Countries › Panama › Guide › 11. Real estate and land › Condominiums in Panama (propiedad horizontal): owners' assembly, monthly common fees, a 20 percent late surcharge cap, a 1 percent reserve fund and the paz y salvo needed to sell

Condominiums in Panama (propiedad horizontal): owners' assembly, monthly common fees, a 20 percent late surcharge cap, a 1 percent reserve fund and the paz y salvo needed to sell

Last verified: 2026-10-29 · Status: Stable

Apartments, offices, lots and other units in shared developments are held under the horizontal property regime of Ley 284 de 2022, which replaced Ley 31 de 2010. Each owner holds its unit and a share of the common property; common fees are monthly, attach to the unit and can be enforced through executive proceedings after two months, with a late surcharge of up to 20 percent. A unit cannot be transferred without a paz y salvo from the building, and every building must keep a reserve fund of at least 1 percent of annual income.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Maximum late surcharge on unpaid condominium fees	20 %Ley 284 de 2022 art. 28, as of 2026-10-29 · in force
Minimum condominium reserve fund, share of annual income	1 %Ley 284 de 2022 art. 47, as of 2026-10-29 · in force
Deadline to issue a condominium paz y salvo	3 calendar daysLey 284 de 2022 arts. 87 and 88, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. The horizontal property regime is a special form of ownership in which private and common property coexist with access to the public road; it can cover buildings, units on common land, serviced lots and subdivisions, parking, storage and commercial buildings where common and private parts can be identified. Units may be sold, mortgaged and bequeathed freely, and the co ownership rules may not limit those rights.Ley 284 de 2022, arts. 1, 3 and 4, 2022-02-14 official text · verified 2026-10-29

2. The owners' assembly is the highest governing body and acquires legal personality once the title constituting the regime is registered in the Registro Público; common property belongs to all owners in undivided shares according to their participation coefficient and cannot be mortgaged or attached except for obligations incurred or by court judgment.Ley 284 de 2022, art. 6 numerals 4 and 7, 2022-02-14 official text · verified 2026-10-29

3. Common expense fees are paid monthly and bear a surcharge once overdue; they fall on the unit regardless of who owns it. Arrears arise if fees are not paid by the date in the co ownership rules or, failing that, the last day of the month.Ley 284 de 2022, arts. 6 numeral 27, 21 and 23, 2022-02-14 official text · verified 2026-10-29

4. If an owner falls behind, the building may charge a surcharge of up to 20 percent of the unpaid fee, post the unit number and amount without the owner's name, suspend recreational areas and common services, restrict non essential visitor vehicles, bring executive proceedings using the account statement or unpaid receipts as the enforcement title from two months of arrears, and inform mortgage or trust creditors of units two or more months behind. The defaulting owner pays collection costs, including professional fees.
Cost to do it: Late surcharge up to 20 percent of each unpaid monthly fee.
Example: A B/.400 monthly fee paid late: surcharge up to B/.80. / US$400 fee, up to US$80 surcharge.Ley 284 de 2022, art. 28, 2022-02-14 official text · verified 2026-10-29

5. Every building must keep a reserve fund for unforeseen expenses of at least 1 percent of total annual income and common fees collected, included in the budget approved at the annual assembly; using it needs a justified request and approval by at least 51 percent of all units. Only the reserve fund or up to 20 percent of monthly collections can be attached by a court.
Example: Annual fees of B/.600,000: reserve fund of at least B/.6,000. / US$600,000 of fees, at least US$6,000 reserve.Ley 284 de 2022, arts. 46 to 48, 2022-02-14 official text · verified 2026-10-29

6. To transfer a unit, the owner or buyer must give the notary a paz y salvo certificate showing fees are up to date, signed by the person authorised under the law or the co ownership rules; it is also required for court auctions. The board president (or vice president) must issue it within three calendar days of the request, and the secretary does so within the same term in the absence of the administrator and the president. The administration must report to mortgage and trust creditors each month any unit two or more months behind.Ley 284 de 2022, arts. 87 numeral 6, 88 numeral 6, 114 and 115, 2022-02-14 official text · verified 2026-10-29

7. Converting an occupied rental building into horizontal property requires a technical habitability report, a notarised memorial signed by at least 66 percent of occupants (51 percent for buildings twenty years old or less) acknowledging the application and offered price, and compensation of one month's rent per year of occupancy, up to six months, for tenants who do not buy.Ley 284 de 2022, art. 43, 2022-02-14 official text · verified 2026-10-29

Worked example

An investor buys an apartment with a B/.400 (US$400) monthly fee; the seller is three months behind.
The notary will not authorise the sale deed without a paz y salvo, so the B/.1,200 arrears plus surcharges of up to B/.80 a month must be settled first; because fees attach to the unit, an unpaid balance would follow the buyer.

Step by step

Ask the administration for the paz y salvo, the latest budget, the reserve fund balance and the co ownership rules before signing.
Read the co ownership and use rules on rentals, pets, works and parking before buying for rental use.
Calendar monthly fee payments; arrears of two months open executive proceedings and notice to the lender.

Common traps

Unpaid fees follow the unit, so a buyer without a paz y salvo inherits them.
Short stay rentals in a condominium trigger ITBMS reporting through the administrator.
Common areas can be suspended for owners in arrears.

Sources

← Rental income in Panama: territorial income tax at 0 to 25 percent for individuals and 25 percent for companies, and 7 percent ITBMS on commercial and short leasesCoastal land, beaches and islands in Panama: public beaches and shoreline strips, the titleable coastal zone, island land and beach access fines →

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