Horizontal Property vs Condominium Panama: Law 31 of 2010

Last updated: April 24, 2026

Buying an apartment in Panama means buying a unit under the Horizontal Property (PH) regime — a legal framework that determines how much you pay in HOA dues, how decisions on capital projects are made, whether you can do Airbnb or not, and what happens if you don't pay your dues. Most buyers sign the deed without reading the HOA Bylaws (Reglamento de Copropiedad) and discover the rules late. This guide covers the current legal framework (Law 31 of 2010 and Executive Decree 854 of 2015), differentiates PH from a simple condominium, and explains how assemblies, dues, delinquency, and use restrictions work.

Pair it with Panama condo maintenance fees, Panama condo HOA fees 2026, and consumer protection law for real estate buyers. To find Airbnb-friendly buildings or those with reasonable dues, browse apartments for sale and estimate value with PanamaEstimate.

Horizontal Property Legal Framework

Current statute: Law 31 of 2010

Law 31 of June 18, 2010 — "Regulating the Horizontal Property Regime". It repealed the prior Law 13 of 1993 and unified scattered regulations.

Regulation

Executive Decree 854 of September 3, 2015 — regulates operational aspects: assembly procedures, notice formats, reserve fund, audits.

Enforcement authority

• Public Registry: PH recording and amendments.
• Consumer Protection Authority (ACODECO): consumer disputes.
• Civil Circuit Judges: disputes between owners and the HOA.

Scope

All apartment, office, and commercial buildings under a recorded PH regime.

Horizontal Property vs. Simple Condominium: Technical Differences

1. Horizontal Property (Law 31 of 2010)

• Formal regime recorded at the Public Registry.
• Legal personality.
• Mandatory owners' assembly.
• Board of directors.
• Detailed HOA bylaws.
• Dues enforceable with executory title.
• Statutory lien on the property for past-due dues.
• Applies to virtually all apartment buildings.

2. Proindiviso / simple co-ownership (Civil Code arts. 400-462)

• Multiple owners on the same property.
• NO private unit divisions.
• NO PH bylaws.
• Management by joint agreement of co-owners.
• Each can sell their share.
• Typical use: shared land, NOT apartment buildings.

3. Master-planned / gated community

• Can be PH (homes on common land under Law 31) or civil association (Law 33 of 1984).
• Recorded private bylaws.
• Maintenance dues for services (security, common areas).
• Less rigid than pure PH.
• See Panama master-planned communities.

How to verify the regime

1. Request a copy of the recorded HOA Bylaws from the seller.
2. Request a Public Registry certification on the property.
3. Verify the PH recording number.
4. If there is NO recorded PH: it's a de facto condominium without Law 31 protections.

The HOA Bylaws: Mandatory Contents

Per art. 25 Law 31 of 2010:

1. Identification

• Building name and location.
• Master folio number.
• Developer information.

2. Private units

• Description, square meters, location.
• Participation coefficient (% of total).
• Determines voting rights and dues.

3. Authorized use

• Residential, commercial, parking, storage.
• Use changes require assembly approval.

4. Common areas

• Hallways, elevators, facade, roofs, pools, gyms, social areas, gardens.
• Exclusive use of certain areas (private terraces, assigned parking).

5. Use restrictions

• Airbnb allowed/banned.
• Pet rules.
• Noise and quiet hours.
• Architectural facade modifications.
• Visible laundry hanging.

6. Financial regime

• Ordinary maintenance dues.
• Reserve fund.
• Special assessments for projects.
• Delinquency and late charges.

7. Administration

• Board: composition, election, powers.
• Administrator: requirements, compensation, oversight.
• Assemblies: types, notice, quorum.

8. Sanctions

• For bylaw violations.
• Internal procedure before judicial action.

Owners' Assembly: How It Works

Types

Ordinary: at least once a year (art. 47 Law 31). Approves:

• Prior-year financial statements.
• Next-year budget.
• Board accountability.
• Election of new board.
• Administrator's report.

Extraordinary: special call for specific topics:

• Bylaws amendment.
• Major works not in the budget.
• Class actions.
• Sale or lease of common areas.
• Change of administrator.

Notice

• By the board or 25% of owners (art. 48).
• Minimum 10 days advance.
• Means: personal notice, email, lobby posting.
• Specific agenda.

Quorum

• Ordinary first call: > 50% of coefficients.
• Ordinary second call: those present (minimum 25-30% per bylaws).
• Extraordinary bylaws amendment: 75-80% of coefficients (qualified majority).

Weighted vote

• By participation coefficient, NOT one vote per unit.
• Large penthouse may have 3-4%.
• Standard apartment 1-1.5%.
• Delinquent owners CANNOT vote (art. 56).

Minutes

• Mandatory, signed by president and secretary.
• Notarial protocolization recommended for registry-relevant amendments.
• Available to owners.

Board of Directors: Role and Limits

Composition

• President, secretary, treasurer (minimum).
• Members at large per bylaws.
• Elected at ordinary assembly.
• Typical term: 1-2 years.

Powers

• Execute the approved budget.
• Contract with regular vendors.
• Supervise the administrator.
• Judicial and extrajudicial representation of the HOA (if delegated by bylaws).
• Impose minor sanctions (within bylaws).

Limits

• CANNOT amend bylaws without the assembly.
• CANNOT approve extraordinary works without the assembly.
• CANNOT sell common areas without an extraordinary assembly.
• Civil liability for decisions outside its powers.

Administrator

• May be an owner or a third party.
• Written contract with duties, compensation, obligations.
• Responsible for collections, payments, maintenance.
• Reports monthly to the board.
• Typical compensation: $800-$2,500/month depending on size.

