YOUR GUIDE TO PROPERTY PURCHASE IN PANAMA

1. Buyer and Seller must agree on the following points:
   1. Sales Price.
   2. Down payment (generally 10% to 15%).
   3. Date for down payment.
   4. Date of closing.
   5. Escrow/Lawyer services for safeguarding his/her payments.

1. Buyer must consider:
   1. If he/she is going to buy under a corporation, foundation or a private name.
   2. If they are going to pay cash or finance any amount of the total cost.
   3. If they are going to pay with a check or via wire transfer.
   4. Legal fees and registration expenses (Buyer pays the fee to transfer title).

1. Seller must consider:
   1. Taxes to be paid:

i. 3% capital gains tax.

ii. 2% transfer tax on the entire amount of purchase.

1. 1. Realtor commission.
   2. 7% ITBM tax on commission amount is paid by Seller.
   3. Certificates of good standing (Paz y Salvo): Water services, Maintenance fees, Property Tax and Corporate tax (if property held in Corporation).

1. Promise to Purchase Agreement:

This regulates the down payment until the closing or final Purchase Contract. In this Agreement sales price is stated, Buyer promises to buy in no more than a specific period of time, and Seller promises to hold and finally sell the property in that time.

1. Due Diligence:

The attorneys must begin a Due Diligence on the property to establish the following:

1. 1. That the property is dully registered to the Seller’s name.
   2. That the property is in good standing with the government in property taxes, or that it has been registered for the property tax exemptions.
   3. That the property has no liens or charges that would damage the Buyer’s rights.
   4. If the property is in a Homeowner’s Association that all fees are paid up to date of planned closing.

1. Final Purchase Agreement:
   1. The purchase agreement is drafted and signed only when:

i. Due Diligence has been completed.

ii. Both buyer and seller have accepted to go forward with the operation and the closing date hasn’t expired (if for any reason that date has expired both parties can agree to amend the agreement with a time extension for closing.

iii. Seller has paid the taxes required and specified above.

1. 1. The Purchase Agreement must be filed in Spanish with an English version provided to non-Spanish speakers.
   2. After both parties have signed the Deed, it has to be authenticated by a Notary Public.
   3. After the Notary Public has closed the Public Deed, it will go to the Public Registry where the property will be registered to the new Owner.

1. When buying a new property under a corporation, the following must take place:
   1. Creation of the corporation.
   2. To incorporate, the buyer must provide the following information:

i. Three (3) possible names for the corporation.

ii. Who will be the President, Secretary and Treasurer, with their full names, passport numbers and physical addresses.

iii. Percentage of shares and beneficiaries. Or if the corporation will have “bearer shares.”

1. 1. The corporation must issue a Minute where the shareholders authorize the President or any person designated, to sign all documents regarding the purchase process and where they authorize the purchase of the property.

1. If the property is going to be financed:
   1. Buyers must choose a bank.
   2. They must comply with the bank’s requirements.
   3. Once the loan has been approved, the bank will issue an Irrevocable Letter of Payment, where it promises to pay the Seller the amount loaned once the property has been dully registered to the Buyer’s name.

1. Your Attorney’s fees should cover the following:
   1. Process Due Diligence on the property and the seller if in a corporation.
   2. Draft all documents, agreements, deeds, minutes and shares, and have them translated to English for non-Spanish speakers.
   3. Confirmation of payment of taxes (by the seller).
   4. Obtaining Certificates of Good Standing (Paz y Salvo).
   5. Issue letters of reference when required by the bank in order to approve the mortgage.
   6. Create the Corporation.
   7. Register the property in the Public Registry to the Buyer’s name.
   8. Serve as an intermediary with the bank in case of a mortgage.
   9. Escrow service for payment control.