PROCEDURES MANUAL 

For general administrative and real estate inquiries please write to: [email protected] 

For general legal and tax inquiries please write to: [email protected]

Procedures for working with owners

1. We only agree to work with the person who owns the real estate property, whether a natural or natural people or a legal entity and its legal representative. We only accept to promote and market properties which have been authorized and signed by the owner, this information will be verified in the public registry through the property (“finca”) number. If the person who owns the property does not reside in Panama, it is preferable to have a lawyer or attorney and / or legal representative in the country, if not, we can provide the service through our legal firm Panama Finance Law & Co. https://www.financelaw.com.pa/es/
2. In the event that the owner wishes to sell the real estate through our company, he must provide at least the following documents: Scan / Copy of the original deed of sale, identification documents of all owners and / or president and secretary of the legal entity, mortgage balance letter (if applicable).
3. Our company will make a "Competitive Price Assessment" (CPA), through public or private databases and in this way find and determine the correct price to sell the property faster according to the appropriate market value, this service is provided at no additional cost, unless it is an Official Appraisal as such.
4. It is preferable to deliver or manage the appraisal (accepted by banks) of the property before its promotion, although the price is determined by the market and the Competitive Price Assessment, we as a company can prepare a "Desk" appraisal for the client or its agent, such appraisal is not accepted by banks, it only serves to have a supporting document for the value of the property.
5. After having agreed on the sale price, our company will offer to market your property under our written authorization, which will allow you to have access to multiple local portals, with our legal services included in the sale fees. The agent can send the owner the link of the ads for them to be reviewed, so the client can validate that the information placed is correct (before proceeding with the aforementioned, verify that the ad is complete, well written and without spelling mistakes and with the right photos).
6. Once this process is done, the photos of the property will be taken. It is mandatory to take our own photos of the property and that they are professional photos. It is essential that, when coordinating the photo shoot, the property is well arranged and clean to ensure that the photos are of quality. At the time of the photo session, it is preferable that the owner remove the items and / or furniture that are not included in the sale or lease of the real estate. You will not be allowed to take photos from the internet or other ads, this is totally prohibited, nor do you use photos provided by the owner or third parties, or photos that show too many private or private articles.
7. To show the property, we will proceed to register the appointment in writing with the owner before taking the person or external agent with the client, in addition to making a basic filter and having the general or client profile, this is with a view to informing the owner of the person we are taking to show their real estate.
8. All contact with the owner will be through the listing agent, that is, the agent who managed to list the property and service the owner. And in turn, all contact with the buyer or lessee will be through the real estate agent that represents him or her, be it internal or external, that is, each agent will represent one half of the transaction in the cases in which it is this way, given there may be double-pointed cases, In that an agent represents both parties to the transaction, if both parties agree to that, in such case, it would move to a negotiation based on mediation.

Procedures for working with buyers or tenants

1. Collect the basic contact details of the person, full name, email and cell phone, in addition to obtaining a general profile of the person, in a nutshell, knowing who we are dealing with in general sense in order to be able to provide the necessary service according to the client profile, this is for the benefit of all parties, it is called "Know Your Customer".
2. At the same time, provide the client with all corporate and professional information of the company, i.e. "Know Your Agent", including but not limited to: company name, real estate license, physical office address, company corporate profile, etc.
3. Provide the client with properties in accordance with his / her profile, collect all documentation and due diligence for contracts and advise the client from beginning to end until he is given the key to his rented or purchased property.

Procedures for working with external real estate agents

1. Identify each other’s companies with the real estate license and / or natural persons license in case where it applies, this is the first step, it is like you real estate “ID”, or send a business card digitally or in physical form, therefore it is called a "business card". It is important to always present yourself professionally and politely. Preferable to use a WhatsApp business like the company and most of its staff have, with a professional company badge and other corporate information on the same cell phone.
2. If you are requesting photos and additional information of the property, please make the requests in writing, preferable by means of corporate email communication, we clearly understand that in today’s world we are much out on the street, mobilizing ourselves and attending appointments and other matters, however, in a corporate and professional world - what real estate should be and is for us - one should be able to communicate clearly with their corporate details via email.
3. Please register the client in writing, this is for the benefit of all parties, to save us time if we are already attending the same client or to let you know if the same property has already been shown to the person. Another benefit is in case the client contacts the agent later by other means, the client was already registered for the property that is going to be shown, this could be "counter intuitive", but if we analyze it well, it is obvious why we must register the client in writing with the external real estate agent, and if we are working with a real estate professional (see items 1 and 2), there should be no problem. Another added benefit of this is to avoid the famous "ghost clients" that sometimes make "appointments" that are then "canceled". Sometimes it is only for an agent to receive photos and information of the property. Please let’s register our clients so we can save time and be more professional.

