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contact@aupanama aupanama By Sébastien Picart y Manoj Chatlani +507 610 947 16

PANAMA REAL ESTATE LAWS. contact@aupanama.com www.aupanama.com By Sébastien Picart y Manoj Chatlani +507 610 947 16. PANAMA LAW FIRM. PANAMA - REAL ESTATE LAWS CONSTITUTION Article 44 of the National Constitution of the Republic of Panama:

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contact@aupanama aupanama By Sébastien Picart y Manoj Chatlani +507 610 947 16

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  1. PANAMA REAL ESTATE LAWS contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  2. PANAMA - REAL ESTATE LAWS • CONSTITUTION • Article 44 of the National Constitution of the Republic of Panama: • "It is granted the private property acquired according to the Law by natural or juridical persons". • CIVIL CODE • AGRARIAN CODE • FISCAL CODE (PROPERTY TAX) • HORIZONTAL PROPERTY LAW • MINISTRY OF HOUSING LAW • LEASE (PROPERTY RENTAL) LAW • ANATI (PROPERTY TITLE GOV.) contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  3. PANAMA - REAL ESTATE LAWS GovernmentInstitutes: NOTARY: Public Deed draft 2. PUBLIC REGISTRY: Properties Registration, assign a "Finca" number Registration System through the History: Big Books (Tomos): Microfilm: Scanner: Finca, Tomo, Folio 2. Finca, Rollo, Imagen 3. Finca, documento 3. ANATI: PropertyTaxes Payment of Property Taxes: Calcullation: by year divided in 3 installments: by April 30th, August 31st, and December 31st contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  4. PANAMA - REAL ESTATE LAWS LEGAL DOCUMENTS EXAMPLE: 1. Title Deed: contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  5. PANAMA - REAL ESTATE LAWS LEGAL DOCUMENTS EXAMPLE: 2. Survey: contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  6. PANAMA - REAL ESTATE LAWS LEGAL DOCUMENTS EXAMPLE: 3. Property Tax Statement - MEF contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  7. PANAMA - REAL ESTATE LAWS LEGAL DOCUMENTS EXAMPLE: 4. Property Tax Good Standing Certificate - MEF contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  8. DESCRIPTION: TITLE PROPERTY: RIGHTS OF POSSESSION: 1. Ownership Private ownership Owner is the Government Only possession can be acquired 2. Government Public Registry Any Government Institute Registration can Certify: Anati, Mayor (Alcalde), Chief of Police 3. Necessary Title Deed Physical occupation, ROP requirement (registration) Certification, good faith,... PANAMA - REAL ESTATE LAWS TITLE PROPERTY -vs- RIGHTS OF POSSESSION: contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  9. NEW or USED: 1. Home (House): Pre-Construction -vs- Used 2. Apartment: Pre-Construction -vs- Used 3. Land: Small Lot -vs- Hectares of Land With Furniture -vs- Without Furniture PANAMA - REAL ESTATE LAWS PROPERTIES OPTIONS: contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  10. PANAMA - REAL ESTATE LAWS BEACH SET BACK AND OCEAN PROPERTIES TITLE EXPLANNATION: : Main Land Main Land Titled area Titled --------------------------------------- ROP area that can be titled 200mts set back from high tide beach (cannot be titled) 22mts set back beach (cannot be titled) 22mts set back high tide high tide Ocean Ocean contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  11. PANAMA - REAL ESTATE LAWS PROPERTY TAX COMBINED SCALE (for Land and Houses - not P.H.): REGISTERED VALUE: PROPERTY TAX: AMOUNT: 1. $30,000 or less 0% $0.00 2. Over $30,000 to $50,000 1.75% $350.00 3. Over $50,000 to $75,000 1.95% $487.50 4. Over $75,000 2.1% $ _______ contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  12. PANAMA - REAL ESTATE LAWS PROPERTY TAX COMBINED SCALE (for Apartments in P.H.): IF IMPROVEMENTS ARE EXONERATED: REGISTERED VALUE OF LAND: PROPERTY TAX: Any amount 1% AFTER IMPROVEMENTS EXONERATION: REGISTERED VALUE: PROPERTY TAX: AMOUNT: 1. $30,000 or less 0% $0.00 2. Over $30,000 to $100,000 ($70,000) 0.75% $525.00 3. Over $100,000 ($....) 