real estate info - title vs. rop

Advantages of Titled Real Estate Ownership in Panama:

In a nutshell, titled real estate is a far more secure investment vehicle than is ROP (right of possession) real estate and certainly affords the owner huge piece of mind that the real estate they bought and paid for once is in fact theirs…forever. You can use it as a guarantee against a mortgage or personal loan from banks and registered title documentation is recognized by all levels of government as legitimate proof of real estate ownership. This type of real estate is legally severable for sale as smaller parcels of real estate, each with their own new finca ID number which is registered with the Housing Ministry, the National Catastral (Land) Office, as well as the National Public Registry.

Titled real estate has a very clear and definite ownership history and is registered in the National Public Registery and recognized by all governing bodies. The land title registry system in Panama is the best in Latin America and on par with that of the US or Canada. ROP real estate is not registered by this system or any other government mechanism.

ROP or Government Concession Lands Use and Occupation

There are many stories of worthless ROP ‘ownership’ transfer documents, buyers re-buying from other family members who did not agree with the original sale, buyers rebuying from the actual owner of record after having paid someone else who falsely represented themselves as the owner… the ways in which ROP land can be a problem are many and varied.

And now with Law 2 in place there is the added cost and extensive legal process of applying for a land concession from the federal government. Since it is ultimately their real estate to begin with and Law 2 ended the creation of new ROP lands, this is now the only legal mechanism for gaining some security over your land ‘purchase’ and any rights you claim to possess and use it. Paying the local who claims to own it is merely a mechanism to have him agreeable to de-occupy the land. Once you then occupy the land, it is at this point that your lawyer begins collecting enormous amounts of paperwork in order to apply for a land concession that will then allow you to do something with it - build, live, open a business, etc. 

ROP land is a product of the “agrarian reform” Panama underwent in the 1960’s. ROP was created in law to prevent large land owners from having all of the land, while poor peasants starved to death. In short, what it says is that if a person OCCUPIES and works the land for several years (at least 15), then they acquire some possesory rights.

If a Right of Possession property has not already been officially recognized by The Reforma Agraria, then it can no longer become designated as ROP. As of January 11, 2006, when the Panamanian Assembly passed Law 2, the only legally recognized way to use, occupy or otherwise ‘own’ ROP land is through the granting of a land concession from the federal government.

On April 21, 2009 the National Assembly passed and President Torrijos signed Law 23. The law promises the ready issuance of land titles to people on islands and in coastal areas, which until now had been occupied through Rights of Possession,a leftover from the agrarian reforms of the 1960’s.

The law provides for relatively low fees to title right of possession land, and creates a 25 percent capital gains tax on the first sale of land titled under the new law.

This will dramatically increase not only the investment potential in Panama, but the speed and intensity of development throughout the country. Another excellent sign that Panama will be a safe haven for investment during these troubling economic times.