Why Own property in Panama?

Why buy property in Panama? Well, there are many reasons, but four are most important:

• Low cost of living
• Relaxed life style
• Year round tropical climate
• Natural beauty

If you are thinking of buying property in Panama, you should know something about the types of property rights, which are sometimes different from those in North America and Europe.

Types of Property Rights

There are three types of property rights in Panama:

• Titled Property
• Concessions
• Rights of Possession

Titled Property. Titled property in Panama is essentially the same as titled or ¨Fee Simple¨ property in North America or Europe. Such rights are registered in the Panamanian Public Registry and can easily be searched and verified. These are the safest to own and most desirable property rights in Panama.

Concessions. Concessions are leases, typically from the government, lasting for periods of 20, 40 or 60 years, most commonly in coastal areas. These rights must be negotiated with the 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 designed to give poor Panamanians 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. 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.

ROP lands may be held informally, with no documentation whatsoever, in which case they can easily be subject to conflicting claims by different parties. In non-coastal areas, ROP lands are sometimes registered in Reform Agraria, a government agency. In that case, they come with a Certifica¨indicating the owner and boundaries of the property.

Buying ROP property can be risky. If you buy ROP, you may find that the person who sold them to you has relatives who claim an ownership interest in the ROP. Or one of your neighbors may claim that he owns the rights. Or, if you are not living on the property, you may arrive one day to find that someone has built a shack on it. In all of these cases, you can find yourself tied up for years in a legal action.

This is not to say that you should never buy ROP. There are occasions when it makes sense to do so, if the property is exceptional and you cannot find a comparable titled property. The important thing to remember with ROP properties is that if you are considering buying one, it is crucial that you research it thoroughly and retain a good lawyer to protect your interests.