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The process of purchasing real estate in Panama

The process of purchasing Real Estate in Panama

By in Blog with 2 Comments

Below is an outline on the process of purchasing real estate in Panama.  

Purchasing property in Panama is usually done in two different stages.

Stage 1: The Promise of Sale and Purchase

This contract is performed preliminary to the sale and purchase contract. In this particular contract the seller agrees to sell to the buyer at an established price. It is common that the buyer consigns a down payment directly to the seller to ratify his commitment to the sale. This agreement will establish the closing timeframe and also establish penalties, among other issues such as what is included in the sale, how the property is to convey (the sale of a corporation that may own the property or the sale of the property itself), how the final payment will be made, etc.

Stage 2: The Final Contract

This contract is done in the form of a public deed and has to be registered at the Public Registry of Panama. Prices for registration will depend on the value of the property or on the price of the sale, but generally range from $1,000 – $3,000 depending on the price of the real estate. When the contract is registered, the change in the ownership of the property is done.

As of the time of the registration, you become the owner. The most common way to pay the remainder of the purchase price to the seller is by an irrevocable letter of payment issued by a bank. The bank holding the funds issues the irrevocable letter of payment to the seller and pays it as soon as it is presented with the registered public deed transferring title to the buyer.  It is no required to have a local account if you are planning on purchasing real estate in Panama, as most attorneys provide this service.



Please be advised that the law establishes that the seller pays the transfer tax and the buyer pays for the legal and registration costs.

About The Author

Kent Davis, founder and Managing Director at Panama Equity real estate, has been widely quoted in publications such as Wall Street Journal, Time Magazine, The Miami Herald and the Financial Times for his unabashed views on the Panama real estate market. Panama Equity is regarded as one of the most active real estate agencies in Panama and Kent’s articles, reports, and market research projects have been syndicated by press agencies including Bloomberg and the Associated Press.   Connect with the Author via: Email | LinkedIn | Facebook | Google+


  1. Hi Kent,
    Regarding the last sentence on this page about who pays what costs –
    on our last property sale the attorneys said that the law was changed – the buyer has to hold back the sales tax and submit it to DGI – what is your experience with this?.

    Marion MacGillivray

    • Kent Davis says:

      Hi Marion, nice to hear from you. Usually the way we structure a deal now is the requirement that the deposit (which goes to the seller) is put towards the transfer taxes. My understanding is that the onus of the law is on the buyer to insure that the seller has paid the transfer taxes. You’re protected if the sale is of the actual property (as opposed to a transfer of ownership or outright sale of shares in the corporation) because the deed must get registered at the public registry and proof of payment of the transfer taxes is one of the documents a seller must furnish (paz y salvo).

      Hope this helps!

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