1% $ ______ contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  13. PANAMA - REAL ESTATE LAWS IMPROVEMENTS EXEMPTED OF PROPERTY TAX Property Tax Exoneration can apply Improvement value Property Tax Exoneration does not apply Land proportional value Your Property Registered Value contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  14. PANAMA - REAL ESTATE LAWS IMPROVEMENTS EXEMPTED OF PROPERTY TAX 20 years Tax Exoneration on Improvements (NOT ON LAND): IF CONSTRUCTION PERMIT IS ISSUED AFTER SEPT.1, 2006: RESIDENTIAL PROPERTIES: REGISTERED VALUE: IMPROVEMENTS EXONERATION: 1. Up to $100,000 15 years 2. Over $100,000.00 to $250,000 10 years 3. Over $250,000.00 5 years If Construction Permit is issued by July 1st, 2009 and Registered at the Public Registry before December 31, 2011. COMMERCIAL PROPERTIES: REGISTERED VALUE: IMPROVEMENTS EXONERATION: Any amount 10 years contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  15. PANAMA - REAL ESTATE LAWS Improvements "Not" Registered EXAMPLE OF POSSIBLE CONSEQUENCES FOR NOT REGISTERING THE IMPROVEMENTS: Title Land Registered BEFORE SALE: Improvements Reg. Value: $0 + Land Reg. Value: $100,000.00 ------------------ Total Property Reg. Value: $100,000.00 SALE TRANSACTION: Improvements Reg. Value: $0 + Land Reg. Value: $600,000.00 ------------------ Total Property Reg. Value: $600,000.00 FUTURE PROBLEM: Improvements Reg. Value: $500,000.00 + Land Reg. Value: $600,000.00 ------------------ Total Property Reg. Value: $1,100,000.00 contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  16. PANAMA - REAL ESTATE LAWS PROPERTY OWNERSHIP OPTIONS: Ownership in Personal Name Corporate Ownership PANAMA CORPORATION or PRIVATE INTEREST FOUNDATION -vs- contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  17. PANAMA - REAL ESTATE LAWS WHY IS RECOMMENDED TO HOLD A PROPERTY IN A CORPORATION OR A PRIVATE INTEREST FOUNDATION: contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  18. PANAMA - REAL ESTATE LAWS CORPORATE STRUCTURE RECOMMENDED FOR: ESTATE PLANNING PRIVATE INTEREST FOUNDATION (PIF) Corporation A Corporation B Corporation C Corporation D Bank Accounts Family Home Business Car contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  19. PANAMA - REAL ESTATE LAWS SALES OPTIONS & SALES TAXES: Shares Transfer Transaction Must pay: 5% Shares Transfer Tax PANAMA CORPORATION BUYER Title Transfer Transaction Must pay: 2% Title Transfer Tax, plus 3% "Advance" Capital Gains Tax contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  20. PANAMA - REAL ESTATE LAWS 3% "ADVANCE" Capital Gains Tax -VS- 10% Capital Gains Tax: EXAMPLE No.1 OF A SALE TRANSACTION: Sale Value: $100,000.00 - Reg. Value: $20,000.00 ------------------ Capital Gains: $80,000.00 EXAMPLE No.2 OF A SALE TRANSACTION: Sale Value: $100,000.00 - Reg. Value: $98,000.00 ------------------ Capital Gains: $2,000.00 -VS- CALCULLATION IN EXAMPLE No.1: 2% Title Transfer Tax: $2,000.00 + 3% "Advance" C.G.T.: $3,000.00 ------------------ Total: $5,000.00 10% C.G.T.: $8,000.00 CALCULLATION IN EXAMPLE No.2: 2% Title Transfer Tax: $2,000.00 + 3% "Advance" C.G.T.: $3,000.00 ------------------ Total: $5,000.00 10% C.G.T.: $200.00 contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  21. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: 1. Negotiation - Seller, Broker & Buyer 2. Due Diligence 3. Promise to Purchase Contract 4. Closing contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  22. