Taking over mortgage in Panama

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  • Hello everyone I’m new on this forum I have read a lot on here and like all of the good information.
    I would like some help on a house in Panama that I have an opportunity to get. I know someone who is getting a divorce and they are leaving the country–both of them–and they said that I could have the house if I give them some money up front and then just take over the monthly payment to the bank. The house is worth $40,000 and they want $5,000 from me now and just take over the payment of $200.00. My question is I know this would be a subject to deal but how would I write up the contract for this in my name for this to work in Panama. I would not live in the house but I know I could rent it out for $400 to $500 per month. Thanks you.

    Robert I.

    HI Robert

    Have you seen the property?
    Have you had a title search done? extremely important. Get the FINCA number then get an attorney to do a title search.
    What is the mortgage balance? Is the mortgage through a bank or a private loan?
    Are you sure this is titled property or ROP property?
    Is it titled in their name or in a corporation? ( if in a corporation you could simply buy the shares of the corp)

    Need more details before I can answer accurately.

    All contracts in Panama need to be in Spanish to be valid.

    Buying subject-to the mortgage in Panama is a different process than the USA.

    Thank you for the fast response
    I have seen the house a few times, this is the house of my girlfriends sister. It’s a pretty good house they have only lived there 2 years. It is worth at least $60,000 and they owe $33,000. They got a good deal from someone before them that was getting divorced. The mortgage is through a bank I have seen the mortgage papers. It is titled only in the husband name but he has agreed for all of this so far. They want $5000 from me for moving expenses and other things and then me take over the payment of $200. So how would write this up to make sure everything is covered. I plan on renting it put for about $450 a month.
    Thank you


    Sorry I said it was worth $40,000 at first but then I was told it is with at least $60,000. They owe about $28,000 and they want me to pay them $5,000. I then would make the monthly payment to the bank of $200. I would like to just rent it out for some positive cash flow. I was told I could sell it also they said they don’t care.

    what town is it in?

    you need to get the FINCA number then get your Panama lawyer to do a title search before you hand over any $

    not sure you can get $450 – it depends on where it is, how big it is, and if it is a Panamanian style house or a north american style house.

    Mortgages in Panama are completely different.

    Because the house in Panama is less than $120,000, you will NEVER have property taxes.

    House insurance will run about $150 a year for full coverage in Panama.

    Make sure you read the note, there is probably a balloon.

    Your attorney should do a title search, then your attorney can prepare the closing documents.
    You and the seller will take everything to a Notary for signatures, then you send back to your attorney for her/him to record the title

    You may want to move the title in to a Panama corporation or foundation. That is very customary in Panama. A Foundation is similar to a Trust because your estate planning is built in to it plus the asset protection and you can avoid probate. The down side is it cost about $800 to set up a corporation (unless you can find one to buy for less) then there are annual renewal fees of $300. And, if you are a US citizen you need to report all offshore corporations, even if they are only used to hold title. If you take title in your name, there is a bigger chance the lender will call the loan due in Panama. If you use a corporation or foundation, there is little chance the loan will be called due.

    Could I do a rent to own on this house. I use the $5000 for a deposit and I pay the mortgage payment to the bank. If I don’t want to live in the house they told me I could rent it out to someone else and keep the difference between mortgage payment of $200 and say I rent for $400—$450. They just want out of the house. So I was thinking of writing up contract for rent to own $5000 deposit and I make payment to bank. I then set a Purchase price of $33,000 minus the $5000 of $28,000. for 2 or 3 years to buy in future. They want this to happen now. I got the FINCA # I had an attorney look it up and no issues with title. I think it is a good deal.

    Yes you can do a rent to own. It would be quicker and easier.

    But I’m not sure you can get $450 a month for the property – it depends on where it is located and what all comes with the rental (is it furnished, include appliances, i=include utilities?)

    Thank you for your reply.
    It is about 30 minutes north of panama city. In an area where there is alot of houses. I said $450 a month because I talked to some people around there and I see what other people are getting on the internet site for rentals on panama in that area. Maybe only $400that is not alot but my payment for me is $200 it is actually $195.00. I would be happy with that.
    Maybe some day I meet you in Boquete. we are renting a house there now just outside of downtown, about a 10 minute drive maybe not even that. Go over the bridge over river go to the T in road turn left we are down there a couple miles or so. Very very quiet. We like it alot. Heck I am thinking about going to the panama retreat. Take care.

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