- Judicial Auctions in Panama
- September 18, 2017 | Author: Juan Raul Sevillano
- Law Firm: Pardini & Asociados - Panama Office
Since 1917, the Panamanian Judicial Code has recognized Judicial Auctions as a way for plaintiffs to execute their credits and recover the funds owed. By initiating a judicial process called “Executive Process”, in which there are no disputes over the facts and applicable rights, but there is only a matter of credit execution. In which, credits such as, letters of exchanges, promissory notes, bounced checks, lease agreement fees, bonds, judicial or arbitration judgments.
There is also a subdivision of this Executive Process, within the Panamanian Judicial System, based on the securities provided by the debtor, in favor of the creditor, in order to guarantee the results of this collection process. This subdivision is divided in, Mortgaged and Simple.
Most of the time, Mortgaged Executive Process, are the ones in which we will find a suitable apartment property, and Simple Executive Process, are the ones in which we will most likely find commercial collective items, from business seizure by the plaintive, who is trying to find assets owned by the debtor.
Also, these types of processes constitute a fair option for debtors to pay their debts by showing assets to sell, when they have no cash to cover their obligations. Most of this cases, this auctions are executing a mortgage, presenting an option to real estate investors to acquire properties at very good prices.
Nonetheless is a simple process applied worldwide, in Panama, in order to protect the involved parties interests, our Judicial Code has established certain requirements and procedures that must be complied to successfully complete the auction, with some other to entice bidders to show up.
Within the most important requirements, that must be complied to successfully proceed with a judicial auction in Panama, is the appropriate valuation of the assets executed. Unfortunately for the debtors, these valuations are in most of the cases, determined on the registered value of the properties and not of the actual market value, which constitute another advantage for investors to acquire good properties at very low prices.
On the bidder’s side, the most important requirement is a bond of 10% of the amount set as based of the auction that must be consigned before the auction starts, along with a formal posture to initiate and enter the auction procedure.
As we mentioned before, in order to entice bidders to show up, legislators has determined an escalated 3 phased procedure, in which each phase, if the previous one fails, lowers the price of admissible postures, from two thirds of the auction base price, to half of the auction base price, to any amount without consideration of the auction base price.
These auctions are more common every day, and a serious track of auctioned assets is required to be able to take advantage of these opportunities. That is why many investors has turned into legal assistance to provide a service to alert them of important auctions of assets of their interests, whether they are real estate properties in certain conditions or areas, or vehicles of any kind, industrial equipment or any other type of assets they might be interested into.
But the benefits of investing a little bit, to secure a trustworthy source of information, will produced, most likely in a quite short period of time, new opportunities to buy properties or different assets, at reasonable conditions, at a price that normally is not reachable in the market.
Lic. Juan Raúl Sevillano