The purchase of immovable property in the Republic of Panama requires adhesion to specific formalities and solemnities. Among the most relevant are: (i) the contract must be in writing; (ii) the contract must be formalised by a public deed authorised by a public notary of the Republic of Panama; and, (iii) the public deed must be registered at the Public Registry of Panama (PRP).
The contract must clearly establish the parties to the contract, the specific details of the property (including the property identification number provided by the Public Registry), and the will of the parties to sell (transfer) and purchase the property that is the object of the contract.
The public deed must be filed at the PRP for registration to occur. It is only after the public deed has been registered that the property is effectively transferred from the seller to the purchaser. Hence, the essence of the transfer of immovable property is dependent on the PRP.
The registration of the transfer of immovable property has been the subject of much discussion locally, as well as being the subject of multiple decisions by the Supreme Court. The existence of the solemnity is to allow a purchaser to have certainty over the ownership of a property being sold, as well as any encumbrances that the property may have. As such, anyone purchasing a property in good faith, relying on the information found in the PRP, will be deemed the legal owner of that property, even if it transpires that there is an earlier purchase agreement through which the property was sold to another person, but that purchase agreement was not duly registered. Likewise, if a mortgage contract has been previously created but not been duly registered at the PRP, it is deemed non-existent.
Article 1761 of the Civil Code of the Republic of Panama establishes that contracts that are subject to registration at the PRP will not affect third parties until those contracts have been filed at the PRP. In the case of immovable property, the mere existence of a purchase agreement will not have any effect or validity for third parties. Although a purchase agreement will create obligations for the signing parties, the property will not be transferred until the public deed is duly registered. Only after the immovable property has been transferred at the PRP, will it be enforceable against third parties.
The longstanding solemnity is a tool established by law to grant certainty to a good faith purchaser of immovable property. In this context, it means that immovable property not registered in the PRP does not exist as far as a transfer of immovable property is concerned.
|Julieta De Diego|
© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.