Commercial Security Deposits in Panama

The mercantile capital segment in Panama allows the corporate lessee and the lessor to stipulate custody clauses that far exceed the traditional single "1 month base in cash" scheme. This is due to the nature of extensive damages, deep remodeling of the corporate enclosure ("fit-outs"), or the bankruptcy business risk represented by premises destined for work purposes or industries.

Amounts Free of Caps for the Commerce Sector

Unlike the strict limitation usually dictated in the domestic stratum and sheltered by social regulations, when formalizing with establishments dedicated to lucrative and commercial purposes—and in Premium offices located under special regimes—there is no such legal barrier preventing landlords from asking for significantly higher multiples. A Panamanian business landlord can set conditions in the agreement that include deposits usually tied to the size and viability of the contracting company's flows (e.g., 2, 3, or 6 net advance equivalent months retained on rents of large multinational commercial surfaces in Hubs, plus advances).

Additional Tools and Performance Bonds

Building owners often prefer to use various credit or documentary instruments replacing purely liquid immobile amounts, to cover in a broader spectrum what is operated corporately:

• Irrevocable Bank Surety Policies: With guarantors from the local market.
• Bills of Exchange, Bonds, or Promissory Notes: Firmly against parent companies or empowered guarantors.

The application of these resources is generally validated by the Panamanian Civil Code for summary enforceability when there is repeated non-payment of rent or to guarantee possible extraordinary operational costs assumed by unauthorized demolitions upon commercial contract termination.

All these funding requirements must be meticulously drafted under the base structure of the contracts, obligatorily detailing under which specific exceptions exact deductions arising from non-compliance with the original scheduled commercial time will be applied, and the corresponding returns after settling overdue commitments.

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