Titled Property vs. Right of Possession in Panama

Foreigners can own property in Panama. Property you might want to buy here is held by the current owner in two ways.

Titled Property

The owner has done the appropriate paperwork to obtain legal title to his Panama property. Thus he, and you, can obtain a mortgage on this property. The title to the Panama property is transferable and ownership is clear.

Derecho Usario

Most of the rural land in the islands and in Panama's interior has been lived on, died on, farmed, and used for any and all purposes for generations. This has gone on without the owners having title to the property. In the last generation, the Panamanian government encouraged users of property to register with the Department of Agriculture. This was a land reform act of 1971. Technically, those who have registered have a right to use Panama property, namely a "Derecho Usario." This right to use or right of possession to Panama property is not a title. The government still owns the land.

Historically the boundaries of these right to use Panama properties are determined "por machetazo" which translates to "by machete." The right of possession Panama property owners keep the boundaries clear by cutting brush in a timely manner. (This can be quite often in the tropics.) If boundaries are not kept clear and one owner or the other uses his neighbor's property for five years ownership of the used portion goes to the user similar to "right of way" laws in the USA. Moving away and not using the land does the same thing. If you don't use it you lose it.

For a foreigner to purchase Panama right to use property or right of possession property it is advisable to retain the services of a qualified Panamanian attorney. Ask ABPanama for a referral if there is a piece of "derecho usario" property that catches your eye.

Banks do not provide mortgages for Panama right to use or right of possession properties but they can be titled allowing a mortgage. It is an ongoing policy of the Panamanian government to encourage titling of property.

A March 2008 press release in La Prensa, Panama notes that the government is starting a program the name of which roughly translates, "Title Your Property, a very useful option," in order to promote titled ownership of property. The government cannot and will not take away these right of possession properties without condemnation proceedings and payment of a fair market value. The problem has to do with resale, investment on the Panama right to use property such as a home, and security of ownership.

All in all it is best to ask ABPanama for a referral to an appropriate Panama real estate attorney when you think of buying any real estate in Panama.