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Both parties can agree on increasing the rent rates after a certain number of years. However, rent rates below $150 a month can be increased only with prior written consent by Ministry of Housing officials. This directive is covered by Law number 93 dated Oct. 4, 1973. The Ministry will give its approval based on fairness of rates proposed to the tenant. The Ministry will also determine if there’s a reasonable return on landlord’s investment on the property.

On Security Deposits

The tenant must consign a security deposit which is equal to a month’s rent through the landlord. The said deposit will be reimbursed to the tenant at the event of the termination of lease agreement. The security deposit may not be reimbursed if there are amounts owed by the renter (tenant) to the owner or that any damage had been inflicted by tenant on the landlord’s property.

Rights of tenants and landlords

There are no limitations or restrictions imposed when it comes to the time length of the rent or lease agreement. Accordingly, both parties (tenant and landlord) can agree freely on how the lease contract would last and that they can also decide if there’s an option for extensions.

The tenant can terminate the particular agreement at any time provided that he or she informs the landlord about this decision thirty calendar days before the actual termination.

In lease contracts protected by Law 93, the minimum duration of the term must be three years. The tenant can also extend the lease agreement for the same number of years. This can be done provided that the tenant pays the rent on time without delays at all.

The maximum time frame to evict a tenant may take up to four months or 120 calendar days. The first 30 days will be for the completion of process service, the next 60 days for trial and the last 30 days are allocated for enforcement of the tenant’s eviction.

Trials and court procedures

The proceedings for the eviction of lease agreements should be filed at the Panamanian municipal or circuit courts. This is for agreements not covered by Law 93. The order will be enforced by Corregidor, the agency that has the authority on these matters.

Meanwhile, for eviction procedures covered by Law 3 must be filed at the Housing Commission which an agency under Ministry of Housing.

The court proceedings may take longer than expected due to increasing number of cases. Thus, it could take many months before evictions can be done. The proceedings for payment collections should be filed before the municipal and/or circuit courts.

Rent due collection

It could take another 120 days to collect the rent due. The first 30 days will be for the completion of process service, the next 60 days for court proceedings and the last 30 days for enforcement of the rent collection.

Lease of rural and urban real estate properties

The Civil Code of 1917 has a provision that regulates the lease of rural and urban real estate properties.

The rent of urban real estate properties are covered under Law no. 93. Meanwhile, the lease for properties that are privately-owned that can be used for residential, commercial, industrial, educational and professional use will be under the jurisdiction of Civil Code Law No. 93 and will also depend on the agreement made between the parties.

Here are some of the leasing agreements that are subject to regulations of Law in Panama No. 93 of 1973:

• Property leases which will be used as a resident and has a monthly rent rate of $150 and below.

• Vacation property leases that exceed more than six month.

Here are some of the leases subject to the Civil code provisions:

• Furnished room leases in privately-owned properties. This may be occasional or permanent activity in the property.

• Leases of privately-owned properties that can be used as private residence. The agreement must be made on or before Jan. 7, 1995.

• Privately-owned property leases that can be used as business or commercial establishments.

• Privately-owned property leases that can be used as private residence with monthly rent rate beyond $150.

Here are some of the exclusion from Law No. 93 provisions:

• Rural property leases

• Property leases that were reverted from former Canal Zone

• Property leases that have fixed daily rates (e.g. motels, inns, boarding and lodging houses and hotels).

• Vacation property leases provided that terms and renewals will not go beyond six months.

• Property leases wherein the local or national governments are the parties.

A brief overview of rent law history

Changes have taken place these past decades when it comes to the tenant and landlord laws. Enforcement on conditions on lease contracts was not really done between 1917 and 1970. However, there have been efforts done within that time period.

In the year 1944, URB or Urbanization and Rehabilitation Bank was created to resolve the tenancy problem in urban areas. Nine years later, Economic Fostering Institute was founded and made URB as part of the entity. In 1958, IVU or Urban Housing Institute was created and eventually the Ministry of Housing by 1973. This led to the enforcement of Law 93 of 1973. Since then, there have been no significant changes in the tenant-landlord agreements.

The usual market practice in Panama

As mentioned in previous articles, real estate agents usually act as middle persons between tenants and landlords. The lease agreement usually takes three, five, ten, fifteen or twenty years. The right to terminate lies with the tenant although penalties may be settled as specified in the contract. The rate may be increased between three and five percent per year but it must be made sure that both parties should agree with the terms.

According to latest figures, there are about two thousand real estate agents in Panama. This means that you won’t have a problem finding one but you must be careful in selecting your own agent because there may be those who will take advantage of the situation and will charge higher rates that the landlord would have quoted.