign investments, not to mention that private property in
Panama is protected by the constitution of the Republic of
Panama. Thousands of foreigners own property in Panama. At
Paradise4boomers.com, we process Panama real estate transactions
for foreigners every day without a problem. Contact us today
and we will ensure that you get the right property you are
looking for.
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Q: Is it legal for foreigners to buy property in Panama?
A:
Yes, it is legal for foreigners to own titled property in Panama
in their personal names, although we normally recommend that
clients hold all property in the name of a Panamanian corporation
for asset protection and income tax reasons. Panama "possession
rights" (as opposed to titled) property, however, should always
be held in the name of a Panamanian corporation, where the
foreign person is the shareholder (or a Panama private interest
foundation or trust can be appointed as the shareholder in
place of the foreign person) of the corporation. At Paradise4boomers.com,
we’re here to assist you.
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Q: What are the procedures to buy
real estate in Panama?
A: First, Paradise4boomers.com will
assist you in finding a Panama property you like and getting
the best price possible. Also, if you already have a property
in mind, we can assist you with any additional steps necessary
to ensure that buying the property of your dreams will be an
easy and hassle-free process.
Second, thru a qualified attorney
in Panama, we will handle the due diligence and title search
on the property, putting the Panamanian attorney in contact
with the seller (or real estate broker) to gather copies of
the property title documents and survey (if available). Paradise4boomers.com,
works with only the best professionals available in the market,
to ensure you the most dedicated and personal service you deserve,
at affordable prices.
Third, the attorney prepares a written
Promise to Buy/Sell Contract to lock in the property sale and
secure the terms agreed upon. (A deposit of 10% is usually
required by the seller upon signing the promise to buy/sell
contract). This gives Paradise4boomers.com’s team
the opportunity to complete the due diligence and put your
funds into the escrow account, for your peace of mind.
Fourth,
once the attorney has confirmed the property title is clean,
the final closing is scheduled; at which time the buyer/seller
sign the final Buy/Sell Contract. Paradise4boomers.com and
its team will be there to assist you.
Fifth, payment is made
to the seller, broker, and attorney from escrow. (In some cases,
buyers/sellers agree that payment is made after the public
deed of the property is transferred and registered into the
buyer’s name.) Paradise4boomers.com’s
team will be there to ensure everything his handled exactly
as planned.
Sixth, the Buy/Sell Contract is registered at
the Public Registry where they transfer the property title
ownership from the previous owner to the new owner. Of course,
once again Paradise4boomers.com will be there to assist you
through the entire process for the fastest and easiest buying
experience available in the market.
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Q: Is it safe to buy a Panamanian
corporation's shares which hold title to property in Panama?
A:
Yes, as long as a proper due diligence investigation is done
on the corporation and a proper title search is done on the
property, then it is generally safe to buy property this way
in Panama. It is important to hire qualified attorneys to handle
the due diligence, and put the proper clauses in the Buy/Sell
Contract of Shares of the corporation, such as:
(1) a clause
that guarantees the buyer that the corporation does not have
any pending debt or liability other than that established in
the contract and indemnifies the buyer from any such liability,
(2) a clause that makes the seller responsible for any liability
for previous actions of the corporation and/or its directors
(3) a clause that guarantees the buyer that the purchase
is for 100% of the corporation’s
shares, as well as for 100% of the property title number xxx
(with the description of the property), which is duly owned
by the corporation, whose shares are owned by the seller.
As
mentioned, at Paradise4boomers.com we work only with highly-experienced
attorneys that will assist to ensure due process and compliance
with all the local rules and laws.
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Q: Who normally pays for
the property title transfer tax in Panama, the buyer or the
seller?
A: It is standard practice in Panama for the seller
to pay for the title transfer tax. However, in some cases,
depending on the negotiation between the buyer and seller,
the seller may insist that the buyer pay the title transfer
taxes. At Paradise4boomers.com we strive that our clients get
the best deal possible.
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Q: Who normally pays for the closing
costs on Panama real estate transactions, the buyer or the
seller?
A: Generally, each party pays for their own closing
costs. For example, the seller pays his/her attorney to review
the buy/sell contract, and the buyer pays his/her attorney
for drafting the buy/sell contract, doing the title search,
title transfer, and escrow services. However, in some cases,
buyers and sellers negotiate special terms whereby the buyer
or the seller pays all closing costs, so it really depends
on the particular negotiation between buyer and seller. Your
Paradise4boomers.com’s team will be there with you to
ensure your get the best option available.
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Q: What are the average
closing costs for Panama property transactions?
A: The closing
costs vary depending on the particular transaction. For example,
if the property is held in the seller’s personal
name, and the buyer is transferring the property title to a
Panamanian corporation (most recommended), then the closing
costs would include:
(1) the legal property transaction fee
(that includes: title search, buy/sell contract, closing, & property
title transfer service)
(2) escrow fees from 0.5% to 1% of
the transaction amount (vary depending on amount of transaction)
(3) incorporation fee + tax to set up the Panama corporation.
However,
if the property is already held by a Panama corporation, and
the buyer is purchasing the shares of the corporation, then
the transaction is relatively simple because there is no registration
of title transfer, meaning that there is no title transfer
tax, and no public registry title transfer fees. In this case,
the closing costs would include: the legal property transaction
fee (including title search, purchase of shares contract, and
closing); and escrow fees from 0.5% to 1% of the transaction
amount (varies depending on amount of transaction). Again,
don’t worry: Paradise4boomers.com
will ensure that you pay the most reasonable fees according
to the situation.