Real Estate Purchase and Sale Procedures in Panama

1. Show Properties:Find a property that your client likes and negotiate the price and terms of the sale with the seller or their real estate agent:

Step # 1, listen to the buyer's needs. The buyer is offered certain properties that meet the property search criteria, desired characteristics and within budget. Buying real estate can be a more emotional than logical process, so the property should click with the buyer. Try to get more than one property for the buyer, and no more than 3 to 5 on average, unless he is giving you a free "real estate tour" with you. The more you show him, the more confusing they can get and make no decision. Be sure to ask the buyer if he is working with another Real Estate Agent as you can coordinate appointments with any other properties they want to visit with the idea of becoming your “Buyers Agent” or Buyer's Real Estate Agent, with whom the client will be working, so don't waste your time with non-loyal clients, especially if you are offering them a great buying experience, professional added value and first-rate service. Clients need to feel that you want to please them.

Time period: 1 day to 1 year (the least scenario is when the buyer knows what he wants, the properties are shown in 1 to 3 days or within a maximum of 1 to 2 weeks). The purchase may be immediate, or they may return between 6 months to 1 year to buy, we should never lose contact with customers.

2. Negotiation:Making an offer, counteroffer and acceptance of the final offer, preferably with the use of Offer Documents that the company has, which are professional and legally binding documents to the parties, which greatly facilitates the negotiation and closing of transactions.

Once the buyer is interested in a property, an offer is expected, which is immediately sent to the seller or his real estate agent, who will return with a Counter Offer, until the final accepted offer is reached. In Panama, due to the fact that the real estate agent can represent both parties (on certain occasions), this task can be challenging. You have to make sure that the buyer feels that you are looking after their interests when it comes to property quality, conditions and price; and at the same time, represent the seller or before his real estate agent, making sure that the property is sold at a reasonable market price.

In fact, on the occasions when we have "dual agency", we are in charge of looking after the interests of both, through a collective mediation agreed by the parties, i.e. both the buyer and the seller, and there is no one better than you, expert in the field of real estate, to quickly reach the "balance point" between all parties. However, increasingly or in most transactions, there is an Agent from the seller and an Agent from the buyer.

Time period: 1 to 2 weeks in the best scenario or 3 to 4 weeks in asynchronous communication between the parties, our recommendation is to always try to bring all parties together at least once in our corporate offices. This aspect will always be crucial and important throughout the process.

3. Reservation Agreement (“Agreement”) and / or Initial Payment to the Promissory Purchase and Sale Contract (“Contract”):

• The buyer can proceed with a Reservation Agreement and give a deposit to insure the unit and that it be removed from the market, it usually is a percentage of the initial payment. The usual is from $5,000 to $10,000 depending on the value of the property and it will really depend on the mutual agreement of the parties involved. The guidance, experience and negotiation of the Agent of the respective parties will be key in the whole process.
• The buyer can go directly to the Promissory Purchase and Sale Contract and give an Initial Payment at the time of signing. This payment must be at least 10% in cases where the bank pre-approval has been verified for the remaining 90% or in cash, or it can be 20% in cases where the bank pre-approval has been verified for the remaining 80% remaining or cash.
• Our office has both Reserve Agreements and Promissory Purchase and Sale Contracts that are used in practically all our transactions, to provide a faithful guarantee of the process and guarantee compliance with the responsibilities and obligations derived from the Agreement or Contract.

Time period: 5 to 15 calendar days for the agent to receive the deposit in cases where the Reservation Agreement is used. So that within 1 month approx. or upon mutual agreement of the parties, the Promissory Purchase and Sale Contract is signed.

4. Financing:Obtaining financing (when applicable) varies from bank to bank since each of them has its own requirements, policies and procedures. There is a list of documents that must be delivered to the bank for the client's credit to be analyzed and then, the Bank's Credit Committee can pre-approve the mortgage by issuing the "Irrevocable Promissory Payment Letter". This letter is delivered to the seller after signing the Promissory Purchase and Sale Contract with the times agreed by the parties in the "Contract" and will be made effective by means of a cashier's check issued directly by the bank, once the final deed has been registered and the property has been duly registered in the Public Registry of Panama in favor of the buyer, who, from that moment onwards, would become the owner of the property.