Maintenance Dues: Legal Basis and Collection

How dues are calculated

• Annual budget approved at assembly / 12 months.
• Distributed by participation coefficient.
• Ordinary dues + reserve fund (mandatory minimum 5% per Decree 854).
• Possibly special assessments for projects.

Typical 2026 ranges in Panama

See Panama condo maintenance fees for zone detail.

Payment obligation

• Both an in rem obligation (runs with the property) and a personal obligation (of the owner) — art. 79 Law 31.
• A buyer who acquires an apartment with past-due dues inherits them, unless agreed otherwise with the seller + cleared before deed.
• Always demand HOA clearance before closing.

Consequences of delinquency (arts. 78-85 Law 31)

1. Late charges: typically 5-10% monthly.
2. Loss of voting rights (art. 56).
3. Cutoff of NON-essential services: pool, gym, social areas.
4. CANNOT cut: water, electricity, unit access.
5. Executory title (art. 83): HOA can sue via executory action.
6. Statutory lien (art. 84): priority over the property up to past-due dues + late charges of the last 12 months, ranking ahead of standard bank mortgage.
7. Judicial foreclosure in persistent delinquency (6+ months).

Owner's Rights and Obligations

Rights (arts. 11-15 Law 31)

• Exclusive use of the private unit.
• Common use of common areas per their purpose.
• Attend and vote at assemblies.
• Elect and be elected to the board.
• Information: minutes, financial statements, contracts.
• Judicial action against unlawful resolutions.

Obligations (arts. 16-23 Law 31)

• Pay ordinary and special dues.
• Comply with HOA bylaws.
• Maintain the unit in good condition.
• Allow access for common-area repairs.
• Not affect structure or aesthetics without authorization.
• Notify ownership changes to the administrator.

Use Restrictions: Airbnb, Pets, Remodeling

Airbnb / short-term rentals

• Bylaws may ban, allow with conditions, or be silent.
• 2024-2026 trend: more buildings ban due to complaints.
• Pre-purchase verification: bylaws + recent assembly minutes.
• Municipal and ATP also regulate.
• See Panama short-term rental Airbnb.

Pets

• Bylaws regulate size, count, permitted areas.
• Amendments require an extraordinary assembly.
• Panama's general animal welfare law (Law 70 of 2012) also applies.

Remodeling

• Within the private unit: free as long as it doesn't affect structure or common areas.
• Window, balcony, facade modifications: require board approval (per bylaws).
• Demolition of structural wall: municipal authorities + board.

Noise and hours

• Bylaws set hours (e.g., 10 PM - 7 AM quiet hours).
• Parties and events: prior reservation in social areas.

Dispute Resolution

Between owners

1. Internal mediation by the board.
2. Arbitration if bylaws provide.
3. Justice of the Peace or Civil Circuit Judge depending on amount.

Against assembly resolutions

• Judicial challenge within 30 days (art. 58 Law 31).
• Owner with legitimate interest.
• Civil Circuit Court.

Against the board or administrator

• Internal complaint to the assembly.
• Civil liability if acting outside powers.
• Removal at extraordinary assembly.

Consumer vs. developer

• ACODECO: consumer complaints (Law 45 of 2007).
• See consumer protection for real estate buyers.

Pre-Purchase Checklist for a PH

• Recorded HOA Bylaws copy.
• Last 3-5 ordinary + extraordinary assembly minutes.
• Audited financial statements for last 2-3 years.
• Current-year budget.
• List of current ordinary and special dues.
• HOA clearance for the target unit.
• Pending sanctions certification.
• Confirmation Airbnb is allowed/banned if relevant.
• Reserve fund: amount and status (sufficient for capex?).
• History of special assessments over the last 5 years (has the building done major assessments recently?).
• Active contracts with key vendors (security, elevators, pool).
• See Panama property due diligence.

Case Study: Special-Assessment Conflict

Scenario: 50-unit building in Marbella, 25 years old. Board decides to replace elevators ($120,000) with a $2,400 special assessment per apartment.

Correct legal process

1. Board calls extraordinary assembly with specific agenda.
2. Notice 10+ days with quotes attached.
3. Assembly with quorum > 50% coefficients.
4. Vote: approval requires qualified majority (75% per typical bylaws for works > 10% of annual budget).
5. Notarized minutes.
6. Dues payable on approved schedule.

Owner who challenges

• 30 days for judicial action from minutes.
• Arguments: notice, quorum, majority, or abuse-of-rights defects.
• If challenge succeeds: nullification and new assembly.

Owner who doesn't pay

• Automatic delinquency.
• Late charges.
• Executory collection.
• Eventual statutory lien.

Sources and Regulations

• Law 31 of June 18, 2010 — Horizontal Property Regime.
• Executive Decree 854 of September 3, 2015 — Regulation.
• Panama Civil Code — arts. 400-462 (simple co-ownership).
• Law 45 of 2007 — Consumer Protection (ACODECO).
• Law 33 of 1984 — Non-profit associations.
• Law 70 of 2012 — Animal welfare.
• Public Registry of Panama — registro-publico.gob.pa.
• Consumer Protection Authority (ACODECO) — acodeco.gob.pa.

This article is general information. Each PH has specific bylaws with particularities. Consult a real estate attorney for your specific case.

Related Articles

• Panama condo maintenance fees
• Panama condo HOA fees 2026
• Consumer protection for real estate buyers
• Panama master-planned communities
• Panama property due diligence
• Panama short-term rental Airbnb
• Building 15-point checklist evaluation
• Panama property closing costs
• PanamaEstimate

About to buy in a PH and want to review the bylaws before signing? We prepare an audit of the HOA Bylaws + recent minutes + building financial statements, with a red-flag report (pending special assessments, Airbnb, pets, major works). Ask Alma with the building name or address.