Agreements are not always honored by all parties

In Panama there are two types of land ownership. There is titled land and as you might expect you actually own the land and your ownership is recorded in the Public Registry. It’s yours and you can sell it, get a mortgage and use it as collateral, rent it and in general do on it whatever you please unless that conflicts with the law. Titled land is property.

The other type of land ownership is called Rights of Possession. With Rights of Possession you don’t own the land and it is not property. You own the right to use the land but the land itself stays property of the government. With the right to use it comes an obligation which according to the Codigo Agrario (the law governing land use) is that you have to put the land to good use providing a benefit to society. That benefit to society is performing some agricultural activity which provides work opportunities and food. In theory one can loose Rights of Possession, if one doesn’t perform any activity on the land but it is rarely challenged.

The land of the farm we are aquiring has been held as Rights of Possession by someone who has stopped cattle farming and any other activity about 4 or 5 years ago. Those 4 or 5 years is an estimate based on the growth of all the brushwood that has invaded the former pasture areas. Things grow fast in this climate and some of the brushwood has evolved into little trees taller than a man.

We did sign a contract with the former owner of Rights of Possession on the land in question back in June. The contract specifies rights and obligations for both parties and among these are two major obligations we have to fulfill. One is to pay money to the former user of the land and the other is to perform the land survey and all legal steps to title the land. We don’t want to hold Rights of Possession but instead own legal title to the land where we plan to do major investments into infrastructure. So unlike the typical subsistence farmer we made sure that in the end we own the land as property.

We paid the money and performed the land survey which in itself was quite expensive due to the size of the area. Unfortunately the former user of the land changed his mind and is trying since a few weeks to step back from the contract and retake possession of the land. Real estate contracts usually allow the buyer to step back and loose the downpayment. The seller on the other hand cannot step back from the contract and much less, if the contract forces the buyer to invest into land survey and legal procedures. For the interested reader I’d like to mention that in Panama there is actually a law which states that the seller has to pay back twice the amount of the downpayment, if he wants to step back from the contract. It applies to real estate contracts regardless whether it is mentioned in the contract.

Since we noticed that the seller doesn’t want to honor the contract he signed we have talked to the respective authorities and to lawyers to figure out how solid the legal ground we are standing upon is in our case. It turned out that I indeed own the Rights of Possession to the land because early on in the process the seller did transfer it to me. That transfer has been recorded and stamped at the government entity called reforma agraria which is part of MIDA, the ministry of agriculture.

Still the seller does not want to accept that fact and has been entering the property to perform work there. He is opening “streets” in the brushwood with a machete to prepare parcels for burning. Now in December the dry season has started. The old custom is to burn everything that has grown during the wet season and then seed pasture again for the next year. In the village he has been telling people that we want to steal the land from him and he were working there again to prevent that from happening.

So we had to go the legal route and make sure that the contract and the transfered Rights of Possession is being honored. We are currently waiting for the written decision and an official order that prevents the seller from doing damage to the land we now own the right on. Both should be released by the end of this week and then we can proceed with our own work.

Instead of filing a lawsuit which can take a very long time to be decided we went to the corregiduria (kind of Justice of the Peace) office and the mayor of our district to solicit a written confirmation of my right and to have them issue an restrictive order against the former owner and now intruder with a public notice. By the end of this week this should be done.

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