Time period: 1-2 months when it is a cash transaction, up to 3-4 months when it involves bank financing, it may take more time in certain situations with certain exceptional aspects of the transaction.

5. Terms, Conditions and Final Payment:The buyer and the seller need to agree on the terms and conditions that are established in the contract. The most important terms of the negotiation are: Payment structure and Schedule, Those responsible for the negotiations (understand all the good standing documents and other documents necessary to finalize the sale), who will act as Escrow Agent, (or financial agent or escrow agent of escrow account), if applicable.

The property is usually delivered once the last payment has been made, or the bank has executed the made the irrevocable promissory payment letter and the property has been successfully transferred to the buyer in the Public Registry of Panama, with some exceptions such as the property is not occupied, that delivery times can be negotiated, by means of the Key Handover Act, which is an additional document of which we have the Model in our office.

Time period for the Final Payment: 1 week to 15 days maximum (It is imperative to be aware of the lawyers) after the deed has been registered in the Public Registry of Panama.

6. Inventory:If the property is being sold with appliances, appliances, curtains, or furniture, an inventory must be made. The inventory consists of a list of items and preferably photographs (specific details of the product, device, such as brand, or serial number, must be included in it). Inventories can even be done by room. This inventory is a separate annex to the Promissory Purchase and Sale Contract. Banks usually do not accept Contracts with the inventory contained within the contract or as part of the sales price, this must be done separately.

Time period: 3 to 7 days (take photos and make the document to be signed and accepted by the parties.

Other considerations:

• The buyer may be buying the property in Cash or partially Financed, in which case the mortgage must be offered by a local bank. In both cases, an Irrevocable Promissory Payment Letter is required to safeguard against money laundering and further guarantee the transaction.
• The seller, to sell the property, needs to be in Good Standing with the government of Panama, and it is his duty or that of his lawyer, to catch up on all pending issues so that the property is suitable for sale (this information is expanded in point 9).
• The Good Standing for the Yearly Franchise Tax is also necessary when it comes to legal entities; and if the property is under a Corporation and the buyer buys the shares, the seller must pay 5% Tax for the sale of shares, to the Panamanian Government, if it is a sale of a Corporation.
• The seller or his lawyer must verify the cadastral value of the property in ANATI, to see if it has been updated or not, otherwise there may be a necessary period to update it. This value is used when calculating and paying the 3% Income Tax on the capital gain advance and the 2% real estate transfer tax, since the highest value is chosen, between the sale price or the updated cadastral value, for this last tax. It should also verified if there is a current exemption period for property improvements, as far as the Property Tax is concerned, or if this exemption has been registered or not for said property and/or if it can still be registered and the seller will still be the person responsible for paying your property tax and processing all these respective good standing certificates. 
• The Promissory Purchase and Sale Contract and other related documents, is valid only in Spanish, the English version can be used as a reference, and if a certified public translator is hired, this would be an additional cost. There must be a clause that ensures that the foreigner understands Spanish, if that service is not contracted.
• For legal entities, a countersigned act is required that authorizes the sale of the property, as well as designates the person who is authorized to sign all the respective documents by said entity, who is usually the legal representative of the legal entity and/or can be another person related or not to the entity.

1. The following information is needed to complete the draft of the Promissory Purchase and Sale Contract: 

• Updated copy of the identity card or passport of the seller (s) and buyer (s).
• Contact information of the seller (s) and buyer (s): email, address, home, office and cell phone.
• Establish in the final sales contract, who will receive the final payment, so that the Buyer's bank issues the Irrevocable Promissory Payment Letter and eventually the cashiers check, according to the initial instructions in the original contract, to avoid delays at the end a Letter of Assignment must be addressed to the bank that issues the Irrevocable Promissory Payment Letter. If it is a legal entity, it must additionally have Minutes that approves said transfer of payment, which, in turn, is left to the bank's discretion to approve or not.
• Minutes of Sale endorsed by a local lawyer, the seller is responsible for this task with his lawyer.
• If the owner or legal representative of the property being sold is a foreigner, he must previously obtain a tax identification number (8NT), from the General Directorate of Revenue of the Ministry of Economy and Finance, the seller is responsible for this task with his lawyer.
• To be able to do any property handling before the DGI (General Directorate of Income), a NIT must be obtained, which is the Tax Identification Number, which is a private, secret and non-transferable code that only the taxpayer and/or attorney or legal representative must know. It is authorized by the DGI (General Directorate of Income), to identify taxpayers in their tax transactions that require confidentiality. The NIT enables the taxpayer to: Obtain information on their balances with the DGI, consult the affidavits, payments and other acts presented; and submit affidavits interactively.

