Buenos Aires Lease and purchase of real estate – DOING BUSINESS IN ARGENTINA — AN INVESTOR’S GUIDE
August 2, 2011 · News
DOING BUSINESS IN ARGENTINA — AN INVESTOR’S GUIDE
Lease and purchase of real estate
Real estate development, acquisition and rent are mainly regulated by the Civil Code, applicable throughout the country. Additionally, there are regulations, licenses and specific authorizations issued by both provincial and municipal governments.
Real property is rented through a rental agreement or lease signed by both parties, whereby the owner conveys exclusive possession, control, use and enjoyment of the property in exchange for a rent payment.
Residential property may be leased for a period of 2-10 years, while office spaces may be leased for a period of 3-10 years. Rent payments may be made in any currency, as agreed upon by the owner and tenant.
Argentine law prohibits the application of indexation to rental payments. However, in order to protect the owner, the law permits a scaled payment system, which includes increases after each period.
Real estate is sold through a purchase and sale agreement. This agreement does not convey ownership but ensures the right to demand this conveyance. This sale is completed with the execution of a notarial deed.
The property is thus conveyed when the deed is conferred.
The law requires that, at the time of acquiring an asset whose purchase is subject to registration, if the purchaser does not have a Labor or Tax Registration Number (CUIL or CUIT, respectively, for their acronyms in Spanish), a Tax Identification Number (CDI for its acronym in Spanish) must be obtained from the Federal Administration of Public Revenues (AFIP for its acronym in Spanish). For that purpose, a foreign purchaser should have a valid passport and appoint a representative for tax-related purposes, who must be an Argentine resident and register for this purpose.
Property purchases by foreigners do not require any prior authorization except in the case of real estate located in border security areas, that is, geographical areas and strategically located areas for national defense purposes, including areas along the country’s land and water borders, as well as areas surrounding inland military or civilian establishments that are relevant for defense purposes.
To buy real estate located in border security areas, and/or exploit permits or concessions in those areas, prior authorization must be obtained from the National Commission of Security Areas (CNZS for its acronym in Spanish).
Rural land purchase
Law 26737 on the Protection of the National Dominion over Ownership, Possession and Holding of Rural Lands—enacted in December 2011—stresses Argentina’s national sovereignty by protecting the country’s strategic resources. This law limits rural land purchases by foreigners to 15% of all national territory. This percentage will also be computed for the provincial, municipal or administrative territory where the rural land is located. Additionally, a foreign individual or legal entity of the same nationality is not allowed to hold more than 30% of that percentage.
In the area defined as the “core zone”—an area representing the most fertile agricultural lands composed of some districts of the provinces of Buenos Aires, Santa Fe and Córdoba—the total landholding by the same foreign person cannot exceed 1,000 hectares, or an equivalent area, depending on the territorial location
(as determined by its location and its proportion as to the municipality, district or province as well as by the rural lands’ capacity and quality for their use and exploitation).
Furthermore, foreigners cannot own lands containing or adjacent to large and permanent water bodies and located in border security areas, save the exceptions and procedures established in Decree-Law No. 15.385/44, as amended by Law No. 23554.
According to the Bilateral Investment Treaties in force signed by Argentina, the purchase of rural lands will not be considered an investment, as rural lands are non-renewable natural resources contributed by the host state.
The area that constitutes rural lands is determined by subtracting the total urban land areas as determined in the relevant provincial constitutions, laws or decrees, or municipal charters or ordinances, from the total area of the province, district, municipality or equivalent division.
In order to compute the limitation on foreign landholdings, the rural lands informed under such mode or those determined by the Inter-Ministry Council of Rural Lands will be considered rural lands.
The law does not apply to foreign individuals who:
— can prove ten years of continuous and permanent residence in the country;
— have Argentine children and prove five years of continuous and permanent residence in the country;
— have been married to an Argentine citizen for five years before the creation or conveyance of the subject
rights and prove continuous and permanent residence in the country for five years.
Building permits
Building permits (for new works, alterations or additions) are issued by municipal authorities. Building permits are a prerequisite to starting the works. The different permits include: cadastral certificate (certificación de nomenclatura parcelaria); certificate of use or zoning permit (certificado de uso conforme) and construction permits or work notices (permiso de edificación or aviso de obras), as applicable.
The cadastral certificate is issued by the Cadastral Office for the area where the works will be carried out. This certificate is valid for six months after its issuance and indicates zoning restrictions, including public rights of way.
Required documentation for a building permit
— Application for the project and supporting documentation, in accordance with the regulations in
force. This application must be filed in the form of a sworn statement.
— Certificate of use or zoning permit.
— Cadastral certificate.
— Relevant architectural drawings and calculations
— Site plan of the surface area divided by class and category according to the classification of the tariff ordinance in force at the time of the presentation and the calculation of the respective amounts.
A certificate of use or zoning permit permits a parcel of land, a building, facilities or part of them to be used for a prescribed purpose as permitted by the zoning legislation in force.
SETTING UP A BUSINESS IN ARGENTINA
A construction permit should be requested from Private Works Office in the municipality where the construction works will be carried out. This permit is required for new building constructions; additions, renovations or alterations to pre-existing structures; closure, opening or alteration of window or door openings in façades;
main façade surfacing; new walls; roofing changing or alteration; demolition and excavation; performance of mechanical, electrical, insulation, flammable and plumbing installations, or renovation or transformation of the existing ones; new rights of way; land surveys and cadastral modifications; and construction, additions and renovations of parking spaces.
A works notice is required if the works involve curb alterations; clearing or painting main façades; opening, closing or altering window and door openings in other than the main façades; applying coatings to front fences; applying or changing coverings or surfacing on outer walls; changing roofing materials; building ceilings; flattening and filing in lands; making minor alterations to mechanical, electrical, insulation, flammable and plumbing installations; putting up front display windows and awnings on façades facing public rights of way, and any other work for which no authorization is required if a provisional structure for equipment and materials should be erected on the pavement.
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