Commercial Security Deposits in Panama

The legal framework for commercial security deposits in Panama is governed by Law 93 of 1973 (as amended) and Executive Decree No. 7 of 1995. While commercial leases are excluded from rent control and mandatory term extensions under Executive Decree No. 7 of 1995, this exclusion does not apply to security deposit requirements. According to Article 1 of Law 93, the mandate to consign a security deposit is a matter of "public order" and applies to all commercial leases regardless of the rent amount. Every tenant is legally obligated to consign a sum equal to exactly one month's rent to the Ministry of Housing and Territorial Planning (MIVIOT).

Under Law 259 of 2021, these deposits must be held in a separate account at the Banco Nacional de Panamá or the Caja de Ahorros. Furthermore, all commercial lease contracts must be executed on official MIVIOT forms and registered with the General Directorate of Leases within five (5) business days of signing. Failure to comply with these registration and consignment requirements can result in fines up to ten times the monthly rent.

Amounts and Statutory Limits for the Commerce Sector

While Law 93 (Art. 13) strictly limits the official "Security Deposit" to exactly one month's rent, Panamanian law allows for contractual freedom regarding additional financial protections. Because commercial tenancies often involve extensive fit-outs or higher operational risks, landlords frequently negotiate additional "Performance Bonds" (Fianzas de Cumplimiento) or bank guarantees.

These additional instruments are governed by the Civil and Commercial Codes rather than Law 93. They are held privately by the landlord or a financial institution and do not replace the mandatory one-month MIVIOT deposit. It is common for large-scale commercial surfaces or multinational hubs to require these additional guarantees in multiples of 2, 3, or 6 months' rent to cover potential breaches or extraordinary operational costs.

Additional Tools and Performance Bonds

Building owners often prefer to use various credit or documentary instruments to supplement the mandatory MIVIOT deposit and cover broader corporate risks:

• Irrevocable Bank Surety Policies: Issued by local banks to guarantee lease compliance.
• Bills of Exchange or Promissory Notes: Often required from parent companies or empowered guarantors for summary enforceability.
• Performance Bonds: Specifically designed to cover "fit-out" removals or unauthorized structural changes.

The application of these resources is validated by the Panamanian Civil Code for summary enforceability in cases of repeated non-payment or documented breaches of contract. All such requirements must be meticulously drafted in the lease agreement, detailing the specific exceptions and conditions under which deductions or executions of these private guarantees will occur.

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