Time period: 1 month to 3 months (It is imperative for all parties to be aware, buyer, seller, agents and lawyers)

8. Signing of the Promissory Purchase and Sale Contract by the parties:

Option A: The party outside the country, seller or buyer, will send 4 to 5 sets of original contracts duly signed via Courier: 1) buyer, 2) seller, 3) buyers bank, 4) sellers bank, 5 ) agents and/or attorneys and once the other party signs it, an original copy is sent back.

Once the buyer's bank has received this contract, an irrevocable promissory payment letter is usually issued from 80% to 90% of the outstanding balance in the name of whoever has assigned the seller in the Promissory Purchase and Sale Contract, who may be the same.

Option B: If a Power of Attorney (POA) has been granted by the seller, for example, to his Lawyer in Panama or a third party, this individual will act on his behalf to: the signing of the promissory purchase and sales contract, the final purchase and sale deed before, notaries, banks, mortgage lifts, obtaining and payment of good standing certificates, collection of funds, and/or sending of final transfer to the seller, or anything indicated by the Power, which is a separate additional document. This carries an additional cost, since the person assigned with the POA must personally appear before all these private, governmental instances, among others.

Time Period: 1 to 3 weeks, depending on whether the seller signs the contract, or if they have signed a POA.

9. Payment of taxes and any additional charges:

From the initial payment received, the seller needs to cover the following selling expenses:

• Good Standing of the DGI (General Directorate of Income), Property Transfer Tax: 2% of the total sale price or cadastral value, whichever is higher.

It is normal practice in Panama for the seller to pay the property transfer tax, in some cases, depending on the negotiation between the buyer and the seller, the seller may insist that the buyer pays the property transfer taxes, mutually agreed between the parties, but it is not common.

• Good Standing from the DGI (General Directorate of Income), Income Tax for Advancement of Capital Gains: 3% of the total sales price (some people may mistakenly assume that this 3% is charged on profit of capital of the same property which is not the case).
• Good Standing from the DGI (General Directorate of Income), Property Tax (Land and/or Improvements).
• Good Standing of the Yearly Franchise: Corporation Tax or to other legal entities.
• Good Standing of P.H. (Horizontal Property).
• Good Standing from IDAAN (Water).
• Expenses to register the Purchase and Sale Deed: if the bank finances the buyer, it usually includes it in the closing costs, if the purchase is in cash, the buyer must pay these deed, notary and public registry expenses, which will be quoted separately, the Promissory Purchase and Sale Contract has a clause stating that these expenses are borne by the Buyer.
• Legal Expenses (Lawyers, if applicable).
• Real Estate Brokerage Commission according to Law (usually 5% plus ITBMS of 7% according to Law or sales tax, on sales price).

NOTE: In the cases that apply, the mortgage of the property must be lifted by means of a cancellation statement managed by the bank where the mortgage is located and/or the trust of the property must be lifted by means of a disaffection statement managed by the trustee where the trust is held. To begin the said process, the original irrevocable promissory payment letter issued by the buyer's bank must be delivered and the seller must pay the additional expenses for managing these Minutes.

Time Period: 1 to 4 weeks. If there is a previous mortgage to pay, it must be raised before the property can be financed again (additional period of approx. 1 month).

10. Signature of definitive deed of sale, notarization and registration to the Public Registry of Panama:The Final Sales Deed needs to be signed by all parties. The deed is managed by the buyer's lawyer in cases where the sale is with Cash and usually signed at the notary appointed by said lawyer; and the deed is managed by the buyer's bank in cases where the sale is financed with a Mortgage and is usually signed at the branch designated by the bank in this case.

Once this final deed of sale is duly signed by the seller and the buyer and also by the firms responsible for the cancellation and/or disaffection minutes, when applicable, it is then notarized, charged to the buyer, to then continue its registration process in the Public Registry of Panama.

