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Thursday, October 23 2014 @ 02:30 PM EDT

Preliminary Analysis of Law 80 of 31 December 2009

Real EstateBy Susan Guberman-Garcia for Panama-Guide.com - This is a very perfunctory preliminary analysis of Law 80 (formerly P. 81) - the new law that regulates possessory rights and provides for titling of ROP in coastal zones and on islands in Panama. Hopefully, Panamanian lawyers who regularly deal in this kind of stuff will provide more professional, thorough and accurate analyses soon., as well as an exact translation done by a certified translator. Very broad in scope - This is a very broad bill. It not only provides requirements and and procedures for titling ROP land in coastal zones and on islands, it also impacts the process of public contracting for concessions. It basically offers a complete framework for dispositioin of all government owned land in these zones, not only for holders of existing ROP, but for anyone who wants to buy previously untitled land in these areas from the government. It expands the existing procedures for mass titling of ROP that have been applied everywhere else in Panama to island and coastal ROP holders, but only for those who can meet stringent requirements. For those people, it offers free titling (you don't have to buy the land from the government, they're giving it to you) of up to 5 hectares per ROP holder. This is available both to natural persons and legal persons (corporations, foundations) who hold ROP and there is no requirement to prove poverty. (more)

For those who want to title more than those 5 free hectares, or for those who want to buy currently unoccupied untitled land from the government, a table of prices, based on location and amount of property to be titled, is included in the law, so there is no guessing about "how much will this cost me."

And, for those who currently occupy ROP, it makes titling mandatory: Either title it or lose it. If you can't afford to pay for your title (beyond the 5 free hectares), 15 year loans at the prime rate will be made available, guaranteed by your property (no credit requirements). In other words, you WILL pay property taxes whether you want to or not!

Because of its breadth and scope, this law incorporates modifications to several other laws. I have not read those laws and therefore, cannot comment on those modifications, with the exception of Law 2 of January, 2009 (the island concession law).

Where to get copies of the law:

There is a copy of Law 80 in its original Gazetted format (Spanish) in the island-coastal titling bill folder in the FILES of the yahoo group Panama Laws for Expats: http://groups.yahoo.com/group/panama_laws_for_expats/ There is also a very rough Google Translate English translation (with very minimal manual editing by me) there too. If you have a better translation from your lawyer or a certified translator, please post it there.

Requirements for the "right" (qualified) to title

In order to qualify for the "right" (though its not really a "right" as first worlders understand that term) to title, either free (1st 5 hectares) or by buying the land from the government, you have to demonstrate, to the satisfaction of the Catastro bureaucrats who are in charge of this whole process (or to a court if Catastro disputes your ROP claim) that (1) you; or (2) the person you got your ROP from; or (3) a combination thereof, have occupied the land for at least 5 years in a material, peaceful, uninterrupted manner, with the "animus of ownership" (ie, you act as though you own the property). (Articles 1, 3.)

How can you prove your possessory status?

You can prove this by any method generally accepted in the judicial code, such as: oral testimony, documentation, certifications by local or national authorities (for exampke, the police, correigador, mayor, municipality, Reforma Agraria, Catastro, etc.). (Article 3). Examples of this would be your ROP purchase documents, certifications from some government agency (which buyers of ROP usually get from Reforma Agraria, Catastro, or the municipality), affidavaits from the correigador, statements and testimony by your neighbors, your contractor's bill, etc. etc. etc. If you live on your ROP or run a tourism or other business there, this will be very easy to prove. If you don't live on it, haven't built anything on it, it may be harder, so you should probably get a small dock, a bodega or something up on it as soon as possible if you've been waiting for retirement ot build. Fence it, sign it, put a caretaker on it, hire a management company to oversee it for you.anything to demonstrate that you are acting as an owner would with respect to the land.

What if there is a dispute over the legitimacy of your ROP claim?

