Buying a Condo in Panama: Pre-Construction Contracts, PH Rules & Closing

Pre-construction vs resale: the legal risks when you buy an apartment in Panama

Resale is the safer legal position: you buy a registered unit that you can inspect and check at the Public Registry. Pre-construction is usually cheaper, but you pay a large share of the price to a developer years before your unit exists as a separate property. Your nationality does not change your rights in either case, and the border-area restrictions that apply in parts of the country do not affect Panama City.

The general purchase process for houses, land and apartments is in our guide to buying property in Panama as a foreigner. This page covers what is specific to condos: developer contracts, building (PH) rules, short-term rental limits and closing.

For price context, as of October 2026 new compact condos in Panama City list from about USD 160,000. New and pre-construction units in Bella Vista, Amador and Coco del Mar list at about USD 3,700-4,000 per m², and one-bedrooms in Costa del Este at about USD 264,000-331,000. These are asking prices, not closed sales. Yields and neighborhoods are covered in our guide to Panama apartments for foreigners.

Market practice as of October 2026. Contract terms vary by developer and seller.

What goes wrong with Panama pre-construction

The failures we see most often are predictable. The building is delivered late, and delays of a year or more are common enough that you should plan for them. Finishes, window lines or amenities differ from the renderings, or the unit measures less than advertised. In the worst case the project stalls with your installments spent.

How to check a developer before you pay

• Buildings the developer has actually finished, whether they were delivered on time, and conversations with owners who live in them.
• Construction permits that are issued, not "in process".
• A Public Registry certificate on the land showing it is titled to the developer or its trust, and listing every mortgage or encumbrance on it.
• Whether buyer payments go into a pre-sale trust (fideicomiso de preventa) with a bank or licensed trust company, and what conditions release that money to the developer.
• The developer's financing: who lent the construction loan and on what terms the bank releases each unit from it.

When we vet a pre-construction project for a client, the land certificate and the trust documents come before anything in the sales package.

What goes wrong with resale apartments

The risks in a resale are in the paperwork, not the concrete. These include unpaid condo fees, a seller's mortgage that is not cancelled at closing, and extraordinary assessments the owners have already approved, such as a facade or elevator project. Another common one is a building rule that bans the rental plan you bought for.

If the seller offers to sell you the company that owns the apartment instead of the apartment itself, be careful. You inherit that company's whole history, including its debts and tax filings. The trade-offs between holding property directly and through an entity are in our comparison of a Panama corporation, LLC and foundation.

What the promesa de compraventa must say: deposit, delivery and penalties

The promesa de compraventa (promise to purchase) has to carry all the protection you need before the deed. It must cover the price, a payment schedule tied to construction milestones, who holds your money, and a firm delivery date with a defined penalty. It also needs the exact unit and its area, the finishes, and what you get back if the project fails. Anything it leaves out, you generally cannot claim later.

The typical pre-construction payment schedule

Typical market structure for Panama City projects as of October 2026. Some developers ask for 20-30% down. Every schedule is negotiable before signing.

Clauses to insist on

• Unit number, floor, parking and storage numbers, and the area in m², with how it is measured (interior only or including walls and balcony).
• A finish schedule (materials, appliances, air conditioning) attached as an annex, not "similar quality".
• A delivery date, a short and defined grace period, and a daily or monthly penalty paid to you after it.
• A definition of "delivery": occupancy permit issued, common areas finished, and the unit registered as its own finca so the deed can be signed.
• Your right to cancel and receive a full refund, plus interest or a penalty, if delivery slips beyond a fixed date.
• Where every payment goes (trust or escrow), and what happens to that money if the project is abandoned.
• A narrow force majeure clause. Be wary of wording broad enough to excuse any delay.
• What happens to your deposit if your bank declines the mortgage for the balance.
• Your right to assign the contract, and the conditions for doing so.

What happens if the developer delivers late

In practice, your remedy for late delivery is whatever the promesa says. A clear delay penalty and a cancellation right with a full refund are enforceable. Without them you are left with general Civil Code claims for breach, which are slow and uncertain.

