Panama Real Estate FAQs

Q1: Is it safe for foreigners to buy property in Panama?
A1: Absolutely. Buying property in Panama is very safe. There are over a dozen laws in Panama established specifically for protecting foreign investments, not to mention that private property in Panama is protected by the constitution of the Republic of Panama. Thousands of foreigners own property in Panama, and brokers process Panama real estate transactions for foreigners every day without a problem.

Q2: Is it legal for foreigners to buy property in Panama?
A2: Yes, it is legal for foreigners to own titled property in Panama in their personal names, although normally it is recommended that clients hold all property in the name of a Panamanian corporation for asset protection and tax reasons. Panama possession rights property, however, should always be held in the name of a Panamanian corporation, where the foreign person is the shareholder (or a Panama private interest foundation or trust can be appointed as the shareholder in place of the foreign person) of the corporation.

Q3: What are the procedures to buy real estate in Panama?
A3: The first step is to find a Panama property you like, and negotiate the price and terms of the sale with the seller (or Panama real estate broker).

• Second, you should seek a qualified attorney in Panama to handle the due diligence and title search on the property, putting your Panamanian attorney in contact with the seller (or real estate broker) to gather copies of the property title documents and survey (if available).




• Third, have your attorney prepare a Promise to Buy/Sell Contract to lock in the property sale and secure the terms agreed upon (a deposit of 10% is usually required by the seller upon signing the promise to buy/sell contract), plus this gives you time to do the due diligence and get your funds into the escrow account.
• Fourth, once the attorney has confirmed the property title is clean, then the final closing is scheduled, where the buyer/seller sign the final Buy/Sell Contract.
  
• Fifth, payment is made to the seller, broker, and attorney from escrow (in some cases, buyers/sellers agree that payment is made after the public deed of the property is transferred and registered into the buyers name).
• Sixth, the Buy/Sell Contract is registered at the Public Registry where they transfer the property title ownership from the previous owner to the new owner.

Q4: What advantage is there to putting a property in the name of a corporation, instead of putting the property in my personal name?
A4: By putting the property in the name of a corporation; (1) the corporate veil protects the property from any attacks from creditors or frivolous lawsuits against your personal name, (2) when you go to sell the property, you can simply sell the corporations shares, saving you a 2% property title transfer tax, and possible Capital Gains Taxes, (3) when you go to sell the property, the buyer benefits because the buy/sell contract does not have to be publicly registered, saving the buyer closing costs, and (4) when you go to sell the property, the buyer benefits from lower property taxes (or possibly no property tax if the registered value is below $30,000), because the registered value does not reflect the actual purchase price.

Q5: Is it safe to buy a Panamanian corporation’s shares which hold title to property in Panama?
A5: As long as a proper due diligence investigation is done on the corporation and a proper title search is done on the property that the corporation holds, then it is generally safe to buy property this way in Panama. It is important to hire qualified attorneys to handle the due diligence, and put the proper clauses in the Buy/Sell Contract of Shares of the corporation, such as;
(1) a clause that guarantees the buyer that the corporation does not have any pending debt or liability other than that established in the contract and indemnifies the buyer from any such liability,

(2) a clause that makes the seller responsible for any liability for previous actions of the corporation and/or it’s directors, and

(3) a clause that guarantees the buyer that the purchase is for 100% of the corporations shares as well as for 100% of the property title number xxx (with the description of the property), which is duly owned by the corporation, whose shares are owned by (the seller).

Q6: Are there any government taxes or fees for transferring Panama property titles from the sellers name to the buyers name?
A6: Yes. The Panamanian government charges a 2% property title transfer tax. The 2% is based on the registered value (the value established in the registered deed of sale). In addition, there are other fees charged by the Public Notary and the Public Registry which total in the range of $200 to $300 for registering a buy/sell contract for the sale of real estate in Panama.

Q7: Who normally pays for the property title transfer tax in Panama, the buyer or the seller?
A7: It is standard practice in Panama for the seller to pay for the title transfer tax, however, in some cases, depending on the negotiation between the buyer and seller, the seller may insist that the buyer pay the title transfer taxes.

Q8: Who normally pays for the closing costs on Panama real estate transactions, the buyer or the seller?
A8: Generally, each party pays for their own closing costs. For example, the seller pays his/her attorney to review the buy/sell contract, and the buyer pays his/her attorney for drafting the buy/sell contract, doing the title search, title transfer, and escrow services. However, in some cases, buyers and sellers negotiate special terms whereby the buyer or the seller pays all closing costs, so it really depends on the particular negotiation between buyer and seller.

