Panama straddles the Atlantic and Pacific oceans, with hundreds of miles of ocean-front property. Some areas of Panama remain heavily covered with tropical jungle, principally in the Darien Gap near the Columbian border, and in the Panama Canal zone. Panama also has a great deal of beautiful highland real estate, where the temperatures are cooler.
In recent years, Panama has become a popular vacation destination and place to retire, due to its modern infrastructure, US dollar economy, generous retiree benefits, first class medical care, and low cost of living.
Types of Property Rights
There are three types of property rights in Panama:
Titled Property
Titled property in Panama is essentially the same as titled or ¨Fee Simple¨ property under North American and European property law regimes. Such rights are registered in the Panamanian Public Registry and can easily be searched and verified. These are the safest and most desirable property rights in Panama.
Concessions
Concessions are leases, typically from the Government of Panama, lasting for periods of 20, 40 or 60 years, most commonly in coastal areas. Such rights, must be negotiated with the Panamanian Government, which may impose various conditions with respect to land use.
Rights of Possession
Finally, there are Rights of Possession (ROP), which came into existence only in the 1970´s, by the government of the day, as a land reform measure intended to give poor, rural Panamanians an opportunity to obtain security of tenure on lands they worked but to which they had no formal title. The North American equivalent to Rights of Possession are squatters´ rights.
In a word, Rights of Possession are rights to use and occupy a given piece of land. They last only as long as the person claiming the right physically occupies and controls the land. If you build a home on ROP land, you will own the home but not the land. Rights of Possession are just that -- rights acquired by, and lasting so long as, the claimant physically possesses the land. They are not rights of land ownership. The Panamanian Government-- more strictly, the ¨Nation¨-- is the owner of all ROP property, which is why, if you wish to title ROP land, you must buy it from the Government, albeit at a nominal price in the case of inland property.
ROP lands may be held informally, with no documentation whatsoever, in which case they can easily be subject to conflicting claims by different parties. ROP lands may also be registered in Reform Agraria, a government agency. In that case, they come with a ¨Certificado¨indicating the owner and boundaries of the property.
Due to the absence of documentation, and attendant risks, we at Chiriqui Coastal do not list ROP lands for sale without Certificados, and we advise clients not to purchase them.
ROP lands with Certificados are more secure, but can still be subject to conflicting claims. ROP lands on the 200 meter coastal strip are treated differently from non-coastal ROP lands and are subject to different laws. It is much easier to obtain title for inland ROP properties than for coastal ROP lands.
One drawback of all ROP property is that banks will not accept them as security for loans, meaning that they cannot be mortgaged (because you don´t own the land). There is, however, one advantage to ROP property: it is not subject to realty taxes.
Island Properties
Island properties held by Right of Possession cannot be titled at all, except under the most unusual circumstances. As far as ordinary purchasers are concerned, if they are not already titled (some are), the chances of getting them titled are slim to none.
Rights of Possession on Coastal Properties
At present, there is a great deal of confusion concerning the titling of ROP lands on the 200 meter coastal strip. In principle, such properties are titleable. However, the Panamanian Government has been considering imposing a sliding scale, titling fee ranging from $2-$10 per meter, depending on such factors as whether there is access to roads and electricity, and whether the ocean front is rocky, mangrove-covered or has beaches. While the government debates this issue, there has, in practice, been a moratorium on titling applications in Chiriqui Province, with only the rarest of exceptions.
Criteria for Purchasing Coastal ROP Property Our recommendation at Chiriqui Coastal is that foreign buyers should be especially cautious with respect to coastal ROP lands. We suggest that the following six criteria should be applied when considering whether to buy coastal (or island) ROP property:
- It should be purchased only if the buyer is prepared to go forward with the purchase even if the property cannot be titled.
- It must be thoroughly researched, including the history of previous owners, and whether neighboring property owners, or relatives of the vendor, have any claims against the lands.
- A new survey, commissioned by the prospective purchaser, should be obtained from a competent and qualified surveyor.
- The price must reflect a substantial discount to the price of comparable titled property, particularly in light of the fact that the purchaser may have to pay a $2-$10 per meter fee to the Panamanian government in order to obtain title.
- There should be no available titled property of similar quality at a comparable price.
- The prospective buyer should retain an experienced and capable lawyer, knowledgeable with respect to Rights of Possession and titling procedures, and the lawyer must be satisfied that the proposed purchase is prudent.
In our view, foreign buyers should consider purchasing coastal ROP lands only if all of these criteria are satisfied. Onerous as these criteria are, we believe that some coastal ROP properties represent good value and are worth purchasing. Generally speaking, these properties have three main characteristics: - They are exceptional properties by virtue, for example, of outstanding beaches or ocean views.
- They are compelling values, selling at much less than comparable titled land.
- The buyer and his lawyer have investigated thoroughly, and are satisfied that there are no plausible claimants to the Rights of Possession other than the vendor.
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