The Civil Code does give one specific remedy on area. If a property sold by the unit of measure cannot deliver the area stated in the contract, the buyer may ask for a proportional price reduction, or cancel if the shortfall exceeds one tenth of the area or price.^[1]

The gap between handing over the keys and signing the deed is also regulated. Under Law 284 of 2022, as generally applied, a promesa may charge you for that period, but the charge is capped at 1% of the outstanding balance and may run no longer than three months from delivery. The cap does not apply if the delay is caused by you or your mortgage process. Cancelling and recovering your money from a developer that will not deliver is litigation, which our Panama litigation team handles.

Register the promesa

The registration and its limits come from Article 1221 of the Civil Code, as applied by the Public Registry.^[2] Many developers resist registering, or register only on request. Whether it can be done for your unit depends on how the project's land is titled, so this is something to settle before you pay the 10%.

Selling your contract before delivery

Some buyers plan to "flip" by assigning (cesión) their contract to a new buyer before delivery. Whether you can depends entirely on the promesa. Many contracts ban assignment, require the developer's written consent, or set conditions such as a minimum percentage paid. The tax treatment of an assignment also differs from a deeded sale. Confirm both before you count on a resale profit.

We review promesas line by line and return a marked-up version showing the changes worth asking for, before you sign or pay the down payment. You can send yours through the contact options at the end of this page.

PH law: condo fees, building rules and Airbnb restrictions

Every condo building in Panama is a horizontal-property regime (propiedad horizontal, PH) governed by Law 284 of 14 February 2022, which replaced Law 31 of 2010.^[3] The owners' assembly approves the budget that sets your monthly fee. The building's reglamento de copropiedad sets the house rules, and together with tourism law it decides whether you can rent short term.

Who sets condo (PH) fees

The Asamblea de Propietarios is the building's highest body. The administrator runs day-to-day operations on the budget the assembly has approved, and may not sit on the board (Junta Directiva) except in buildings with fewer than twenty units.^[3] Owners must pay ordinary and extraordinary fees on the dates set, and missing a mandatory assembly carries a fine of at least 20% of the monthly fee.^[4]

Fees vary widely by building, amenities and size, so no city-wide average is useful. Before you buy a resale unit, ask for:

• The current approved budget and the fee for your specific unit.
• The latest financial statements, the reserve fund balance and the building's overall delinquency rate.
• Minutes from the last 12 months, which show approved or planned extraordinary assessments and disputes.
• The full reglamento de copropiedad, especially rules on rentals, pets, renovations and use of common areas.

In a building that is not yet delivered, the fee you are quoted is the developer's projection. The real figure comes later, from the owners' first budgets.

Unpaid fees, arrears and the paz y salvo

Under Law 284, an owner is delinquent once fees go unpaid past the period set in the reglamento, or the end of the month if none is set. The board can authorize the administrator to collect administratively or in court, and delinquent owners generally lose their vote.

Your protection as a buyer is the paz y salvo, a certificate that the unit is current on fees. Owners are entitled to receive it within three calendar days of asking.^[3] The Public Registry lists the PH paz y salvo among the documents for a property sale, alongside clearances from the tax authority and the water utility IDAAN.^[2] Make sure the one used at your closing is dated close to signing.

Can you rent your condo on Airbnb?

In the District of Panama, renting for less than 45 days without a tourist lodging permit is prohibited under Article 21 of Law 80 of 2012. The Tourism Authority of Panama (ATP) can fine both the owner and anyone advertising the unit, including online platforms.^[5] Buildings use this rule: in 2025 the ATP opened proceedings on a complaint filed by a PH board over a short-term rental in one of its apartments.^[5]

Two layers apply, and you need both to allow it:

1. The law. The 45-day rule above applies in the District of Panama. Outside it, for example in the beach towns, the rules differ and should be confirmed for the specific location.
2. The building. The reglamento de copropiedad can restrict or ban short-term rentals. Many Panama City buildings do, while some, including several in Casco Viejo, allow them.

The rules may change. Bill 713, presented on 14 September 2026, would apply a 15% tax to short-term residential lodging and replace Law 80 of 2012. It is still pending first debate, and it would not automatically authorize short-term rentals in PH buildings where existing restrictions apply.^[6] The ATP estimates about 13,000 units are offered on Airbnb in Panama, against about 25,000 hotel rooms.^[6] The licensing route and the zones that allow it are covered in our guide to Airbnb investment and tourism licensing in Panama.