(Article 3). If there are conflicting claims to the same ROP, boundary disputes, or the government refuses to accept your proof, some form of alternative dispute resolution will be held and if the dispute cannot be resolved, it will be referred to the courts.

The first 5 hectares of your title will be free

This was an important victory for the locals and for the expat retirees and small tourism providers in the coastal/island areas. 5 hectares is more than 10 acres, and that's a lot of land. Assuming titling will be permitted (this is a big "IF" for island ROP owners, see below), you will be able to title up to 5 hectares (assuming you can prove possession of that amount) at no cost. You won't have to buy it from the government and you won't have to pay administrative costs to title it. (Article 5). The free titles are the ssame as any other title (ie, if you re-sell your freely titled land, you will have to pay transfer tax, capital gains tax and any fees and costs normally associated with the sale of titled property. (Articles 5, 6).. The 5 free hectares will be available whether you are a natural person, corporation, or foundation, and regardless of your residency or citiizenship status, so long as you can prove "possession."

But you won't be able to game the system on the 5 free hectares by splitting up your ROP, "selling" it to new corporations, etc. prior to title. If you hold your ROP via corporation you will have to disclose all shareholders and dignitaries, and if you hold your ROP in a foundation you will have to disclose all beneficiaries as well as dignitaries. Moreover, this disclosure, like the rest of the title application process, will be public; no more anonymity for any corporation or foundation that applies to title its ROP. Moreover, legal entities will have to submit a financial statement along with their application (Articles 7, 9, 11). The government reserves the right to investigate your bona fides if it thinks you are trying to get more free hectares than you are entitled to.

How much will it cost to title ROP?

For titling of land over 5 hectares, you will have to buy the land (again) from the government. The law contains a table of prices (Article 7). The price table divides the coastal and island areas into various zones, and each zone has two prices: One price if you title from more than 5 to 25 hecatres, and a higher price (often 250% higher) if you apply to title more than 25 hectares. The prices range from a low of $1,000 per hectare (for the outer Bocas and Chiriqui islands) to a high of $300,000 per hectare (!) for the "urban" and "near urban" areas of Isla Colon in Bocas del Toro). (NOTE: There is no "urban development" anywhere in Bocas del Toro, and I can't imagine where this ridiculous price came from.)

The price table incorporated within Article 7 is subject to revision every 3 years. The govenrment must hold a public hearing before revising the prices.

Can't pay for your title? The government will loan you the money

If you want to title more than 5 hectares of your ROP but can't afford to pay right away, the government has arranged with Banco Nacional de Panama to offer loans at the current prime rate. A mortgage lien will be placed on the land and you won't be able to sell the mortgaged land unless you pay off the loan first (but you can bequeath it to your children or give it to your spouse without first paying it off.) (Article 7).

Protected areas not eligible for titling and ROP may not be recognized

If your ROP is in a designated protected area (like a forest reserve, for example), you cannot title it. Moreover, your possessory rights will not be honored unless you purchased the area before it was designated as a protected area. If you did, you will be allowed to continue to occupy it but you can't title it. (Article 10).

Island ROP holders may or may not be allowed to title

Due to the government's restrictive interpretation of Article 291 of the constitution, there is no guarantee in this law that island ROP holders will ever be allowed to title. In order for any island land to be titled under this law, the President and his Cabinet must first issue a decree declaring any particular island area (or if they wish, all island areas) to be a "special development area" and that specified development goals will be met by allowing ROP holders to title. This is a loophole big enough to drive a truck through. It is quite possible that titling will be allowed only for specific types of uses, or even limited to specific developments (which you can bet money will be owned by those who are "connected" politically. There is no guarantee in this law that ANY ROP holders on islands (other than those who have tourism businesses, see below) will ever be allowed to Furthermore, the government can declare any island area it wants a "strategic area" where titling won't be allowed. If such a "strategic area" declaration is made, the ROP holders will be offered a 20 year concession. (Article 13).

