Commercial Leases in Panama: Legal Overview

The Panamanian ecosystem for entrepreneurship, multinationals, and SMEs stands out enormously due to the international influx that requires spaces, premises, warehouses, and offices. Primary governing legislation is Law 93 of October 4, 1973 (Ley 93 de 1973), which regulates urban property leases for commercial, professional, and industrial use. While the Civil Code and Commercial Code provide a supplementary framework, Law 93 serves as the "Special Law" that dictates mandatory administrative requirements.

Prevalence of Law 93 and Contractual Freedom

Leases for professional, commercial activities, or business purposes differ from residential rules in their flexibility regarding rent amounts, but they remain strictly bound by the administrative oversight of the Ministry of Housing and Territorial Planning (MIVIOT). Under Article 5 of Law 93, parties may freely negotiate the rent amount and contract duration, but the execution of the agreement must follow specific statutory mandates.

Key Factors to Consider

While lease rates are deregulated for "A+ offices, B offices, or shopping center premises," the administrative process is not. Per Article 11 of Law 93, every commercial lease must be executed in writing and formally registered with the Directorate General of Leases at MIVIOT.

A critical requirement is the Security Deposit. Unlike residential markets in other countries where amounts vary, Panama requires exactly one month's rent. This sum must be consigned by the landlord to MIVIOT, which holds the funds in a trust account at the National Bank of Panama (Banco Nacional de Panamá) or the Savings Bank (Caja de Ahorros). It is not a matter of free negotiation or private instruments like Letters of Credit.

In case of delays, while commercial "fees" or fines for expirations can be stipulated in the contract, the landlord must ensure the underlying contract is registered to have full legal standing. The Panamanian State, through MIVIOT, maintains strict oversight; failure to consign the security deposit or register the contract is subject to severe penalties under Article 56 of Law 93, including fines of up to ten (10) times the monthly rent.

Necessary civil works, exterior advertising installations, and commercial patents remain the responsibility of the lessee. Furthermore, the entrepreneur must often subcontract mandatory policies on "Civil Protection or operability and third-party damages" to guarantee the owner against corporate risks.

Scale your Commercial Portfolios and Mixed Returns

By relying on the specialized administration platforms with superior design created by the Landager team, simultaneously manage your Panamanian diversification with buildings equipped with residential rents operating individually. You can also automate metrics, ensure compliance with MIVIOT security deposit consignments, and manage the mandatory registration timelines that Law 93 strictly demands.

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