Q9: What are the average closing costs for Panama property transactions?
A9: The closing costs vary depending on the particular transaction. For example, if the property is held in the sellers personal name, and the buyer is transferring the property title to a Panamanian corporation (most recommended), then the closing costs would include; (1) the legal property transaction fee of US$600 (includes; title search, buy/sell contract, closing, & property title transfer service), (2) public registry title transfer fees of approx. US$200 to US$300, and (3) incorporation fee of US$1000 to setup the Panama corporation. However, if the property is held by a Panama corporation already, and the buyer is purchasing the shares of the corporation, then the transaction is relatively simple because there is no registration of title transfer, meaning that there is no title transfer tax, and no public registry title transfer fees. In this case, the closing costs would include; (1) the legal property transaction fee (includes; title search, purchase of shares contract, and closing for US$600) and (2) change of directors / resident agent of the corporation (approx. $350).

Q10: How long does it normally take to register a property title transfer in the Public Registry of Panama?
A10: In some cases, it can be done within 2 business days, if we pay extra for quick expediting. However, in normal circumstances, it takes from 1 to 3 weeks, depending on the volume of transactions at the Public Registry.

Q11: How long does it normally take, from start to finish, to purchase property in Panama?
A11: The time frame from start to finish is normally about 6 weeks, however, it really depends on a variety of factors which are dependent initially on the buyer and the seller, the negotiation between buyer and seller, and subsequently dependent on the attorneys and the public registry.

(1) The buyer and seller to agree on the price and terms (time frame can vary depending on the negotiation),

(2) seller provides our firm with all the due diligence documentation on the property title so we can do the title investigation (time frame depends on the seller),

(3) attorneys do initial title search & draft the promise to buy/sell contract (time frame is approx. 1 day assuming we have all the required information from buyer and seller),

(4) buyer and seller review the promise to buy/sell contract and agree to set a date to sign (time frame varies depending on the buyer and sellers),

(5) buyer sends payment for down payment and legal fees to escrow (time frame depends on the method funds were sent),

(6) buyer and seller sign promise to buy/sell contract and down payment is paid to seller from escrow,

(7) final title search is completed (time frame is approx. 5 days),

(8) buyer sends final payment to escrow (time frame depends on the method funds were sent),

(9) attorneys draft final buy/sell contract (time frame is 1 day),

(10) closing takes place and buyer/seller sign final buy/sell contract (time frame is 1 day),

(11) contract is registered at the Public Registry for title transfer procedure to begin (time frame ranges from 2 to 30 days, depending on the Public Registry’s volume),

(12) attorneys receive deed from Public Registry, draft official English translations, and prepare final documents to send to buyer (time frame is approx. 5 business days).

I hope this list of FAQs sheds some light on the process. For newcommer, it can be an intimidating process. I know from firsthand experience. I can assure you, if you have confidence in the people you chose to work with, the process can be exciting and enjoyable.

Wall Street Meltdown: How's your IRA doing?

"Don’t wait to buy land. Buy land and wait."
– Will Rogers

“Buy land, they're not making it anymore.”
-Mark Twain

"Land is the basis of all wealth."

-Adam Smith

Land Banking is the acquisition of unimproved land for the purpose of development or disposition at a future date.

Advantages of Investing in Land Banking
Attractive Return - If the land is in the path of development, the return can be outstanding. Out performing practically any other vehicle of investment. The key is due dilligence.

Portfolio Diversification - Land banking investment offers an opportunity that isn’t directly correlated or tied to the movement of other standard investments. This offers clients a unique opportunity to bring diversity to their portfolios.

Minimum effort by Investor(Dummy Investing)- No Service or management charges to pay. Just invest one lump sum and wait for about 3-6 years to reap the expected return. It offers a hassle free investment because you pay your initial investment, and you don’t have to think about it until exit. Very suitable for who do not have the time/education/patience to study and do research.

Land is a finite resource- The key to land investing is to buy in countries with a shortage of land and a growing economy and population that will make prime land locations rise in price as they are developed.

Disadvantages of Investing in Land Banking
Minimum liquidity – You are expected to hold the investment minimum for 3-6 years for the land price to appreciate. Early exit will result loss.

No guarantee on Exit - Companies operating these schemes are seeking investors to buy plots of land in areas which HAVE NOT YET been granted planning permission. There is no guarantees on how soon developers will buy over the land. Estimates by landbanking companies range from a period of three to eight years, to five to seven years. Basically the companies will apply to convert from agriculture to Commercial land status from the Government. Government may changed their policies anytime.

Land is located Oversea- You do not know the real value of the land, except the promise of the marketer that no investor had sold the land at a loss.
Land banking is unregulated , and thus falls into a legal grey area. This could pose problems if disputes arise between companies and individual investors. You cannot complaint to Bank Negara Malaysia(BNM) for dispute as land banking is not under its purview. In November 2006, UK landbanking company, Land Heritage (UK) closed down after an investigation by the Financial Services Authority. Its 700 investors were not refunded.
There is NO perfect Investment . Therefore Investors need to do their due diligence before investing.

http://www.wisegeek.com/what-is-land-banking.htm

http://en.wikipedia.org/wiki/Land_Banking

http://www.proland.com/land_banking.htm

http://alantanblog.com/investment/land-banking-secret-recipes-to-wealth.html

The Plot Thickens...Part IV

As the Saga continues, a theme seems to emerge. Oh what the heck, I'll run with it. This theme is using classic parlor games as cliched metaphor to describe the plot twists in an unfolding story of international intrigue. An epic tale about a regular guy in seeking amusement, sets out to try his skill in an obscure, nearly forgotten, yet historically significant part of the world. Naively wandering, by chance, into an extraordinary situation from which he can not turn back. Suddenly, he must find inner strength and formulate strategy to succeed against formidable odds....Finding time among the needs of three kids, executing moves between diaper changes and after school activities.