Financing and escrow when you buy a condo in Panama

Panamanian lenders do finance foreign buyers. Some offer up to about 75% of the price on titled property, with proof of income. Your money before closing should sit in escrow or a developer trust, never in a seller's or developer's ordinary account.

Mortgages for foreign buyers

Expect the bank to ask for income documentation, credit history and, in most cases, a larger down payment than a resident would need. The mortgage is signed as a public deed before a notary.^[7] Registering it costs B/.10 per property plus B/.3 per B/.1,000 of the loan under the Registry's 2013 tariff.^[7]

In pre-construction, the 60-70% balance due at delivery is the part usually financed. The bank evaluates you at that point, not when you sign. Get pre-approval before you commit, and make the promesa say what happens to your payments if the bank later declines.

Escrow on resale purchases

On a resale, a deposit of around 10% is usually held in escrow until closing. It is released to the seller only once the deed is registered in your name. The escrow agreement should name the agent, the release conditions and the refund conditions, including a deadline after which you get your money back if the seller cannot deliver clean title.

Developer trusts and the construction mortgage

Panama's banking regulator recognizes pre-sale trusts (preventas) whose purpose is to collect buyers' payments while conditions for the development are met.^[8] A trust must be in writing, and a trust over Panamanian real estate has effect against third parties only once it is registered at the Public Registry.^[9] Ask for the trust deed, the trust company's name and the exact conditions that release your money.

Most projects are built with a construction loan secured on the land. Your unit has to be released from that mortgage at closing, or the bank has to consent if you take the unit with the debt on it.^[7] The Public Registry keeps separate mortgage and trust sections for real estate, so both show up in a proper search.^[2]

Closing and registry: from promesa to registered title

You own the apartment only once it is registered in your name. Closing happens when the deed of sale (escritura pública) is signed before a Panamanian notary and recorded at the Public Registry (Registro Público). Only public deeds and final court decisions can be registered.^[1] The deed must state the price and your acceptance, and declare the property free of encumbrances or list the restrictions you accept.^[7]

1. Offer and reservation
   You agree on price and terms. For a resale, the deposit goes into escrow. For pre-construction, you pay the reservation fee under written refund terms.
2. Due diligence
   Your lawyer pulls the Public Registry certificate of ownership and encumbrances, and checks the PH paz y salvo, the reglamento, the budget and the minutes. For new projects, the review also covers permits and the developer's trust. The Registry is open to anyone, so this takes days, not weeks.
3. Promesa de compraventa
   Both sides sign the promesa, ideally as a public deed that is then registered. In pre-construction, it governs the years until delivery.
4. Financing and funds
   The bank approves the loan, or you transfer the balance to escrow. Keep records of funds arriving from abroad, especially if you will use the purchase for residency.
5. Clearances and seller's taxes
   The seller obtains the property tax, IDAAN and PH clearances. The seller then files the transfer tax and capital gains forms with the DGI and pays them within the same calendar month. The receipts must appear in the deed before it can be registered.
6. Deed signed before a notary
   Buyer, seller and any bank sign the escritura. If you cannot travel, you can sign through a power of attorney.
7. Registration
   The notary submits the deed to the Public Registry, which checks taxes and fees before recording it.^[2] Your mortgage, if any, is recorded together with it. Escrow is released once your title appears in the Registry.

A resale cash closing often takes 30-60 days from signed promesa to registered title, and a mortgage purchase takes longer. For pre-construction, the deed can be signed only once the building's PH regime is registered and your unit has its own finca, which can trail the occupancy permit. That is why the definition of "delivery" in your promesa matters.

We handle closings remotely for clients in the US, Canada and Europe: due diligence, the promesa, escrow, signing under power of attorney and registration. More detail on our title work is on our Panama real estate lawyer page.

Closing costs and annual costs of a Panama condo

As of October 2026, buyer closing costs on a cash purchase usually come to about 1.5-2.5% of the price, mostly legal, notary and registry fees. The 2% transfer tax and the seller's capital gains tax are customarily the seller's costs. The table uses a USD 250,000 resale apartment bought for cash.

