Origen Panama Real Estate Consultants

A Bill which will reform the Concession application process and requirements for island properties, is currently before the Economic and Finance Commission of the Panamanian Legislature.  A copy of the draft bill is available on the Legislative Assembly website. http://www.asamblea.gob.pa/actualidad/2005_P_132.pdf.  The second debate by the Commission on the proposed bill was held on October 6, 2013.

Update: 26 January 2006 – “Regulation of Property Concessions in Panama for Tourism Investment and Sale of Island Property for Tourism Development.”

The purpose of the following pages is to provide some insight and information regarding these changes and the background information which should be known in order to understand the changes. 

Any discussion of property concessions of Government Lands in Panama should center on Articles 257 and 291 of Panama's Constitution. 

The issues which currently are being debated, and the bill which is being passed, concern property which belongs to the Panamanian Government.  However, the property is currently not being used by the Government, and is in fact being occupied and used by private persons. 

This occupation and use is the subject of the debate before the Legislature, since the new law for granting concessions (between 60 to 90 years) will provide the concession holder with legal rights far and above those of "rights of possession". 

Basically, what the concession will provide the holder is legal tenancy (leasehold estate) for a period of 60 to 90 years.  Currently, concessions are issued for 20 years, renewable for an additional 20 years if the concession holder is current with the payment of the concession annuity and is continuing to use the property for the purpose for which it was established. 

The first day of debate regarding the bill was held on Tuesday, October 4th.  In this session, the discussion was to cover Chapter I (articles 1 - 13).  However, most of the discussion focused on Article 1, and the general objections to the law as a whole. 

Article 1 fails to define derechos posessorios or rights of possession, as they are currently known in Panama in the ex-pat community.  It also only deals with island property, whereas the discussion centered on island and coastline properties. 

One of the points of the discussion is the inability to obtain loans and financing from banks and financial institutions over derechos possessorios properties (free possession), because the holders have no title or right to property (being owned by the Government).  Therefore the need for the concessions and legalization of the property is important in order to finance development. 

Another one of the strong points under discussion was the legalization of properties which have been held by families for various generations.  Article 27 of the law (not yet under discussion) deals with persons that have occupied the land for 10 or more years. However, what if the property was occupied by the person’s father or grandfather before them, and was "inherited", and they have only received the property 3-4 years prior to the entry into effect of the law.  They obviously wish to have recognition of the occupation of the property. 

A further issue under discussion arose in Article 4, which indicates the requirements in order to apply for the concession.  Among these requirements are the needs to provide a bond to the IPAT department, regarding the tourism development to be done.  However, this appears to put the cart before the horse.  Why would a developer obtain a bond (which they might lose, should they fail to undertake the project), when they have no guarantee that the government will give them a concession over the property on which they are going to build the project.  Obviously, the logic in this article was flawed.  The applicant should be required to present proof of ability to provide the bond upon the concession being approved, and in the event that the concession is not approved, should not stand to lose the bond. 

Article 9 was also discussed, as it includes a 60-meter easement along the coastline.  Currently, this easement is limited to 22 meters.  It appeared to be agreed upon, that the easement would be left at 22 meters. 

Email or call us as more information becomes available . . .  and we will refer you to a reputable law firm to handle any of your questions.