Early in 2009, just before the last presidential election, the Panamanian legislature passed a new law — Ley 23. It was a good law that made sense for the people of Panama, the government of Panama, and foreign investors. It allowed all owners of Rights of Possession on coastal and island property to have their lands titled at nominal expense. This made sense for the people of Panama, because it allowed them to acquire secure ownership of their properties at very little cost. It made sense for the government of Panama, because it would have eliminated much confusion concerning property rights, reduced the massive backlog of property disputes clogging up the court system, and vastly increased tax revenues, since all the newly titled properties would have been subject to annual realty taxes. It also made sense for foreign investors, since it would have put them on an equal footing with Panamanian citizens and given them security of tenure on their Right of Possession properties.
The ex-pat community had high hopes when President Martinelli was elected several months ago. He is a business man and we were encouraged when he spoke favourably about foreign investment and promised to titled all Right of Possession properties in Panama, whether on islands, the coast or inland.
Alas, President Martinelli is proving to be a serious disappointment to those of us who hoped he would follow through on his campaign promises. The new Martinelli government has just introduced a draft law — Ley 71 — that would effectively repeal Law 23 and create, in its place, a new statute whose effect, inter alia, will be to allow most Panamanian citizens to title the coastal and island properties they have held by Right of Possession for many years, while preventing foreigners from acquiring title to their Right of Possession properties, because, in most cases, they have not owned the Rights of Possession long enough to qualify for title under Law 71.
Law 71 contains many bad ideas, but the most obnoxious from the perspective of the ex-pat community is doubtless that it is designed to discriminate against foreigners, the vast majority of whom will not qualify under this law to title their Right of Possession properties on islands or the coast.
For investors, Law 71 represents an opportunity for some and a bad bet for others. If you have already purchased Right of Possession property expecting that its value would increase when you are able to title it, you are likely to be disappointed if Law 71 passes in its current form. The value of coastal and island Right of Possession properties will drop sharply, as few foreigners will want to buy Rights of Possession if they cannot get the properties titled.
On the other hand, if you have already purchased titled property on the coast or on an island, or if you are considering doing so, Law 71 will work out well for you, since it will create a long-term shortage of titled ocean-front property, thus driving up prices.
Allen
{ 4 comments… read them below or add one }
Hello,
I would like to get a copy of the proposed Law 71. Do you know where I can get one online?
Thank you,
David
It seems this law means that the greater the extent to which you acquired land here for the purpose of financial gain rather than because you wanted to live, green up, contribute etc. here, the greater the law will inconvenience you. Sounds fair enough to me!
I have 4 ROP properties in the islands of Bocas del Toro and I’m a Panamanian American meaning I’m of Panamanian decent and have dual citizenship and I was wondering if there is anything I can do to push for law 23 and and what can I do to prevent law 71 from passing. I speak good Spanish and was hoping to be able to participate or help the situation since it does affect me personally.
Hi Steven
We have been keeping track of draft law 71 as it works its way through the legislative process. Unfortunately, there is not much you or I can do to affect the outcome. There is horse trading going on within the government and with the usual centers of power in Panama. This will determine the outcome.
I suspect that the worst features of the draft law will be removed, such as increasing the statutory servidumbre from 22 to 47 meters, but it looks as though there is going to be a very substantial charge for titling coastal and island properties — think of dollars per meter, not pennies.
There is also a serious question in my mind whether a significant number of properties will be titled in the foreseeable future, even with a new law, and even if owners of RoP land are willing to pay an arm and a leg to title their properties. The government agencies involved in the titling process — mainly Catastro and ProNat — are astonishingly incompetent, even by the normal standards of the Panamanian bureaucracy. I just can’t see them doing a competent job of titling a large number of properties in a finite period of time.
Allen