Figures as of October 2026. Registry figures use the Public Registry's 2013 tariff. Percentages for legal and notary fees are market ranges, not official rates.

The transfer tax is 2%.^[10] It is generally applied to the greater of the sale price or the cadastral value.^[11] The DGI's own form description refers only to the land or cadastral value, so the base for your unit is worth confirming. The old first-sale exemption for new homes was repealed in 2025, and the government has proposed a new scheme exempting the first USD 120,000 of the base for qualifying new homes.^[12] With pre-construction, read the promesa carefully: some developers try to pass the transfer tax to the buyer.

What you pay every year

Property tax rates under Law 66 of 2017, in force since 2019, as of October 2026.

New construction can qualify for a long exemption on the value of the improvements, while the land portion stays taxable. The terms are disputed: some readings give up to 20 years from the occupancy permit, others a much shorter period for certain first homes. We confirm the exemption on the specific unit. The full breakdown is in our guide to Panama property taxes and closing costs.

Does buying an apartment in Panama give you residency?

Buying property does not give you residency on its own. Two routes use real estate: the Qualified Investor visa, at USD 300,000 in lien-free new property bought on first sale or USD 500,000 in resale property, and Friendly Nations, which accepts property from USD 200,000. The Pensionado visa is based on your pension, not on property.

Earlier decrees set different investment amounts.^[13] Under Executive Decree 17 of 8 September 2026, in force since 16 September 2026, the minimum is USD 300,000 for new property bought on first sale, with no end date, and USD 500,000 for resale property.^[14] The property must be free of liens. We confirm the text in force before you sign.

For a pre-sale unit, the immigration filing accepts an authenticated copy of the promesa registered at the Public Registry.^[15] Two practical consequences follow. A mortgaged unit generally does not meet the "free of liens" test. In most cases the qualifying amount must be actually paid, so a small down payment on a developer installment plan is usually not enough. Between July 2025 and June 2026, the government issued 268 qualified investor certificates backed by USD 113.6 million.^[16]

Details are in our guides to the Panama Golden Visa (Qualified Investor route), the Friendly Nations visa and the Panama Pensionado retirement visa. When a client buys for residency, we run the purchase and the visa as one file, so the deed, the registry certificate and the proof of funds from abroad meet the immigration requirements from the start.

Panama condo investment: rental tax, resale tax and US reporting

Rent from a Panama apartment is Panama-source income, so it generally falls inside Panama's territorial tax even though your foreign income does not. When you sell, Panama collects 3% of the sale price or cadastral value up front. If you are a US person, you still report the rent at home. How the territorial system treats you is covered in our guide to Panama taxes for expats.

When you sell

The seller pays 3% of the sale price or the cadastral value, whichever is greater, as an advance on income tax, and may treat it as the final tax on the sale.^[17] Alternatively, the seller can pay 10% on the actual gain, meaning price less cost, improvements and transaction expenses. If the 3% exceeds that amount, the seller can claim the difference as a refund or a tax credit.^[18] The capital gains return (Form 107) is filed and paid in the same calendar month as the sale, before the deed is registered.^[19] The seller must be registered with the DGI to file.^[20] Keep every receipt for your purchase and improvements: they are what makes the 10% option work.

US reporting for a Panama condo

• The property itself. A foreign rental or residence you own directly is not reported on Form 8938.^[21]
• Property held through an entity. If a Panamanian corporation or foundation holds the condo, your interest in that entity is reportable on Form 8938 once your foreign financial assets pass the threshold.^[21] Information returns such as Form 5471 for foreign corporations may also apply.^[22]
• Bank accounts. A Panamanian account used for rent or fees counts toward FBAR filing, which applies when your foreign accounts together exceed USD 10,000 at any time in the year.^[23]
• Rental income. US citizens are taxed on worldwide income, so Panama rent goes on your US return.^[24] For a directly owned rental it generally goes on Schedule E.

Canadian residents have their own foreign property reporting rules, and the structure you choose in Panama changes what you file in both countries. Settle the ownership structure with your home-country tax advisor before closing, because changing it afterward means a second transfer and new costs.