Since the World Health Organization formally declared the Covid-19 Pandemic, the Panamanian government has been resorting to extraordinary measures to protect the health of the population as well as other aspects of the Pandemic’s impact on economic activities, including provisions of landlord-tenant legislation concerning tenant security deposits, which have been in force for many years.

The tenant security deposit is the amount of money the tenant must provide to the landlord according to the rental contract as security to cover possible monthly rent outstanding or damages to the rental property.

As usually stipulated in the rental contract, the full amount of money of the security deposit must be returned to the tenant as soon as the tenant has surrendered the rental property to the landlord and vacated the property, after deducting any rent outstanding and/or damages to the rental property.

 However, the landlord is bound to deliver the amount of the security deposit to the Department of Rentals of the Ministry of Housing and Territorial Development (MIVIOT).which is then deposited in the Sole Account of the National Treasury, thereby becoming part of the National Treasury without really being so.

As a consequence of the above, in the light of the complex procedures involved to dispose of funds from the National Treasury to return the security deposit to the tenant, it may take months or even years before the funds become available, which is not the real purpose of the security deposit agreed to by the tenant and the landlord.

In consideration of this situation, Bill No. 593 of the 24^th of February, 2021 provides a solution to the above situation because it amends Article 13 of Law 93 of 1973 which established that security deposits were to be delivered to the Department of Rentals of the Ministry of Housing and Territorial Development (MIVIOT) and then deposited in the Sole Account of the National Treasury.   On the other hand, the new legislation provides that the funds of the tenant’s security deposit are to be deposited in the Ministry of Housing and Territorial Development’s operating accounts in the Banco Nacional or the Caja de Ahorros where they would be readily available to return the funds as soon as the General Directorate of Rentals checks if any damages to the property or rentals outstanding claimed by the landlord are true or not and thereupon proceed to return the security deposit in full or after deducting the landlord’s claims.

Upon its enactment, the new legislation creates a safe and expedite procedure to return all or part of the tenant’s security deposit without resorting to the landlord’s own funds to cover the amount after any deduction for damages or outstanding rentals, if any.