In Panama, the real estate purchase and sale contract is a topic of great importance due to the growth and dynamism of the real estate market in the country. This contract aims to formalize the transfer of property of a real estate asset between a seller and a buyer.
The purchase and sale of real estate assets in the country is regulated by specific laws and regulations such as the Civil Code and the Horizontal Property Law. If you are interested in knowing what a real estate purchase and sale contract looks like in Panama, below we will provide you with a general example of its structure, the parties involved, and the requirements that give it validity.
Definition of a Purchase and Sale Contract
A purchase and sale contract is a legal agreement through which a person (seller) undertakes to transfer the ownership of a real estate asset to another person (buyer) in exchange for an agreed price. This type of document establishes the rights and obligations of both parties, as well as the conditions of the purchase and sale.
Structure Required in a Purchase/Sale Contract
The purchase and sale contract must have a clear and complete structure to ensure that the rights and obligations of the parties are properly established. Although it is recommended to seek the advice of a specialized real estate lawyer for its drafting, here are the essential elements that are usually included in the structure of the contract:
Identification of the Parties
The contract must contain detailed information about the parties involved, including their full names, personal identification numbers, addresses, among others.
Precise Description of the Real Estate Asset
The contract must clearly and precisely specify the location and characteristics of the real estate asset being sold (complete address, boundaries, dimensions, and any other details that allow the asset to be identified).
Sale Price and Payment Conditions
The contract must establish the agreed price for the purchase and sale and the forms and deadlines for payment. Clauses related to price adjustments under certain circumstances, such as delivering the property in conditions different from those agreed upon, can also be included.
Conditions and Terms of the Purchase and Sale
The contract should include clauses that establish specific conditions and terms of the purchase and sale, such as the delivery of possession of the property, warranties offered by the seller, responsibilities of each party, restrictions or limitations on the use of the property, among others.
Signature and Date
The contract must be signed by all parties involved, along with the date of signing. This is important to demonstrate the parties’ intent.
Parties in the Purchase and Sale Contract
In a purchase and sale contract, the parties involved may vary depending on the context and specific circumstances of the transaction. However, the main parties that are usually present in a purchase and sale contract are:
- Buyer: Person or entity acquiring the property or asset being sold.
- Seller: Person or entity selling the property or asset to the buyer.
- Lawyer: In some cases, both the buyer and the seller may seek the advice of a specialized real estate lawyer to draft or review the contract and ensure compliance with applicable laws and regulations.
- Real Estate Agent: If the transaction is carried out through a real estate agent, they may act as an intermediary between the buyer and the seller.
- Notary: It is common for the purchase and sale contract to be formalized before a public notary, who is responsible for certifying the authenticity and legality of the contract.
Legal Requirements for Contract Validity
Although requirements may vary according to the laws and regulations applicable in each case, a clear example of the legal requirements necessary for the validity of a real estate purchase and sale contract includes:
All parties involved in the contract must give their consent freely and voluntarily, without being induced by deception, coercion, or defects in will.
Both the buyer and the seller must have the necessary legal capacity to enter into a contract. This means they must be of legal age and mentally competent, and not subject to any legal restrictions that prevent them from entering into contracts.
The object of the purchase and sale contract must be lawful, meaning it cannot be contrary to the law or public order. The property or asset being bought and sold must be legally transferable and not subject to legal limitations or prohibitions.
In Panama, for a real estate purchase and sale contract to be valid, it generally needs to be in writing. This implies that the contract must be drafted in writing and signed by the parties involved.
For the purchase and sale contract to have an effect on third parties and be enforceable against them, it must be registered with the Public Registry of Panama. This especially applies to real estate purchase and sale contracts (for example).