Right of Possession Property in Panama

Types of Property Rights

Panama has three types of property rights:

  • Titled property
  • Concessions
  • Rights of possession

Titled property is the same as property ownership in North America and Europe. Concessions are limited-time leases. Rights of possession are essentially squatter’s rights. You do not own the land. The “Nation” of Panama owns all right of possession property. What you own when you buy a right of possession is the right to occupy and possess the property. You can build a house on right of possession property; you can plant crops; you can do many things; but you do not own the land.

In recent years, many foreigners have purchased right of possession properties in Panama. Most have experienced no serious problems, but a significant minority have experienced difficulties, which tend to fall into three categories:

Conflicting Ownership Claims

Rights of possession are sometimes registered with various government agencies – Reforma Agraria, ANAM (the environmental ministry) and ProNat (an agency tasked with titling right of possession properties). However, this is hit and miss. Many rights of possession are not registered anywhere, and even if they are, that may not stop other people from claiming that they own the rights of possession, even if you have purchased them with a written contract.

What typically happens is that, after someone has bought rights of possession to a property, someone will come along, usually a neighbor or a relative of the person who sold the rights of possession, and claim that he is the real owner of the rights. The naïve person who bought the rights of possession is now looking at a legal action, with years in court and expensive lawyers fees, to resolve the problem.

This is almost always and avoidable problem. It arises almost exclusively because purchasers and their lawyers do not perform proper due diligence (see below)

Misleading Representations about Titling

No matter what eager vendors or salespeople tell you, owning titled property is always safer and better than owning rights of possession. That is why many vendors will tell you that they have applied for title and it will arrive “soon”.

Don’t believe it. For the past few years there has been an unofficial moratorium by the government of Panama with respect to titling coastal and island properties. Very few such properties have been titled recently. When the new titling law (law 71) comes into effect, the government will charge significant – but as yet undetermined -- fees for titling coastal and island properties. Titling a right of possession property may well cost more than purchasing the rights of possession.

Previous Titles

Occasionally, someone will buy the rights of possession to a property, only to discover that there is an existing title to the property. Such cases typically arise when a property has been abandoned for years, or decades, by the title-holder. Someone else comes along, squats on the land for a period of years, and then claims to own the rights of possession.

He may even have the rights registered with one or another government agency, but that will not be conclusive. He may still end up in court battling with the title-holder over control of the property.

How to avoid Problems buying Right of Possession Property

We recommend that foreigner buyers exercise caution purchasing right of possession property. There are some exceptional right of possession properties, which can sometimes be bought at very low prices. In such cases, it may make sense to buy rights of possession. However, we at Chiriqui Coastal Real Estate suggest that the following rules should be applied when considering the purchase of right of possession property, especially on islands or the coast:

  • You and your lawyer must thoroughly research the property, including: whether the rights of possession are registered with any government agency; the history of previous owners, and whether there is an existing title, and whether neighboring property owners, or relatives of the vendor, have any claims against the lands.
  • There should be no available titled property of similar quality at a comparable price.
  • The price must reflect a substantial discount to the price of similar titled property – at least 50%, probably more.
  • You should buy the rights of possession only if you are prepared to go forward with the purchase even if the property cannot be titled.
  • A new survey, commissioned by the prospective purchaser, should be obtained from a competent and qualified surveyor.
  • You should retain an experienced and capable lawyer who should be satisfied that the proposed purchase is safe.