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: Negotiation - Seller, Broker & Buyer: 1. Property Listing: 1. Property inspection, Title & Survey verification, Seller's Id and documents, Representation Agreement signature, pictures, etc. 2. Title Search: Public Registry, M.E.F., etc. 3. Contact with Buyer and Buyer's inspection on Property 4. Negotiation of all Terms and Conditions of Transaction: sales price, down payment amount, balance at closing, conditions or limitations, mortgagecancellation, mortgage constitution, etc. 5. Letter of Intent signature or Reservation Agreement (down payment either refundable or not refundable) contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  23. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: 2. Due Diligence: 1. Title Search at the Public Registry. Verify registered information: ownership, mortgage, size, value, improvements if any, liens, etc. 2. Title Search at Anati (before Catastro). Verify registered information: ownership, size, boundaries, property tax, improvements if any, etc. 3. Property measurement with Surveyor 4. If Mortgage on property, update balance letter request 5. Etc. contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  24. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: Due Diligence: Title boundaries verification extra area Title line (registered) Fence line affected area contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  25. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: EXAMPLE OF PROPERTY WITH BOUNDARIES PROBLEMS: contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  26. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: 3. Promise to Purchase Contract: Most important document in the Transaction - regulates all the rights and obligations of both parties CLAUSES: 1. Parties description 8. Closing date 2. Property description 9. Seller's Penalty for breach 3. Interest to Sell and Buy 10. Buyer's Penalty for breach 4. Price 11. Laws applicable 5. Payment Terms 12. Date of signature 6. Seller's Obligations 13. Signature 7. Buyer's Obligations "FORMALITY": PUBLIC DEED & REGISTRATION IN THE PUBLIC REGISTRY contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  27. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: 4. Closing: 1. Issuance of Bank Promise to Pay Letter 2. Mortgage cancellation (if any) 3. Payment of Sales Taxes (by Seller) 4. Closing Contract signature 5. Registration 6. Payments - liquidation of Bank Promise to Pay Letter 7. Update of new property ownership in ANATI and ANIP contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  28. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: CHECKLIST OF DOCUMENTS: 1. Seller's Id 2. Seller's Entity copy (if Entity ownership) 3. Seller's Entity good standing certificate (if Entity ownership) 4. Minutes of Entity to authorize sale or Power to Sale 5. Property Title deed copy 6. Property good standing certificate 7. Property survey with registration stamps 8. Improvements registration deed (if Improvements) 9. Improvements construction plans (electrical, plumbing, design, etc.) 10. Improvements construction permit 11. Improvements occupation permit 12. Pictures 13. Water (IDAAN) good standing certificate 14. Administration good standing certificate (if Building or PH) 15. Mortgage balance letter updated (if mortgage) 16. Mortgage cancellation minutes (at Closing) 17. Buyer's Id 18. Buyer's Entity copy (if buying through Entity) 19. Buyer's Entity good standing certificate 20. Minutes of Entity to authorize purchase or Power to Buy contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  29. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: BANK PROMISE TO PAY LETTER EXPLANNATION: 2. Step: Bank issues Promise to Pay Letter with the condition of Title Transfer 1. Step: Buyer deposits at Bank balance amount 3. Step: Seller receives Promise to Pay Letter Bank Promise to Pay Letter Local Bank in Panama SELLER BUYER 5. Step: Seller proves to Bank the Transfer of Title and gets paid 4. Step: Seller transfers Title to Buyer's name Public Registry of Panama contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  30. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: BANK PROMISE TO PAY LETTER EXPLANNATION: REGISTERED OWNER: 1.SELLER 2. SELLER 3. SELLER 4. BUYER PANAMA TITLE TRANSFER REGISTRATION SYSTEM: 1. M.E.F.: SELLER pays Sales Taxes 2. NOTARY: SELLER signs Public Deed where transfers Property Title to BUYER 3. PUBLIC REGISTRY: Public Deed of Transfer of Title is "presented" 4. PUBLIC REGISTRY: Public Deed of Transfer of Title is "registered" contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  31. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: "PH" (HORIZONTAL PROPERTY): Important Points in Pre-Construction: 1. Construction completion delay 2. Building not ready and Occupation Permit issuance 3. Increase of Construction Costs 4. Rent or Monthly Fee if payment by Promise to Pay Letter or payment delay 5. Land proportional value "not Exonerated" of Property Tax contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  32. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: "PH" (HORIZONTAL PROPERTY) - CLOSING: Notary and Public Registry registration Closing Legal docs completion: Minutes of Sale, etc. Bank payment of balance Promise to Pay Letter delivery Sales Contract signature Occupation Permit Property 2nd Inspection / Keys collection "Acta de Entrega" Property Inspection Property fixings Utilities connection Furniture contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  33. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: LEASE CONTRACT - CLAUSES: 1. PARTIES 2. PROPERTY DESCRIPTION AND OWNERSHIP 3. INTEREST TO LEASE - OBJECT OF THE CONTRACT 4. RENTAL PRICE. MUST INCLUDE 7% ITBMS 5. 7% ITBMS PAYMENT TO M.E.F. 6. DEPOSIT 7. CONTRACT TERM 8. INVENTORY (FURNISHER) 9. OBLIGATIONS OF THE LESSOR 10. OBLIGATIONS OF THE LESSEE 11. PROPERTY INSPECTION - KEYS RECIPT STATUS AND KEYS RETURN STATUS 12. EARLY TERMINATION BY LESSOR -VS- EARLY TERMINATION BY LESSEE 13. PROPERTY VACATION RIGHT AT JUDICIAL COURT: - 2 MONTHS OF NON PAYMENT - TERMINATION OF CONTRACT 14. PICTURES contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  34. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: BROKERAGE COMMISSION - CONTRACT: 1. Exclusivity -vs- Representation (Commission) Agreement 2. Formality 3. Mistakes by Brokers (not calcullation of sales taxes and sales commission) Standard Sales Commission 5% (Also 3% - 10%) 4. Percentage -vs- Fix amount 5. "Sobreprecio" 6. Several Brokers SELLER BUYER SELLER'S BROKER 1 SELLER'S BROKER 2 SELLER'S BROKER 3 BUYER'S BROKER 1 BUYER'S BROKER 2 BUYER'S BROKER 3 contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  35. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: PICTURES (BEST EVIDENCE): Benefits: 1. Avoid squatters rights 2. Keeps evidence of status of things during time 3. Etc. After rent Before rent contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  36. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: CONTACT DIRECTORY: 1. Seller e-mail phone 2. Seller's Broker e-mail phone 3. Seller's Attorney e-mail phone 4. Seller's Bank Officer (mortgage cancellation) e-mail phone 5. Buyer e-mail phone 6. Buyer's Broker e-mail phone 7. Buyer's Attorney e-mail phone 8. Buyer's Bank Officer (mortgage constitution) e-mail phone contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  37. PANAMA - REAL ESTATE LAWS REAL ESTATE TRANSACTION PHASES: BROKERS - ESCROW PAYMENTS: Responsibility of Seller: Clean Title & Property Responsibility of Buyer: Payment contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

  38. PANAMA - REAL ESTATE LAWS Thank You contact@aupanama.com www.aupanama.com BySébastienPicart y ManojChatlani +507 610 947 16 PANAMA LAW FIRM

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