Panama property law distinguishes between two kinds of property, namely titled property and public, or state-owned property. In Panama investment law, titled property is that property whose ownership, area, value, boundaries and details are recorded in the Public Registry of Panama. The Property section of the Public Registry contains a recording of all titled property in the Republic. Public or state-owned property includes all lands and territories owned by the Republic of Panama. These lands can be used in several ways:

• By an individual or company once administrative concession has been granted.
• For agricultural purposes once Right of Possession certification has been granted by the Ministry of Agriculture. Law No. 2, enacted in 2006 acknowledges recognized Right of Possession land as possible subject for concession.

Concessions are defined as lease agreements, with pre-established time frames and lease amounts, between the Ministry of Economics and Finance and individuals or corporations. Panama Property Law No. 2 defines the following characteristics for concessions located within the tourism zones as defined by Ministry of Tourism:

• The length of concession periods granted to investors for use of state-owned land depends on the size of the investment and the potential for employment.
• The procurement of concession on land to be used for tourism projects will be accelerated.
• All improvements and construction on the concession lands may be titled and recorded in the Public Registry.
• Panama Property Law No. 2 of 2006 creates a Ventana Unica or Express Window within the Cadastral office of the Ministry of Economy and Finance which is the authority in charge of receiving all applications, in addition to processing all approvals and authorizations required for concessions. This department will have representatives from all entities whose approval is necessary to start a project. To speed start up, the Ventanilla Unica department may issue provisional requirements for permanent concession once the developer presents all requirements.
• To obtain a concession, the Ministry of Economics and Finance must receive:

• A preliminary master plan
• A budget
• Development plans
• Proof of financial capability
• A certificate from the IPAT (Panamanian Institute of Tourism) showing that the project is located within a tourism development zone.
• Environmental Impact and Social Impact Studies.
• Certificate of Registration with the Tourism Enterprise Registry of the IPAT

Per the Panamanian Constitution, island ownership had been limited to nationals, but due to the ongoing interest in tourism-related investments, Law No. 2 was created to open certain areas to foreign investment. Through Panama legal services, this law provides the following incentives to foreign and national individuals as well as corporations interested in purchasing island territory for developing a tourism project:

• Island Territory may be sold for tourist-related purposes, provided that the amount of the investment and number of jobs to be created as a result is confirmed.
• Only 50% or less of an island can be sold to foreigners or foreign interests in a corporation. In addition, the sale of the island territory must be submitted for public bidding. One exception to this exists; projects with right of possession already initiated or in place on an island before the enactment of Panama Property Law No. 2 may request direct sale of the island property.
• Individuals or corporations legally occupying island territory will have the right to obtain a concession and shall be able to transfer it to a third party.

Due to the nature of islands, these restrictions have been placed for these special tourism areas:

• The lands in question cannot be six miles of national borders.
• The island cannot be historical or national heritage areas.
• The lands in question cannot have been dedicated to the conservation of the environment.
• The islands in question cannot be part of an Indian Reservation.
• The construction over coral formations is forbidden as well as any activity that may cause the death or destruction of their ecosystem.
• The cutting, use or commerce of mangroves, their products, parts or derived products is forbidden, except for tourism projects after the approval of the respective Environment Impact Study.
• Beachfront property concessions may only be granted up to 22 meters from the high tide mark. The area of 10 meters from the high tide mark is considered beachfront and cannot be granted concession under any circumstances. The area of 12 meters from the beachfront can be granted concession as a coastal easement.

There is a special procedure for possession rights claims of national island property lasting for at least 2 years before the enactment of the Law No. 2. If these people can prove the land has been used for their own home or agricultural purposes, these people will be granted a concession of 90 years without having to participate in a public bidding process, not having to comply with the requirement of posting bond, and being exempt from payment of concession lease.

This investment law makes available island areas which were previously unavailable to foreign investors. Since the law is relatively new, it is wise to utilize Panama legal services to help interpret and execute any purchases in these areas.