Countries › Panama › Guide › 11. Real estate and land › Expropriation in Panama: public utility, a court process with prior compensation at commercial value, and urgent occupation in emergencies

Expropriation in Panama: public utility, a court process with prior compensation at commercial value, and urgent occupation in emergencies

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

Private property in Panama can be expropriated only for public utility or social interest defined by law, through a special court process and with compensation. In an ordinary expropriation the judge sets compensation at commercial value and the State must pay before ownership passes; productive property also gets up to six months of lost income. In war, serious public disorder or urgent social interest the Executive may occupy first and pay later.

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

Deadline to file the expropriation claim after the decree	3 monthsCódigo Procesal Civil art. 663 numeral 4, as of 2026-10-29 · in force
Maximum months of lost income compensated for productive property	6 monthsCódigo Procesal Civil art. 663 numeral 12, 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. Private property is guaranteed; it carries obligations because of its social function, and it may be expropriated for public utility or social interest defined by law through a special proceeding and with compensation.Constitución Política (texto único 2004), arts. 47 and 48, 2004-11-15 official text · verified 2026-10-29

2. In case of war, serious disturbance of public order or urgent social interest, the Executive may decree expropriation or occupation of private property; occupation lasts only while the circumstances last, and the State is always liable for such expropriation and for damages caused by the occupation, and pays the value when the cause ends.Constitución Política (texto único 2004), art. 51, 2004-11-15 official text · verified 2026-10-29

3. Expropriation is ordinary when the State declares the public or social interest the property must serve; the judge decrees it and fixes the compensation, which the State must pay before ownership is transferred. It is extraordinary when decreed by the Executive in war, serious public disorder or urgent social interest, allowing immediate occupation with compensation paid afterwards.Código Procesal Civil (Ley 402 de 2023), art. 662, 2023-10-11 official text · verified 2026-10-29

4. The claim is brought by the Ministerio Público with Executive authorisation (or by the owner) within three months after the expropriation decree is published, with the decree, an appraisal and a registry certificate, against owners, registered tenants, mortgage and other secured creditors and possessors. On request the court orders early delivery if the State deposits the appraised value; an owner who proves the property is solely its home and does not oppose may receive that deposit at once if there are no mortgages, attachments or registered claims.Código Procesal Civil (Ley 402 de 2023), art. 663 numerals 1 to 5, 2023-10-11 official text · verified 2026-10-29

5. The defendant has ten days to answer and may challenge the appraisal with expert evidence; the judge holds a hearing with the appraisers and sets compensation taking into account the commercial value. For property used in productive activities whose income is limited, the judge adds compensation for lost rents for up to six months. Tenants whose lease is enforceable against buyers receive compensation for their loss.
Example: A warehouse appraised at B/.2,000,000 that earned B/.20,000 a month in rent: up to B/.120,000 for lost rent on top of the value. / US$2,000,000 warehouse, up to US$120,000 lost rent.Código Procesal Civil (Ley 402 de 2023), art. 663 numerals 6 to 14, 2023-10-11 official text · verified 2026-10-29

6. When the State is the claimant, it must deposit the balance of compensation within ten days of the final judgment; until it does, the expropriation has no effect, the judge may issue an enforcement order and the amount bears interest at the current bank rate. If most of a property is expropriated and the remainder cannot be used conveniently or loses value, the whole property must be expropriated. Mortgage, antichresis and pledge creditors are paid from the deposited price, their debts becoming due.Código Procesal Civil (Ley 402 de 2023), arts. 663 numeral 15 and 664, 2023-10-11 official text · verified 2026-10-29

Worked example

A road project requires most of a logistics company's B/.2,000,000 (US$2,000,000) warehouse plot; the leftover strip is unusable.
The company can ask that the whole plot be expropriated, contest the appraisal with its own expert, and claim up to six months of lost rental income (up to B/.120,000 at B/.20,000 a month) on top of commercial value; the State must deposit the balance within ten days of judgment or the expropriation has no effect.

Step by step

On notice of an expropriation decree, diarise the three month filing window and gather an independent appraisal.
Document income from the property to support the lost income claim.
Notify mortgage lenders, who are paid from the deposited price.
Foreign investors should also check investment treaty protection with counsel.

Common traps

Early delivery can be ordered as soon as the State deposits its own appraised value, before the final compensation is set.
Compensation for lost income is capped at six months.
Island land sold by the State remains subject to expropriation at any time with adequate compensation under Constitution art. 291.

Sources

← Possessory rights and land titling in Panama: ANATI, five years of possession, free titling up to 5 hectares and acquisitive prescriptionIndigenous collective land in Panama: constitutional reservation, inalienable collective titles and free, prior and informed consent →

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