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Glossary

Panama's real estate vocabulary, in plain language

Buying, selling, or renting in Panama comes with its own language: promesa de compraventa, paz y salvo, finca, FECI… This glossary defines 40 terms in 40–60 words each — answer first, practical context second — reviewed as of July 2026 by our licensed team.

General information, not legal or tax advice. Every transaction is confirmed with an attorney and accountant; we connect you with trusted partners when needed.

Legal process & title

Apostille

The apostille is the international certification (Hague Convention) that validates one country's public documents for use in another. Panama is a member: foreign powers of attorney, certificates, and records must be apostilled to have legal effect in the country.

Escrow account (cuenta de plica)

In Panama, an escrow account (cuenta de plica) is held by a neutral third party — a bank, trust company, or law firm — that keeps the purchase funds and releases them only when the agreed conditions are met, typically the deed's registration in the buyer's name.

Due diligence (debida diligencia)

In a Panama real estate purchase, due diligence is the legal and physical verification before closing: title and liens at the Public Registry, clearance certificates, the condition of the PH, actual measurements and, in pre-construction, the developer's solvency. It happens before you pay, not after.

Possession rights (derecho posesorio)

In Panama, possession rights (derecho posesorio) are the recognized occupation of state land without a recorded ownership title. They are bought and sold, but they are not full ownership: they aren't recorded as dominion at the Public Registry, and their legal security depends on certifications and actual possession.

Public deed (escritura pública)

In Panama, the escritura pública is the notarial document that formalizes a real estate sale. It is signed before a notary and only transfers ownership once it is recorded at the Public Registry in the buyer's name.

Finca number (property registry ID)

In Panama, the finca is each property's unique registry identity at the Public Registry: a number under which the owner, area, boundaries, mortgages, and liens are recorded. Every serious transaction on a property starts by citing its finca number.

Lien / encumbrance (gravamen)

In Panama, a gravamen is any recorded charge on a property at the Public Registry that limits or encumbers ownership: mortgages, garnishments, judicial attachments, easements, or antichresis. A property 'free of liens' is the enforceable standard for buying safely.

Clearance certificate (paz y salvo)

In Panama, a paz y salvo is a certificate showing an obligation is fully paid: property tax, water (IDAAN), condo maintenance fees (PH), among others. They are required to close a sale — without them, the deed doesn't move forward.

Power of attorney (apostilled)

In Panama, a power of attorney authorizes one person to sign on another's behalf — for example, to buy or sell property without traveling. If granted abroad, it must be apostilled (or consular-legalized) to be valid in the country.

Promise-to-purchase agreement (promesa de compraventa)

In Panama, the promesa de compraventa is the contract that locks in a real estate deal before the deed: it sets price, deadlines, conditions, and an initial down payment (typically 10%), and binds both parties to sign the final sale once the agreed conditions are met.

Titled property (propiedad titulada)

In Panama, titled property has a dominion title recorded at the Public Registry: the owner is officially on record and can sell, mortgage, and bequeath the property. It is full, fee-simple ownership, and foreigners can acquire it with the same rights as citizens.

Public Registry (Registro Público)

Panama's Public Registry is the state institution where properties, their owners, mortgages, and liens are recorded. What appears there is a property's legal truth: whoever is not recorded as owner is not the owner vis-à-vis third parties.

Taxes

Property tax exemption

In Panama, a primary residence is exempt from property tax on the first $120,000 of registered value (regime current as of July 2026). Additionally, new-construction improvements may enjoy temporary exemptions depending on the project and its permit date.

FECI (1% loan surcharge)

FECI (Special Interest Compensation Fund) is a Panamanian surcharge of 1% per year on certain loans. On home mortgages, citizens and permanent residents are usually exempt for a primary residence; a non-resident foreigner typically pays it, raising the effective rate by about 1%.

Capital gains tax (10% / 3% advance)

In Panama, the gain on selling real estate is taxed at 10%. The buyer withholds and remits 3% of the total price as an advance; the seller can treat that withholding as the final tax or claim a refund if 10% of the actual gain turns out lower.

Property tax (impuesto de inmueble)

The property tax is Panama's annual tax on a property's registered value. A primary residence gets a preferential rate with an exemption on the first $120,000; other properties pay the general progressive table.

Transfer tax (2%)

In Panama, transferring real estate pays a 2% tax, calculated on the greater of the sale price or the updated cadastral value. By law and custom, it is the seller's obligation, not the buyer's.

Preferential interest regime (interés preferencial)

The preferential interest regime is Panama's state program that subsidizes part of the mortgage rate on new-home purchases below certain price caps, during the loan's first years. The brackets, caps, and validity are set by law and change periodically.

ITBMS — Panama's 7% VAT

ITBMS is Panama's tax on the transfer of goods and services — the VAT equivalent — at a general 7% rate. In real estate it applies to services such as commissions, professional fees, and management; residential rents and used residential sales generally fall outside it.

Financing

Down payment (abono inicial)

The down payment is the share of the price the buyer pays out of pocket. In Panama, banks typically require 30%–40% from non-resident foreigners (as of July 2026) and less from residents; in pre-construction, it's usually paid in installments during the build.

