Hey everybody, it’s Kent Davis from Panama Equity Real Estate. We’ve been doing this since 2007 and today I’m going to tell you about real estate attorneys in Panama.
Real estate attorneys in Panama
Real estate attorneys, just like real estate agents are a dime a dozen in this country. Real estate has been a big industry for the last 20 years to 25 years. And there is no national bar association per se, in terms of becoming a real estate attorney or really an attorney in general. This means that you’ve got a little bit less vetting as a community of attorneys. So caveat emptor, I think is the expression ‘buyer beware’ that said there are some fantastic real estate attorneys out there. I would say if you’re in the market for a real estate attorney, first of all, you want somebody that’s responsive, informed, affordable, problem-solving, and practical. Because while they’ve done ‘this’ many, many times, ‘this’ always seems to be different in Panama. Whether it’s closing a real estate transaction, dealing with someone at immigration, opening up a bank account, or really any of these numbers of things that you might be leaning on a real estate attorney to support the process on.
There will be surprises. And oftentimes if you are not in Panama, it can be a little frustrating as you will be left thinking “what’s going on with my case?”. So, of course, you want somebody who’s going to be responsive, and the best way to figure out if somebody is responsive is to reach out to them, right. See how long it takes to respond and take it from there.
We’ve got some great real estate attorney referrals in Panama. We don’t make any money off of that. We choose not to have the referral in-house, some real estate agents like to have a real estate attorney working for their firm. There could be some conflict of interest there in the interest of just closing a deal and transacting versus protecting a client’s best interest. Saying, don’t do this deal, Mr. Seller, don’t do this deal, Mr. Buyer versus I don’t want to ruin the chances of my company making a commission.
So real estate attorneys, what do they do? Why are they essential to the process? Okay, well, let’s talk on the buyer side. We can also talk about the seller side in a subsequent video. If you guys would like to see that. (Let us know in the comments). On the buyer side, you’re outside of Panama, and you’re thinking about buying real estate in Panama. You already got the best real estate agency in Panama, Panama Equity. We’ve been doing this for a while so…
Why do you need a real estate attorney in Panama?
Why do we even need a real estate attorney if you’ve got a fantastic agent? Well, I’ll tell you what, it’s good to have a team. Why? Because there are certain things that we as agents do not do. For example, taxes. So if you are a buyer, the onus is going to be on you to both withhold the cost of the sale in the form of transferring capital gains tax. This is always in the promise-to-purchase agreement, but as it reads, the onus is on the buyer. Although the seller pays it, the onus is on the buyer. So especially in the sale of shares agreement, where there is nothing that passes through the public registry. So taxes as a seller, you use a real estate attorney as you need to calculate your taxes that you’re going to pay – again transfer capital gains tax.
Second thing, contract formation, or in the case of the buyer contract review. Now we’re the quarterbacks of this deal, right? When you have a real estate agent, they are making sure the attorney’s doing their job, making sure the bankers doing their job, making sure the government’s doing their job. And we are the facilitator to move things forward. Sometimes we move them backward deliberately, but the real estate attorney’s role is on the buyer’s side to review the agreement. Because again, we were going to review it too. Now, as a seller is typically they are the ones creating the agreement (buy-sell agreement or promise to purchase agreement), So your real estate attorney is going to advise you on how that looks, what clauses are missing, what clauses need to be improved, what clauses could potentially be problematic, and what is not in your best interest.
And now we’re looking at the agreement still. There are some other clauses, for example, well, penalty clauses, very important to know about and very important to have your attorney look at them. They are generally mutual. Now, sometimes the seller where the tricky attorney might be inserting a couple of little bonds into the contract because there is no standard agreement for a buy-sell contract in Panama. Don’t you wish there were? All developers have different agreements, many sellers, depending on who their attorney is, have different agreements. So that role is critical.
Let’s say everything’s cool with the agreement, you get it signed, and money goes down to the seller. Now the process starts at due diligence. So the attorney is going to make sure that everything looks good in the public registry. They’ll do initial due diligence before you sign, but now things are moving, now taxes get paid, now water bills get good standing certificates, now homeowners association issues get resolved. So basically transfer capital gains tax or paid homeowner association taxes are paid and there’s nothing owed to the utilities. Now the real estate agent can facilitate getting those documents, but the attorney is going to be the one who wants to review those documents. Again, another good person on the team.
So finally, the closing process. You meet in the notary, you sign the public deed, everything is great. Well, the public deed is also another legal document that needs to get reviewed. While real estate agents might be ok at that, your attorney’s looking at those every day and there’s some little legal minutia that you want to make sure is included on every public deed to make sure you’re protected. And that’s really it post-sale. If you’re purchasing a property with new construction, you’re going to want to file for tax exoneration depending on what qualifies based on how old the property is. That’s also a due diligence item if you’re looking at older property to make sure that the property tax exoneration has been filed. So that’s really the long-short of having a real estate attorney. They’re good.
How much do real estate attorneys cost?
What are you going to pay? You know, I’m not crazy about real estate attorneys pricing based on the property itself, the property price, although ironically, that’s what real estate agents do. So go figure. But typically you’re going to see an hourly rate. Hourly rates in Panama for a top-end partner attorney figure about $300 an hour. Versus middle of the road, get the job done $150 to $200 on the partner side. And then on the legal side, in terms of a helper maybe that’s $100 an hour to $150 an hour.
There are some, attorneys with all due respect that are not that great. They might be colluding with one side or the other. They might not be specialists in real estate. You know, an immigration attorney does not necessarily always make a good real estate attorney. I mean, you have certain principles of a good attorney, responsive, practical professional. However, if you don’t have a whole lot of experience, you don’t know what to look for.
I appreciate you guys watching. There are fantastic real estate attorneys out there and we know, I would say all of them, so give us a call and we would be happy to help.