A Law That Stepped Aside Instead of Stepping In

Every legal gap has a birthday. For short-term rentals in Panama, that birthday is October 4, 1974 — the day Ley n.93 de 1973 was enacted (published and taking effect the following year), the law that still governs residential and commercial tenancy in the country today. If you've ever wondered why a Panamanian vacation rental seems to live in a different legal universe than a normal apartment lease, this is where the split begins.

Ley 93 was, on its face, unremarkable: a tenancy statute regulating leases longer than six months, protecting tenants with rules on rent, notice periods, and evictions. Nothing unusual for a housing law. What makes it the true starting point of our story is a single clause tucked into Article 3, where the law defines what it does not cover.

Article 3: The Exclusion That Changed Everything

Article 3 of Ley 93 explicitly excludes from the law's application "those leased real estate properties whose rental fee is established per day, such as: hotels, motels, boarding houses and guesthouses." It goes further, also excluding seasonal housing in vacation areas ("centros de verano"), as long as the rental term — including any extensions — doesn't exceed six months.

Read that again slowly, because it's easy to skim past how significant it is. The law isn't just talking about hotels. It's describing, in 1973 legal language, exactly what we would today call a short-term rental or vacation rental: a property rented by the day, or rented seasonally for less than six months. The concept clearly existed. Panamanians and visitors were already renting houses and rooms for short stays in beach towns and summer destinations decades before anyone had heard the word "Airbnb."

The lawmakers who wrote Article 3 weren't confused about this activity — they knew it existed, named it by example (hotels, motels, boarding houses, seasonal summer homes), and made a deliberate choice: this is not what our tenancy law is for. Move along.

The Question Nobody Answered

Here's the problem: stepping aside is only safe if something else is standing guard. A landlord-tenant law can reasonably say "long-term housing stability is our concern, not short-term stays" — provided some other regulatory framework exists to cover safety, taxation, and consumer protection for those short stays instead.

In 1973, no such framework existed yet. Ley 93 excluded daily-rate and seasonal rentals from its scope, but no companion law simultaneously stepped in to claim that same territory. The exclusion was real and specific; the coverage that should have followed it was not there yet.

This wasn't a drafting oversight so much as a sign of the times. Hotels were regulated because hotels were an obvious, visible commercial industry with buildings, signage, and employees. A family renting out their beach house for a few weeks in summer looked like a private, informal arrangement between neighbors — not a business requiring its own chapter of law. So the law simply didn't reach it, and nobody in 1973 seemed to think that was urgent to fix.

Setting Up the Mystery

That single decision — a housing law explicitly declining jurisdiction over short-term and seasonal rentals — is the "original sin" this six-part series will trace all the way to the present day. If Ley 93 didn't regulate these rentals, who did? Was anyone? And if the gap was already visible in 1973, why did it take over fifty years, and a wave of confusion around platforms like Airbnb, Booking.com, and Vrbo, for Panama to seriously attempt to close it?

The short answer, which the next chapters will unpack piece by piece, is that other laws did eventually try to reach into this space — first narrowly, through hotel-shaped regulations that couldn't quite see the whole picture, and only much later through a broader tourism framework that finally had the right vocabulary. But in 1973, none of that existed yet. There was just a law that said "not us," and a silence where an answer should have been.

For travelers and property owners trying to make sense of Panama's rental landscape today, that fifty-year-old silence still echoes in surprising ways — which is exactly why platforms like our directory exist to only list properties that have since found their way into the frameworks that eventually did emerge. But to understand how those frameworks took shape, we first have to follow the trail from where it left off in 1973 — starting, in Part 2, with the hotel-shaped law that tried, and largely failed, to fill the gap.