Bank commitment letter (carta promesa de pago)

In Panama, the carta promesa de pago is the document by which a bank irrevocably commits to pay the seller the financed amount once the property is recorded in the buyer's name with the bank's mortgage. It is the standard way financed purchases close.

HOA & renting

Monthly rent (canon de arrendamiento)

The canon de arrendamiento is the monthly rent agreed in a Panama lease. In Panama City's premium areas, as of July 2026, it runs between $11.6 and $13.5 per m² per month depending on the area, on asking prices.

Lease agreement (contrato de arrendamiento)

The lease agreement is the written contract governing a rental in Panama: rent, term (typically 12 renewable months), deposit, who pays each utility, and termination causes. A good lease puts in writing what nobody wants to argue about later.

HOA / maintenance fee (cuota de mantenimiento)

The maintenance fee is each owner's monthly payment to the PH to run the building: security, cleaning, elevators, pool, and administration. In Panama City's premium buildings it typically runs $180–280 per month for a standard apartment (July 2026).

Security deposit (depósito de garantía)

The security deposit is the sum — usually one month's rent in Panama — the tenant hands over at signing to back damages, missing items, or unpaid utilities, returned at the end of the lease after checking the property against the move-in inventory.

Horizontal property / condo regime (PH)

In Panama, horizontal property (PH) is the legal regime for buildings and complexes with common areas: each unit is its own finca, and its owner co-owns hallways, elevators, and amenities, governed by an owners' assembly and bylaws.

Market & investment

Asking-price median (mediana de oferta)

The asking-price median is a given area's 'middle' listing price: half the published properties ask more, half ask less. In Panama City, the resale median is $2,208/m² as of July 2026 (3,199 listings), per Vaca Group's study.

Months of inventory (MOI / absorption)

Months of inventory (MOI) measures how long the available supply would take to sell at the current sales pace. In Panama City new housing, MOI runs about 7.7 months as of 2026: an ample-inventory market that favors buyers who negotiate.

Construction payment plan (plan de pagos)

In Panama pre-construction, the payment plan spreads the down payment across the build — for example, 10% at signing and monthly installments until reaching 20%–30% — with the final balance paid by mortgage or cash at the unit's delivery.

Appreciation (plusvalía)

Appreciation (plusvalía) is a property's increase in value over time. In Panamanian real estate it materializes when you sell — where it's taxed as a 10% capital gain — and depends on the area, building quality, and market cycle more than on a seller's promises.

Pre-construction (preventa)

In Panama, pre-construction is buying a unit before or during its build, directly from the developer: you sign a promise contract, pay the down payment in installments during construction, and settle the balance (or mortgage it) at delivery. Panama City new supply runs $2,700–3,100/m² as of July 2026.

Gross yield (rentabilidad bruta)

Gross yield is a property's annual rent divided by its price, with no expenses deducted. In Panama City, as of July 2026, the reference is 6.84% on asking medians, ranging from 5.8% (Costa del Este) to 7.35% (Obarrio), per Vaca Group's Residential Market Study.

Net yield (rentabilidad neta)

Net yield is a rental property's real return after expenses: HOA fees, property tax, insurance, vacancy, and management. In Panama City it typically lands 1.5–2 points below gross: a 7% gross is ~5%–5.5% net, well managed.

Structures & visas

Private interest foundation (fundación de interés privado)

Panama's private interest foundation is a shareholderless wealth vehicle designed for holding and succession: it can own real estate, and its regulations define who receives the assets, avoiding lengthy cross-border inheritance processes.

Panama corporation (sociedad anónima, S.A.)

The sociedad anónima is Panama's classic corporate vehicle. In real estate it's used to own property through the company: the finca is titled to the S.A., and control is exercised through its shares, easing planning and continuity.

Qualified Investor visa

The Qualified Investor visa is Panama's fast-track residency-by-investment program: with a real estate investment from $300,000 (parameter current as of 2026), free of liens and held for 5 years, it grants permanent residency in a weeks-long process.

Friendly Nations visa

The Friendly Nations visa lets citizens of ~50 countries with ties to Panama gain residency by proving an economic link — local employment, a bank deposit, or a property purchase from $200,000 (parameter current as of 2026). It grants 2-year provisional residency, convertible to permanent.

Pensionado (retiree) visa

The Pensionado visa is Panama's retiree residency program: it requires a lifetime pension of at least $1,000 per month (or $750 when buying a local home from $100,000, parameters as of 2026) and grants residency along with the famous retiree discount package.

The profession

ACOBIR (and the MLS)

ACOBIR is Panama's association of real estate brokers and developers: it gathers the sector's formal professionals, operates Panama's MLS (the shared property database among brokers), and requires members to hold a current license and follow a code of ethics.

Licensed real estate broker (corredor licenciado)

In Panama, real estate brokerage is a regulated profession: a licensed broker holds a license (PN) issued by the Real Estate Technical Board of the Ministry of Commerce and Industry, legally authorizing — and holding them accountable for — brokering sales and rentals.

Terms reviewed as of July 2026 · Vaca Group Real Estate, Lic. PN 5904