Within the Public Registry of Panama, the final deed of sale can take from 1-3 days if the Shift Alteration is paid, which is an express service, approximately $300. Currently it is the additional cost of this service offered by the Panamanian government, or 1 to 3 weeks if it is registered under a regular procedure.

When the deed leaves the Public Registry, the seller can make the Irrevocable Promissory Payment Letter effective, so the buyer's bank will issue the final cashier's check for the unpaid balance. 

Time Period: 1 to 2 weeks to wait for the check to be issued depending on the bank.

• Power of Attorney (POA) may be necessary if the buyer or seller is not in the country at the time of signing the final deed of sale. The POA signature must be made in your country and duly translated, notarized and apostilled. We have made several transactions in this way, please consult us about these procedures if they apply to you.

When the POA arrives in Panama, it is taken to the Ministry of Foreign Affairs to legalize it and later it goes through a notary to be able to raise it to Public Deed and the banks now require that this POA, also be registered in the Public Registry of Panama (Regular registration of a POA is from 2 to 4 weeks), the registration costs are given by the Public Registry of Panama.

Time Period: 1 to 3 days until both parties sign the final deed of sale. When it is a bank-financed sale, the legal department of the banks can take 3 to 4 extra weeks until the bank's directors verify and sign that deed, and it can take from 1 to 3 days (with Shift Alteration), or from 1 to 3 weeks within the Public Registry of Panama.

11. Final Payment and Release of the Funds:The seller can approach the buyer's bank to make his Irrevocable Promissory Payment Letter effective through a Cashiers Check for the unpaid balance of the sale that is pending of the transaction, which will be delivered to the seller once the property has been duly registered on behalf of the buyer. It can take an additional 3-5 business days to cash that check to any bank account in Panama.

You can verify if the property has finally been transferred by reviewing its status through www.registro-publico.gob.pa, either by your lawyer or agent.

Time Period: 1 to 15 days approx. 

SIMPLE SUMMARY - PURCHASE OF A PROPERTY.

1. Seller. Acceptance of Price offered by the Buyer. 
2. Agent. Draft Purchase Offer Document and manage the signatures of all parties. 
3. Lawyer. Draft Contract Promissory Purchase and Sales Contract.
4. Agent. Manage the appointment, signatures of all parties and delivery of the initial down payment. 
5. Buyer. Send the Promissory Purchase and Sales Contract signed to the Bank, to obtain the Irrevocable Payment Promissory Letter, either with own funds or through an approved mortgage credit. 
6. Miscellaneous matters to be covered by the parties. Mortgage Balance Letter (if applicable), appraisal approved by the buyer's bank, obtaining insurance (fire, life, etc.), etc. 
7. Buyer. Signature of the bank's terms and conditions for the issuance of the Irrevocable Payment Promissory Letter. 
8. Bank. Issuance of the Irrevocable Payment Promissory Letter, it is delivered to the agent, lawyer or the seller directly, depending on how the transaction was structured. 
9. Taxes. Payment of real estate property taxes, real estate transfer (2%) and advance on Income Tax for capital gain from a real estate sale (3%). 
10. Good Standings. HOA fees and IDAAN. 
11. Legal Documents. Minutes of the Company or Foundation that authorizes the sale, Minutes of Transfer of Funds for the buyer's bank, Minutes of Sale, Minute of Cancellation / Disinfection / Release of Lien (either Mortgage and/or Trust), this last minute requires that the lawyer who signs for the bank, sign again in the same definitive protocol of sale. Typically, a bank takes 3 to 6 weeks to issue the Minute after receiving the Irrevocable Payment Promissory Letter and it takes another 3 to 6 additional weeks for the lawyer who signed the Minute to sign the definitive Purchase and Sale Protocol. 
12. Bank / Notary. Preparation of the definitive Purchase and Sale Protocol and summons to all parties to go to sign. 
13. Protocol. It is sent directly to the Public Registry for registration and that is where the final transfer is registered and the Public Deed of Sale is generated. 
14. Seller. Must go to the issuing bank of the Irrevocable Payment Promissory Letter with this original document to request the Cashiers Check or Checks for the cancellation of the outstanding balance. 
15. Buyer. Update of the Public Deed in ANATI, to adequately reflect that the newly purchased property is already in the name of the buyer with the values updated at the recent purchase price. 
16. Agent. Manage the delivery of the keys to the Buyer, who is now the new owner.

For general administrative and real estate inquiries please write to: [email protected] 

For general legal and tax inquiries please write to: [email protected]