As a result of the Covid-19 pandemic crisis and the Declaration of National State of Emergency issued on the 13th of March, 2020, the Panamanian Government has adopted certain special measures in relation to lease agreements and eviction proceedings.
This crisis has evolved into loss of jobs, closure of commercial facilities, and the suspension of the effects of existing work contracts, causing the suspension of the rights and obligations, which has led to making extremely difficult for many Panamanians to be able to make timely payments for the rent of their homes.
Under such circumstances, by Executive Decree No. 145 of the 1st of May, 2020, the Executive Branch has adopted special measures in respect of lease agreements and directives in respect of eviction proceedings involving real estate used for residential, commercial, professional, industrial and educational purposes.
This Decree authorizes the Ministry of Housing (MIVIOT) to ensure that it provisions are fully complied with, in respect to all lease agreements, regardless of the amount of the rent, and to resolve complaints arising from the relations between landlords and tenants, and it also authorizes the MIVIOT to impose whatever sanctions may be applicable to landlords and tenants who incur in any violation of any of the requirements formally established.
Among the most relevant legal aspects of this Executive Decree, is should be noted that it suspends the eviction proceedings, it freezes the amount of the rent and the clauses for increasing the amount of the rent as well as the penalties for the unilateral termination of the contract and for charging interest payable for rental arrears.
In addition, it stipulates that if the lease agreement ends during the suspension of eviction proceedings, the landlord may extend the term of enforceability of the agreement under the same conditions and for the same term of effect as this Executive Decree.
It should be noted that the term of the stipulation to freeze the amount of the rent, the clauses of increase and/or sanctions as well as the freezing of rentals shall be in force and effect for two months after the end of the National State of Emergency.
Fort the purposes set forth above, the MIVIOT has established a form, which will be registered at the Directorate General of Rentals with a validity of two (2) years as from the date of registration and shall so remain as long as the tenant does not infringe the agreements, and it is understood that, if the tenant infringes the agreement, said default shall entitle the landlord to apply the respective legal proceedings in order to enforce its/her/his rights.
On the other hand, if the landlord chooses to have the public utilities interrupted as pressure on the tenant, sanctions shall be applicable to the landlord. The Decree also covers the possibility of grievances to be filed before government authorities against the sanctions imposed according to this Decree.
These regulations clearly sets forth that the Executive Branch is seeking to avoid abuses and arbitrary measures affecting the landlord-tenant relationship as a consequence of the Covid-19 pandemic, however, it is not quite clear as to what is to happen to the landlords who did not register the lease agreement in the MIVIOT or made the respective security deposit with the Directorate General of Rentals.
The Executive Branch excluded the application of Law 93 of 193 of Rentals to lease agreements for lodgings with a rental fee of more than B/. 150.00, the rental for furnished lodgings, the rental fees for unoccupied real estate as from the 24th of January, 1994 and rentals intended for commercial, industrial or educational purposes by Executive Decree No. 294 of the 7th of December, 1994 and Executive Decree No. 7 of the 10th of January, 1995, although Articles 6 and 13 of said Law remained in force and effect.
In the light of the above, one may ask the following questions: Does the landlord have to register his agreement? Does the landlord have to make the security deposit? And, if the contract has not been registered, may the agreement about payment for rentals that were not paid due to the Declaration of National Emergency be registered?
As for these questions, the Ministry of Housing, by Resolution No. 247 of the 14th of May, 2020, has clarified the situation stipulating that any landlord who reaches an agreement concerning the payment of the rentals that were not paid on account of the Covid-19 pandemic crisis, does not have to make the security deposit under Law 93 of 1973, but will not be excluded from the obligation to register the respective lease agreement.