The difference between the title and property ownership rights
There are a lot of confusion when foreigners buy property in Panama. This is because some sellers have actual "title" and others only their rights to more than one property. Moreover, title deeds are in Panama from the United States or Canada.
Let us clear this confusion. Panama recognizes three different types of properties: Title, ownership rights, and concessions.
1. Title PROPERTY
Title property is similar to "fee-simple" title in the United States and is the safest form of real estate property in Panama. The Constitution of the Republic of Panama guarantees the right to own property. Title properties are measured and orderly manner in the Panama Public Registry office verify one's own property "Title". These verifiable guaranteed rights allow banks to issue mortgage loans for properties title by registering liens against the title as collateral.
After purchasing the property is easy, using the following procedure:
a) Negotiation: If you are a Real Estate Agent, make sure that all the conditions are clear and in writing. Make sure that the written contract clearly shows the payment amounts and dates. If you deal directly with the seller, all terms must be clearly understood prior to setting a lawyer to prepare the written contract.
b) promise of sale instead of a purchase and sale agreements (in the United States), the buyer and seller, a commitment to purchase (property) continues. A small deposit when signing a written promise to purchase contract secures the property while the buyer looking for a title if the seller is the owner. In the meantime, the buyer for financing conveys (if not fully paid in cash) and the establishment of a company (if applicable) to hold. Sign this contract in the public registry to prevent the seller from the sale of the property to another party before closing.
c) Title Search: If you look at the promise of sale, you should hire a competent attorney to conduct an investigation of the seller the title in the public register. The lawyer will also verify that the property is free and free of all charges, liens and other issues relating to the transfer of ownership. Title Search also includes reviewing the Catastral survey map. In many cases, a professional evaluators reviewed the map points to the site to avoid future boundary conflicts. Finally, have your lawyer review the main utility debts (water and sewer) with the state authority, which they (IDAAN).
d) Buy-Sell Contract: After the title, the parties a formal buy-sell contract (also known as a public document of title transfer). The trustee pays the seller of the balance and transfers title in the name of the purchaser. I recommend using an established escrow company to protect both parties.
e) Title Transfer: This process is known as the "Close" in the United States. Formal property ownership to the buyer if the two parties, the buy-sell contract (public document of title transfer) and registered it with the public register. If title is in a company's name and the buyer decides, the seller merely transfers Corporation sharesto the buyer, without a title. To facilitate the closure by ensuring the seller and the buyer gets full title, the lawyer prepares a "Promise To Pay Letter" from a local bank. This letter guarantees full payment to the seller, if the title transfer registers in the public register.
Problem solved: The "Promise To Pay Letter" solves a typical problem Close. Sellers usually the full payment, if it signs the public deed of transfer before the actual registration of the title in the transfer of public registry. There have been cases in which the seller of the full payment, but the deed was not registered (or the government rejected the deed). The buyer has not come to the new owner, since there are no records of the title transfer in the public register. The "Promise To Pay Letter" guarantees the payment to the seller of a local bank, while ensuring that the buyer does not pay until the actual transfer of title.
2. The property rights
This is similar to "squatter's rights". This is the state property is "occupied" by a Panamanian (or businesses) in course of time. Possession of rights, squatter certification by a simple certificate either municipal mayors, sheriffs, or other government agencies, such as the Agrarian Reform Department (Reforma Agraria). There are no taxes, because the owner does not own the property. However, all buildings on the site is, local and / or national taxes if they are registered. Ownership rights to the title with the purchase of property by the government. However, some coastal areas, national parks, islands, or "protected characteristics", where the owner can apply for an administrative "concession" on the country to ensure use.
To acquire ownership rights to a property, it is important to follow these steps:
1. Promise to Purchase: Pay a small deposit upon signing the promise to purchase the property rights agreement of the property and securing the provision of sufficient time for due diligence. During this time, the buyer coordinate payment arrangements for the closing. Contracts for the purchase of the rights of possession can not be registered in the public registry, therefore, a notary should authenticate them.
