A foreign buyer closes on a two-bedroom in Punta Pacifica expecting to recover part of the purchase by listing it on Airbnb. The building administrator sends a warning letter within the first month. The buyer's attorney points to Article 21 of a tourism statute that has been on the books since 2012. This is the most common surprise in Panama City's short-term rental market — not a new restriction, but a 14-year-old prohibition that is now being enforced more visibly, layered on top of building-level bylaws that often go further than the national floor.
The 2012 statute
Law 80 of November 8, 2012 established Panama's general tourism regime. The clause foreign buyers most often miss sits in Article 21: inside the District of Panama, residential rentals shorter than 45 days are prohibited unless the property is licensed as a public tourist accommodation — alojamiento publico turistico — by the Autoridad de Turismo de Panama (ATP).
The prohibition is geographic. It applies only to the District of Panama, which covers Casco Antiguo, Bella Vista, Avenida Balboa, Marbella, Punta Pacifica, Obarrio, San Francisco, Costa del Este, Coco del Mar, El Cangrejo, Santa Maria, Carrasquilla, Calle 50 and the rest of the metropolitan corridor. Other districts — San Miguelito, La Chorrera, Arraijan — sit outside the 45-day rule. That is why a Casco Antiguo apartment carries a different operational risk profile than a beach house ninety minutes west, even when the gross-revenue math looks similar on a spreadsheet.
The licensed-accommodation track is real but narrow. Executive Decree 82 of 2008 enumerates the establishment types ATP can authorize: hotels, hostels, cabins, and a particular subcategory called horizontal property tourism regime — typically buildings designed from inception to operate as aparthotels with a single licensed operator. For a residential propiedad horizontal not licensed at the project level, the path to legally renting by the night is, in practice, closed.
What the threshold actually does to the math
Forty-five nights is the line. Rent your apartment for 46 nights and you are a long-term landlord under standard residential lease law. Rent it for 44 and you have done the same legal thing as opening an unlicensed hotel. According to the Sucre, Arias & Reyes summary of the statute, penalties run from $5,000 to $50,000, escalating with recurrence. Merely advertising a non-compliant listing is itself a sanctionable act.
This recasts the unit-economics conversation. The kind of pro-forma a foreign buyer often arrives with — extrapolated from Lisbon, Mexico City or Miami nightly comps — collapses against a 45-day floor. Medium-stay revenue per square meter sits well below nightly-rate revenue, but it also carries fewer turnovers, less platform-fee leakage and lower marketing intensity. Buyers who underwrite with realistic medium-stay rates and 70-85% occupancy generally avoid the recurring shock of building warnings; buyers who underwrite with implied nightly rates do not.
The propiedad horizontal overlay
Law 284 of February 14, 2022 is Panama's modern condominium statute, replacing the decades-old propiedad horizontal rules. It carries a clause that matters more than Law 80 for daily enforcement: the Assembly of Owners — the building's governing body — can independently regulate or outright prohibit short-term rentals inside the building, regardless of what national law allows elsewhere. The ADEMSA primer on Law 284 describes the framework: each building's reglamento de copropiedad may already contain restrictions, and any assembly resolution properly approved becomes binding on all owners.
Three legal layers therefore stack: the national 45-day rule under Law 80, the original reglamento de copropiedad signed at building inception, and any subsequent assembly resolution. In the condo-dense corridors where most foreign-aimed inventory sits — Avenida Balboa, Marbella, Punta Pacifica, Costa del Este, Obarrio, San Francisco — building bylaws are typically the binding constraint. Many have tightened above the national floor, requiring minimums of 90 or 180 days, or banning platform listings entirely.
The Assembly of Owners holds the power to regulate or, if deemed necessary, prohibit short-term rentals.
Enforcement is real but uneven
ATP is the lead enforcement agency for Law 80, with the Ministry of Housing (MIVIOT) collecting complaints from PH neighbors and forwarding documented cases. In practice, the highest-friction enforcement happens at the building level: administrators issue warning letters, then fines under the reglamento, then, in extreme cases of repeated non-compliance, legal action through juzgados de paz (peace courts), which the Estratega Advisors guidance identifies as the dispute-resolution venue for PH conflicts. ATP-level fines are less common but more expensive when they arrive.
Casco Antiguo carries the highest enforcement intensity because it doubles as a tourism quarter and because the area's restoration ordinance overlaps with ATP's interest in licensed accommodation supply. Punta Pacifica, San Francisco and Marbella have been the most aggressive among the strictly residential corridors, with multiple buildings updating their bylaws over the last two years to explicitly ban platform listings. Costa del Este, designed as a planned suburb with a strong residential identity from the start, has historically had some of the tightest reglamentos in the city.
What pencils out instead
The defensible rental model in Panama City is the medium-stay tenant: 45 days to 6 months, typically a corporate relocation, a remote worker on a project, a foreign professional during a residency-application window, or an expat exploring the city before signing a longer lease. Pricing sits at roughly 1.5x to 2x the long-term-rent equivalent but well below nightly-rate equivalent. Most buildings tolerate or accept these stays even where they ban true short-term rentals — the reglamento language usually targets nightly turnover and platform listings, not 60-day or 90-day stays.
Buyers planning rental income should treat the 45-day floor as the binding underwriting constraint. Realistic occupancy at medium-stay rates, not the implied per-night fantasy that listing comparables in Miami or Lisbon would suggest, is the right model. The two markets do not share a regulatory frame.
The reform that may or may not come
Discussion of a draft bill that would create a simplified registration pathway for individual owners to operate licensed short-term rentals — closer to the regimes that exist in Mexico City or Buenos Aires — has continued through early 2026. The proposal, referenced in industry summaries, would reduce or remove the 45-day floor for owners who register and meet basic compliance criteria. As of mid-June 2026, the bill has not advanced through the National Assembly. The status quo therefore remains: Law 80, Law 284, and the reglamento of each individual building.
The due-diligence item that gets skipped
For a buyer evaluating Panama City inventory, the actionable diligence question is not whether the city allows short-term rentals. It does not. The question is whether the specific building's reglamento de copropiedad does, and whether recent assembly minutes show a pending resolution to tighten further. Both documents are obtainable before closing through the building administrator or the seller's attorney; both are routinely requested by Panamanian buyers and routinely skipped by foreign ones.
Most brokers will not raise the topic unprompted. Most building administrators will. The order in which a buyer hears from each tends to determine whether the rule shows up before or after closing — and whether the unit-economics model survives contact with the actual property.