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Q: How long does it normally take to register
a property title transfer in the Public Registry of Panama?
A:
In some cases, it can be done within 2 business days, if the
client pays an extra fee for expediting. However, under normal
circumstances, it takes from 1 to 3 weeks, depending on the
volume of transactions at the Public Registry.
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Q: How long
does it normally take, from start to finish, purchasing property
in Panama?
A: The time frame from start to finish is normally
about 6 weeks. However, it is contingent on a variety of factors
which are dependent initially on the buyer and the seller,
the negotiation between buyer and seller, and subsequently
dependent on the attorneys and the public registry. Generally,
property transactions have the following procedures:
(1) The
buyer and seller to agree on the price and terms (time frame
can vary depending on the negotiation)
(2) seller provides
our firm with all the due diligence documentation on the property
title so we can do the title investigation (time frame depends
on the seller)
(3) attorneys do initial title search & draft
the promise to buy/sell contract (time frame is approx. 1 day
assuming we have all the required information from buyer and
seller)
(4) buyer and seller review the promise to buy/sell
contract and agree to set a date to sign (time frame varies
depending on the buyer and sellers)
(5) buyer sends payment
for down payment and legal fees to escrow (time frame depends
on the method funds were sent),
(6) buyer and seller sign promise
to buy/sell contract and down payment is paid to seller from
escrow,
(7) final title search is completed (time frame is
approx. 5 days),
(8) buyer sends final payment to escrow (time
frame depends on the method funds were sent),
(9) attorneys
draft final buy/sell contract (time frame is 1 day),
(10) closing
takes place and buyer/seller sign final buy/sell contract (time
frame is 1 day),
(11) contract is registered at the Public
Registry for title transfer procedure to begin (time frame
ranges from 2 to 30 days, depending on the Public Registry's
volume),
(12) attorneys receive deed from Public Registry,
draft official English translations, and prepare final documents
to send to buyer (time frame is approx. 5 business days).
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Q: What are the normal legal fees for property transactions?
A:
Paradise4boomers.com offers a standard property transaction
package which includes the title search, buy/sell contract
drafting, transaction closing, and title transfer at very reasonable
and convenient legal fees. Title transfer taxes are normally
paid by the seller. Escrow fees (if an escrow company is used)
are normally paid by the buyer, and range from one half of
one percent (0.5%) up to one percent (1%) of the transaction.
Paradise4boomers.com’s
team uses only reliable escrow companies to assist our clients.
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Q:
Are escrow companies normally used in Panama for property transactions?
A:
Escrow services are relatively new to Panama, so Panamanians
are not very familiar with the term "escrow,” although
it is quickly becoming a standard for real estate transactions
nationwide with more and more Panamanian realtors selling to
foreigners who are accustomed to using escrow companies in
property transactions. At Paradise4boomers.com we team up with
the best escrow companies in Panama to ensure the best service
to our clients.
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Q: Do purchase contracts for Panama real estate
transactions need to be in Spanish, in order for them to be
legally enforceable in Panama?
A: No. The law does not require
a buy/sell contract to be in Spanish to be legally enforceable.
However, if there is ever a dispute over the transaction in
a court of law in the Republic of Panama, the court will require
that the contract be translated to the Spanish language by
an official (licensed) translator of that language. At Paradise4boomers.com
we ensure that our clients obtain the original of the buy/sell
contracts in Spanish, with an attached official English translation
always to be on the safe side.
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Q: What is normally accepted
as a down payment for purchasing property in Panama?
A: Generally,
sellers will accept 10% as a down payment upon signing the
promise to buy/sell contract. The down payment is shown as "good
faith" on
behalf of the buyer so that the seller knows that the buyer
is serious. However, the down payment really depends on the
particular transaction and the negotiation that takes place.
In some cases, sellers will demand as much as 50%, and in other
cases, sellers will ask for as little as 5% or less. Paradise4boomers.com
will be there to assist you in getting the best transaction’s
terms and conditions.
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Q: If I am a US citizen, can I use my
IRA or 401K money to buy property in Panama?
A: Yes. There
are several financial companies in the USA, like Texas
Financial Group-Park Cities, who offer retirement account services that
facilitate movement of your IRA or 401K funds into self-directed
retirement accounts, through which you can then invest in property
anywhere in the world. If you would like to receive an updated
list of these financial companies, please contact us at Paradise4boomers.com
for details.
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Q: Do
sellers offer owner-financing or leases with purchase options
in Panama?
A: Yes, leases with purchase options are common
in Panama, although most sellers are interested in simply selling,
not lease-optioning. However, please note that rental or lease
contracts must be registered with the MIVI (Ministerio de Vivienda),
which is the "Ministry
of Housing" in order for the lease to be legal in Panama. If
you prefer this option, Paradise4boomers.com will ensure you
can go for it.
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Q: Is it legal to block public access to the
beach if I own beach front property?
A: The laws in Panama
offer public access to all beaches, oceans, lakes and rivers
in Panama. Unless there is access within 1,000 meters from
your property, you must allow public access, according to the
law.
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Q: What is the liability for real estate
investors that "flip" (buy & immediately
sell) properties?
A: The liability for real estate investors
in Panama is limited. The main liability for real estate investors
is capital gains taxes, which some people avoid through the
use of Panamanian corporations. As long as you deliver what
is promised according to the terms of the buy/sell contract,
buying and selling property in Panama is virtually liability-free.
Our team at Paradise4boomers.com will guide you to the entire
process to ensure that you take the right steps to be virtually
liability free when investing in Panama.
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