NOTE: Article 13 appears to conflict with Law 2, which remains good law except as expressly amended by Law 80. . Article 1 of Law 2 expressly grandfathered all existing possessory rights to the extent they existed prior to January 2006, and relieved the holders of any obligation to obtain a concession. Since Law 80 does not repeal or amend that Article, there is a potential conflict of laws here, depending on how the government chooses to implement this Article (and Article 22, discussed below).

Also, if you have a tourism business and your island ROP is within the tourism development zone specified by Law 2 (and any implementing regulations or decrees re Law 2) you will be allowed to title. Moreover, Law 80 expands the scope of tourism businesses who are allowed to title to micro, small and medium sized tourism businessees, whereas Law 2 only allowed large tourism projects to title. (Articles 14, 24.)

What if you have a titling application already in process?

Law 80 is retroactive in that it will be applied to titling procedures that area already in the hopper but not yet completed, including the price table, if your titling application is based on an existing claim of possessory rights. If its not based on existing ROP but is simply a purchase of unoccupied untitled land from the government, the price table will apply but the procedures will be based on the Public Procurement Act and Judicial Code. (Articles 16-19).

Fines and penalties

You will be fined if you violate beach access laws and public use easements. (Article 12). You can also be fined if you are occupy land without a title or a contract (such as a concession) unless you can prove that you have occupied the land for at least 5 years, under the definitions of "possession" above. Furthermore, your home can be demolished unless the government chooses to lease it to you instead.

*NOTE: This provision clearly conflicts with Article 1 of law 2, which guarantees all possessory rights that existed prior to the signing of that law, which was January 2006. Since Article 1 of Law 2 is not expressly repealed or modified in Law 80, this sets up a conflict of laws dispute if the government chooses to initiate penalties against someone who meets the requirements of Law 2.

Procedures for purchasing or concessioning untitled land that is not currently occupied by you or anyone else

This law sets up orocedures for anyone to apply to purchase or lease (via an administrative concession) from the government untitled coastal or island land that is currently unoccupied by anyone., and modifies some existing laws and procedures regarding such contracts. (Articles 25-33).

Titling your ROP may be mandatory

(Article 34). This article appears to provide that titling your ROP will be mandatory for any region which the government declares to be a region of "mass regularization and titling." From the use of that term in Article 1 and 3, it appears that, at least for coastal regions (but not islands), this law itself declares coastal zones to be areas of "mass regularization and titling" immediately, and leaves it open to the President's Cabinet to declare all or some island areas to be such as well. If so, then your titling is mandatory, not optional (get ready to pay property taxes!). This article expressly states that all "beneficial holders" will be notified that they have 30 days to make application for title. If they do not, their titles will be registered anyway, complete with a limiting lien and mortgage in favor of the National Bank of Panama.

This process is fraught with potential problems. In order to "notify" ROP holders, there would first have to be a complete survey of all ROP lands to identify them. And what if you are shown on the survey has having 30 hectares but you choose to title only the free 5 hectares, or 5 free and 5 paid, leaving the rest untitled? And what if (as so often happens in Panama with legal procedures), there is a problem with identification and notice?

Can the government sell your ROP to somebody else?

Furthermore, there is an obvious conflict between Article 35 and Article 4, which states that if a holder of ROP does not apply to title, the government can sell it to someone else. So which is it? Will you be automatically titled whether you want it or not I(and thereby obligated to pay property taxes), or will your land be sold out from under you if you choose not to title it or choose only to title part of it (giving the government the right to take any part of the property you choose not to title and award it to someone else for a price?) This article (which purports to give the ROP holder nothing more than a "right of first refusal" is in direct conflict with the express promises of the government during the discusison and hearing process for Law 80 that all existing possessory rights will be respected and if you have legitimate ROP you need not fear confiscation whether you are allowed to title it or whether you choose to title it or not. Furthermore, Article 4 expressly conflicts with Article 1 of Law 2 of 2009, which is not repealed nor modified as to that Article.

Copyright 2009 by Susan Guberman-Garcia for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.

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