Commercial Rent Increases: Laws for Panamanian Landlords

Properly adjusting the rates of premises destined for commercialization, logistics, and industrialization demands a full understanding that while parties enjoy "libre contratación" (free contracting) for rents exceeding $500.00 per month, commercial leasing is subject to mandatory administrative provisions under Law 93 of 1973. The primary laws governing commercial leasing in Panama are the Civil Code (Art. 1106) and Law 93 of 1973, as amended by Executive Decree No. 37 of 1974 and Executive Decree No. 7 of 1995. This regulatory framework applies to all corporate properties, ensuring that even high-value industrial leases adhere to national registration standards.

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Negotiation The national Panamanian real estate sector for business and dispatch purposes operates on account of pre-agreed staggered rates within voluntarily formulated written formats (governed by the principle of pacta sunt servanda in Article 1106 of the Civil Code). However, Law 93 of 1973 mandates that ALL commercial lease contracts must be formalized in writing and a copy delivered to the Ministry of Housing and Territorial Planning (MIVIOT) within five (5) business days of signing for registration. Furthermore, landlords are legally required to consign the security deposit (equal to one month's rent) to MIVIOT's General Directorate of Leases, regardless of the rent amount. Commercial rent is also subject to a mandatory 7% ITBMS tax (Law 6 of 2005), which the landlord must collect from the tenant and remit to the General Directorate of Revenue (DGI). Legal disputes related to rent increases or contractual breaches are adjudicated by the Civil Circuit Courts (Juzgados de Circuito de lo Civil) of the Órgano Judicial.

1. Staggering and CPI: For commercial leases with a monthly rent exceeding $500.00 (B/. 500.00), the parties may freely negotiate rent amounts and increase indices (e.g., CPI or fixed percentages). This often involves progressive calculated increases indexed based on inflation regularly reflected at the United States level—due to the convenience of the indirect formal dollarization of the national currency—or under stipulated Panamanian indicators.

2. Post-Period Negotiating Retributive Power: For commercial leases excluded from rent control (those over $500/month), there is no statutory "Prórroga Legal" (Legal Extension) unless expressly agreed in the contract. Consequently, landlords may negotiate new rates for renewals at their discretion once the original term expires. If the increases have been projected relative to the pre-elaborated indexation described to intervening parties—or notified promptly within a pre-renewal period—it is an duty to heed them or vacate the spaces. This grants the estate full visibility in the balances or proactive planning of corporate income, particularly when paired with Landager's automated multi-regime corporate calendar tool in Panama. Back to Panama Commercial Leases OverviewPreview unavailable.