2. Due Diligence: Unlike the title of property that is easily verifiable by the public register, the due diligence procedures on possession rights property is more complex. Panama has no central database of possession rights properties. Therefore, purchasers of property rights should be extra careful with the due diligence process. In general, the scope of the due-diligence investigation, we can recognize ownership rights to property is the following:
a. review of the certification of the rights of possession: The certification of possession rights, by a competent authority, which the owners' name and correct description of the property in relation to location, size (area), borders, boundaries and neighbors at all pages.
b. Review of the survey: A survey stamped and signed by a professional, license, engineering surveyor. This identifies the owner name, location and displays the same information in accordance with the certification of possession rights.
c. Inspection: The main elements to verify are: physical activity, no opposition by third parties, and good faith. Your assessor identifies and marks the points of the property confirmed these points with the neighbors to ensure that there is no future
Border conflicts. This requires a physical inspection. In addition, the should be marked and fenced, delineation
the boundaries.
d. Verification: In some cases, if the buyer's intentions are to a certain kind of structure or project on the possession rights property (for example, a marina, port, hotel, airport, etc.), it is necessary to examine whether there are any national or municipal regulations to prohibit such activities in the area.
3. Buy-Sell Contract: After verification of the seller expects that the remaining amount at the signing of the purchase-sale contract. If you are a trustee, payment of the balance shall be made once the possession rights certification to the buyer's name. Contracts for the purchase of the rights of possession can not be registered in the public registry, therefore, a notary should authenticate them.
4. Ownership rights Certification Transfer: The possession of rights over the property to the buyer officially in the possession rights certification. This is done immediately after each party signs the Buy-sell agreement. If the property is in a business' name, the buyer to purchase the company shares. Then there is no transfer of possession rights certification, only a transfer of shares of the Company to the buyer.
3. PROPERTY CONCESSION
Concession property is a lease agreement, which in Mexico or Hawaii. This is when the government grants a concession to an individual or a company for a specific purpose, such as a real estate development, hotel, or Marina. Most Concessions in Panama are for a maximum period of 20-year (renewable) periods. Some licenses will be for up to 40 years (renewable) in specially designated areas such as the Amador Causeway where there are commercial and condominium developments currently being sold. Real estate license is in special coastal or other government-protected areas where actual title is prohibited by law. In many cases, real estate developments on Concession properties offer investors time share or shareholders regulations that very often in Mexico and other resort-type coastal areas around the world. Unlike proprietary rights owned by the government through a special contractual agreement guaranteed concession property. Therefore, there is very little risk for the investor. Title insurance companies typically provide titles for Concession Properties.
Titles on ACQUIRE PROPERTY FEATURES
"Title Process" is the official administrative procedures for the acquisition of rights of possession of property from the Panamanian government. You are buying the property by the government and the registration of the buy-sell agreement with the Public Registry. Island properties can not be considered "entitled" under the Constitution of the Republic of Panama (mainland can only be the title). However, there are some titles Island properties registered before the Constitutional Court, which can be sold. All Title beach properties require a 22-meter back because of high tides.
TITLE INSURANCE
Even though Panamanian laws setup to protect foreign investors, you should always take to your investment. I recommend title insurance for all real estate transaction. This is readily available in Panama through major international title insurers, such as Land America Lawyers Title and Stewart Title. Title policy costs are minimal and the peace of mind is worth the cost.
In Conclusion: Now that you have learned the different types of real estate in Panama, you can take steps to protect your investment. Search for "Title" properties first. Make sure you have a competent real estate attorney to your promise to purchase, a thorough title search and prepare your buy-sell contract. Hire a good escrow company to ensure that all documents in the Public Registry, before the payment of the balance.
If you have the ownership rights, hire a competent real estate attorney to your promise to purchase the property rights agreement, conduct due diligence, and prepare your buy-sell contract. Hire a professional assessor to consider all relevant facts. Protect your original documents from loss, since they are not registered.
Concession rights for the use of government property, if you can. Also, hire a knowledgeable real estate lawyer to prepare your orders.
Finally, purchase title insurance to protect your investment.
With these precautions, you should enjoy full rights of ownership or right to use the new property purchases.
Steven Rich, MBA is the Marketing Manager for Panama Offshore Legal Services, whose website can be found at:
http://www.panama-offshore-services.com
Steven Rich, MBA is the Marketing Manager for Panama Offshore Legal Services at:
http://www.panama-offshore-services.com
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