Real Estate Transactions

1. Decide which property you want to purchase.
2. Hire an attorney: in Panama, you will need an attorney for the contract, deed and registering the Property.
3. Decide how to structure the title: personal name, in the name of a corporation or a foundation. Your attorney will be able to recommend      which option best suits you depending on what the property will be used for: primary residence, investment income, immigration, etc.
4. Offer: make an offer to the seller and if they accept you will pay a small deposit to take the property off the market.
5. The Promise of Sale and Purchase
6. The Final Contract
7. Post-Closing Services.

The Promise of Sale and Purchase
This contract is performed preliminary to the sale and purchase contract. In this particular contract the seller agrees to sell to the buyer at an established price the property. It is common that the buyer consigns a down payment to the seller to ratify his commitment to the sale. If the buyer decides not to proceed with the acquisition of the property, he will usually lose the money that was given beforehand to guarantee the sale. On the other hand, the seller is bound to sell the property object of the contract. It is important to do a full due diligence of the Property, prior to signing.

The Final Contract
This contract is done in the form of a public deed and must be registered at the Public Registry of Panama. Prices for registration will depend on the value of the property or on the price of the sale. When the contract is registered, the change in the ownership of the property is done. As of the time of the registration, you become the owner.

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Post-Closing Services
When you purchase a property in Panama, it is the responsibility of the Buyer, to send the public deed of purchase and sale to the Dirección General de Ingresos (DGI), the Panamanian IRS. To this matter, this entity will need to update all of the records of the property, which are the following:
1. New owner.
2. New price.
3. Exonerations of improvements if applicable.

Differences between preconstruction purchases and resale Properties
1. Payment: one of the major differences between preconstruction and resale properties is how the payment is structured.

a. Preconstruction: payment is made usually following the stages of construction. That is the price is distributed in several payments      or deposits which are sent directly to the Developer. These payments are made in a wide span of time. The last payment is made      usually when the occupancy permit to the property has been issued. This may occur before the title has been registered.
b. Resale: payment is made within a short period of time and divided between the initial down payment and the final payment. Down-    payment is usually 10-15% of the total purchase price. The final payment is usually made when the deed is signed.

2. Delivery: another difference between preconstruction and resale properties is when the property will be delivered to the buyer.

a. Preconstruction: Even when the Developer has finished building the property. He will need to wait to obtain an occupancy permit        in order to deliver to the buyer. Once the occupancy permit has been issued, the Developer and buyer conduct an inspection of          the property to see if anything needs to be repaired. Any repairs are the responsibility of the Developer and once done, property        can be delivered to the buyer.
b. Resale: Since the property already exists, the buyer can inspect it and see if there are any repairs that need to be done.                      Inspections are typically paid by the purchaser. Property can be delivered to the buyer before title is transferred,
    however this is something the parties will have to negotiate. There are many ways this can be negotiated between buyer and              seller:
    i. Seller may elect to sale the property "as is", any repairs the buyer wants to make will have to be done once the title is                         transferred.
    ii. Seller may opt to do the repairs that the Buyer is requesting before the title is transferred.
    iii. Buyer may request to use the property and make repairs prior to the title being transferred.

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How to set up a Panamanian Corporation

1. Contact an attorney in Panama: they will be able to explain the requirements to set up a Panamanian Corporation.
2. Due diligence forms: you will need to fill out due diligence forms required by law in order for the attorneys to process the incorporation.        We will need the following information from you:

a. Proposed name for the company: corporate name must end with an INC, SA or CORP.
b. Directors and officers: you will need at least 3 individuals resident in any country to be the directors of the company.
c. Shareholders: at least one shareholder who can be an individual, corporation or private interest foundation from anywhere in the        world. We will require complete due diligence for the shareholder including: passport copy, bank reference letter, commercial              reference letter and proof of address.

3. Payment: pay for the incorporation fees of the company to the attorney. Our costs are detailed below:

Incorporation Costs: USD$1,400.00
Annual Fees: to be paid the following year the corporation has been created.
Resident Agent: USD$ 300.00
Annual Tax: USD$ 300.00
Declaration of Accounting Records: USD$ 150.00
Due Diligence Fees USD$ 75.00
Nominee Directors: USD$ 250.00 (each)

4. Time frame: once the attorney has all the information required to incorporate, a deed of incorporation is presented to the notary and            once sealed, it is submitted to the Public Registry of Panama. It usually takes five business days for the corporation to be registered.
5. Post incorporation: Once the corporation has been registered, a tax ID number will be obtained with the DGI (Tax office). Each                    corporation has a unique tax ID number.
6. Minutes: once the corporation has been registered, we issue the shares and first minutes. By law we need to keep copy of the signed        share certificates and minutes.
7. Accounting records: All corporations registered in Panama, even those operating in the Republic of Panama, are required to keep              accounting records. They are also required to submit copies of this information to their Resident Agents. The accounting records must       be kept by an Authorized Accountant, and can be kept in Panama or any other place where the corporation has its offices. In case you       do not have a reliable accountant, the firm can provide the service.

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How to set up a Panamanian Private Interest Foundation

1. Contact an attorney in Panama: they will be able to explain the requirements to set up a Panamanian Corporation.
2. Due diligence forms: you will need to fill out due diligence forms required by law in order for the attorneys to process the formation. We      will need the following information from you:

a. Proposed name for the company: name must include the word Fundación or foundation.
b. Founder: is the person who creates the Foundation.
c. Foundation Council: charged with administering the foundation. You will need at least 3 individuals resident in any country to be          part of the foundation council or a corporation.
d. Beneficiaries: persons who benefit from the foundation. They are named in the Regulations.

         e. Regulations: similar to a Will and sometimes called a "life map". This document sets forth all the conditions and wishes of the                       Founder regarding the distribution and disposition of the Foundation's assets to the beneficiaries.
3. Payment: pay for the fees. Our costs are detailed below:

Foundation formation Costs: USD$1,600.00
Annual Fees: to be paid the following year the corporation has been created.
Resident Agent: USD$ 300.00
Annual Tax: USD$ 400.00
Declaration of Accounting Records: USD$ 150.00
Due Diligence Fees USD$ 75.00

4. Time frame: once the attorney has all the information required to create the foundation, the foundation charter is presented to the                notary and once sealed, it is submitted to the Public Registry of Panama. It usually takes five business days for the foundation to be            registered.
5. Post incorporation: Once the foundation has been registered, a tax ID number will be obtained with the DGI (Tax office). Each                      foundation has a unique tax ID number.
6. Regulations: once the foundation has been registered, the regulations will need to be issued providing the instructions on who are the        beneficiaries to the assets of the foundation.
7. Accounting records: All foundations registered in Panama are required to keep accounting records. They are also required to submit           copies of this information to their Resident Agents. The accounting records must be kept by an Authorized Accountant, and can be kept       in Panama or any other place in the world. In case you do not have a reliable accountant, the firm can provide the service.
8. No acts of commerce: A Private Interest Foundation may not engage in commercial activities on a regular basis, but in furtherance of its     purposes may engage in occasional acts of commerce, and may exercise shareholder rights if it holds shares of a corporation that is.         part of its assets.

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