Could someone please explain to me exactly what the hell is going on? When did all the rules change? We are not merely living in strange times, we've slipped into whole other dimension where everything is skewed by 18o degrees, then thrown into a blender set for frappe. World economies are either on the brink of recession or hip deep in one, but due to an astonishing level of denial, nobody seems willing to admit it. The private central bank (a.k.a. Federal Reserve) is printing paper money (or electronically creating it) by the billions in order to stave off the inevitable implosion. The bail out of financial institutions traditionally thought of as pillars, these days looking more like...dominoes, ( ha!) is now being ceremoniously passed on to the common tax payer, and played off as a stroke of genius. The mortgage industry is in total collapse, as Freddie and Fannie are the latest pieces to tumble.

How many more banks will fold is any one's guess. How much can the fiat currencies of the world be diluted, before it starts looking like 1930's Germany?

(hint: It's already looking like it, when you consider the consolidation of power in the executive branch)

The "cold war" is making a big comeback, but the temperature this time may be several degrees warmer. As tensions between the US and Russia take front and center, strategic positions are assumed, game faces are shown. Meanwhile the unfinished stalemates in Iraq, Afghanistan and possibly Iran get pushed out of sight and out of mind. (A Chess reference would fit appropriately here, but I've already used that one on my last post)

We're in the final stretch of a presidential election, yet despite all the dire issues at hand, the corporate controlled media seems to be preoccupied with the non-issue of lipstick wearing pigs. I've been concerned about the unravelling of our society for some time, but I'm now convinced we're on a slippery surface and rapidly sliding toward an abyss, or maybe we're teetering on the edge, I'm not sure which.

In order to protect my family's future, and pocket what was left of my cash. I've taken a cue from the big players, and put my savings into Panama land as a safe bet against the declining securities market. I figured it was calculated risk and was going to take some balls. I didn't plan to buy land with huge gold deposits under the surface. However, when the prospect presented itself, I figured it could be the ultimate hedge against the swirling economic shit storm gathering on the horizon.

Traditionally, times of uncertainty like impending hyper-inflation, bank failures, world wars and general societal collapse tend to raise the price of gold. The fundamental measure of wealth since the dawn of civilization, gold traditionally attracts buyers looking for security. For a brief period gold was acting accordingly. By all logic and reason, gold should be somewhere in the upper atmosphere on it's way toward the outer solar system right about now. However, we do not live in a world of logic and reason any longer. Now considered expendable, logic and reason were thrown under the bus a while ago, to make room for more "fiat". We now live in world of pigs and lipstick (a.k.a. total denial). I was determined to hold on to some resemblance of the world I formerly knew. What savings I hadn't invested in Panama real estate, I invested in precious metals...with leverage. I was certain, bad economic forecasts would buoy the metals, and I'd emerge from the pending wreckage intact.

Even as the metals dropped from their all time

peak six months ago, I was certain new trajectories would be hitting their targets at any moment. Boy, did I miss the mark. I am now facing my second margin call in a month, and the sharp, piercing pain inflicted on my investment portfolio is really smarting. It has been a hard lesson in illogical economics, and really burst my ego. I'm still trying to figure out how a traditional store of wealth, such as precious metals drops like a rock, at a moment, by historical standards, it should be performing.

These guys at the Federal Reserve and the other central banks around the world must benefit from suppressed commodities prices, which stifle the flow of money toward tangible wealth, such as gold. Therefore, propping up their paper fiat currencies, otherwise left to a free market would likely collapse.

Hmmm...How do they do it? It's as if this is just a big game to the central bankers. They create the money through making loans, then collect interest on the loans. Since more money is owed to the bank than has been put into circulation, the money owed to the bank can never be paid off. This scheme works for a while, but eventually an ever increasing money supply, without a basis on real assets, becomes diluted in value. They know this, so they use their position as creators of currency to buy up all the tangible assets, such as factories, toll roads, water rights, natural resources, governments, etc. etc. Meanwhile everyone else is chasing their little pieces of paper that continues to lose value. Eventually, the central banks have the entire globe bouncing around at dizzying speed, banging up and down with bright lights and distracting noise, flipping all over the place, until no one really knows the score, and we hit Tilt. It's as if the game is completely rigged.

Continue to Conclusion