Category Archives: Real Estate

Invest in Argentina – Buenos Aires, Mendoza, Patagonia

Making an Investment in Argentina

If you’re looking to invest in Argentina, then you might consider making a real estate investment in Argentina, such as buying a fixer-upper property. These aren’t as much of a bargain on a per-square-foot basis, but they are less expensive in gross dollar terms and often don’t take much work or capital to put into rentable condition. It is important to note that these days in Buenos Aires even the smaller apartments in good neighborhoods are doing well as short-term rentals.

Tourism has become a very big business in Buenos Aires…for all the reasons we’ve told you about…and smaller apartments (one and two bedrooms) are now great investments because they are ideal for short-term rentals. The demand is quite high, since most hotels are fully booked, and the cost of renting a short-term rental apartment is much lower than staying at a hotel. Either way, if you purchase an apartment in a desirable location–especially in the Recoleta and the Retiro areas–you probably won’t go wrong. Here, apartments in older buildings are reminiscent of apartments in Paris and Barcelona, and have tremendous style and character. They appeal not only to local residents, but also to tourists and longer-term visitors as well. And if you owned one of these, you would certainly want to have occasional use of it as well.

We also see lots of investment opportunity in areas in the south of the city of Buenos Aires, like San Telmo and Barracas. In these areas, the demand is strengthening, and due to its great proximity to all the better areas, they provide a great alternative. The other appeal these southern areas have is that there are plenty of character buildings, which are in the process of being renovated, and costs are very advantageous.

Ready to Invest in Argentina?

A first-time foreign investor in any country can’t be expected to simply drop in and get up to speed immediately. You need a local expert to help you understand the ins and outs of the market–especially in a place as diverse as Argentina.

Before you visit Argentina, we recommend you contact us. We are experts at helping to guide investors to the best local investment opportunities.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Argentina Real Estate

Excellent Argentina Real Estate Opportunities Are Available Throughout the Country

The architecture defining properties in Argentina is eclectic. Older buildings in Buenos Aires that would be well at home in any European city sit alongside unappealing highrises built in the ’60s, ’70s, and ’80s…and here and there, newer and less offensive modern structures share the landscape. The older apartments in Buenos Aires are much bigger than their European counterparts, making the real estate in Argentina much more comfortable than, say, the typical European apartment. For instance, the typical apartment in Buenos Aires is approximately 3,000 square feet, with three bedrooms, two bathrooms, a large kitchen, sitting room, dining room, and maids’ quarters.

Magnificent Apartment Properties

Most larger apartments in Argentina have one or two bedrooms and maids’ quarters, plus a back entrance with separate stairs and elevator for the maids’ use. The per-foot cost of these apartments is one-third to one-tenth that of a similar property in Europe. A 1,000-square-foot apartment, for example, in one of these Argentine properties of character will cost you about $175,000-200,000. All indications are that an investment in an apartment in Buenos Aires is a good one. If you are interested in making an investment in Argentina real estate here, you have two options: You can buy something small…something that would be considered a starter home for a single person or a couple, or you can buy a larger unit–a “classic” apartment in one of the better neighborhoods.

A smaller apartment would make a good long-term rental on the local market, returning about 4-5% (net of everything including the rental management fee) with minimal hassle. The only potential hassle would be an eviction. However, the property laws in Argentina related to eviction of a tenant are similar to those in the United States, and the eviction process isn’t overly difficult. There are steps to follow, but it’s nothing like Europe, for example, where even the most deadbeat of tenants can be all but impossible to evict.

Different Areas of Buenos Aires in Which to Buy Real Estate

In Palermo, a neighborhood in Buenos Aires that attracts lots of expats, real estate prices have fallen less than in other parts of the city, but they’re still very reasonable. End houses in the northern suburbs, which are where expats with families tend to navigate, are selling for up to 20% less than before the currency devaluation.

In addition to apartments in the capital, there is also an attractive real estate market right now for houses in the Buenos Aires suburbs to the north. Here, you will find quaint English-style houses built in the 1940s and modern, angular houses of more than 7,000 square feet with four-car garages. These are higher-value investments and, like apartment properties in Buenos Aires, offer long- but probably not short-term rental potential…plus the promise of impressive appreciation in the coming years.

If you are particularly interested in getting into the rental business with your Argentina real estate purchase, you might want to consider one of the northern suburb’s gated communities, to either buy a lot and build a home or buy an existing home. Returns in the best gated communities for long-term rentals are currently about 7% per year.

Overall, houses in the northern suburbs rent well on the corporate expat market, especially to families with school-aged children. There is an English-language school nearby, and the feel is more like the North Shore of Chicago than the Third World. There are shops, restaurants, parks, and there’s even a commuter train to the city. The cost per square foot for the ready-to-move-into houses ranges from $65 to $93. This is where the wealthy Argentines live, so the houses are big. In other words, although the per-square-foot cost is low, the total cost is not entirely insignificant. Small houses here are around 3,000 square feet and are selling for $250,000 and up. Every house has maids’ quarters. Most have back staircases for maids, swimming pools, and parrillas y quinchos–outdoor covered eating areas and brick barbecues.

The real estate in these suburbs undoubtedly has great potential for long-term appreciation (longer-term than the two to three years you might expect for apartments in the city). These are grand houses, built with “real” materials–granite (for the countertops), hardwoods (for the floors and windows), and brick (for the exteriors). Houses of this standard in a major U.S. city would go for at least four times what they are currently listed for in Buenos Aires.

The Argentine Real Estate Market Beyond Buenos Aires

Patagonia is a brand in itself, including Mendoza and its wonderful wine region and Bariloche and the lake region including San Martin de los Andes. Mendoza concentrates the best regions for wineries and vineyard properties, with prices starting as low as $75,000 for a 30- to 40-acre piece of real estate. A garden city with stunning views of the Andes mountains, it has five trees for every resident and its shady avenues impart a relaxing and tranquil pace. The wonderful climate is due to its location at the foot of the Andes. Mendoza is the fifth-largest wine-producing region in the world–grapevines were first planted by Jesuit missionaries in 1556. Nearly 80% of Argentina’s wines are produced here, including Argentina’s signature wine, the rich, deep-garnet Malbec, often called Argentina’s zinfandel.

Mendoza’s San Rafael was settled by Italian and Swiss pioneers. It is the home of Valentin Bianchi, one of Argentina’s largest wine producers, which exports to the United States and Europe. Wine enthusiasts are drawn to its sparkling wines and pleasant strolls through the landscaped property.

Bariloche is known as the “St. Moritz of Argentina.” Located in the Andean foothills on the southern shore of Lake Nahuel Haupi, Bariloche is surrounded by dense forests, alpine lakes, and 12,000-foot-high mountains. It was founded by German and Austrain settlers and rivals the Swiss Alps for sheer beauty. The town of 120,000 permanent residents sits on the lakefront and resembles a Swiss village with its wooden façades, mountainous scenery, and cathedral and clock tower in the center of town. Bariloche is popular both winter and summer for outdoor sports, and has very lively nightlife with music, dining, and dancing.

If you are considering other Argentina real estate options, then you will be pleased to know that there is some excellent real estate for sale. In the heart of Bariloche, a beautiful 1,700-square-foot Alpine-style chalet with a view of the lake will cost approximately $110,000, and a 3,200-square-foot house near the town center will be about $225,000.

Picture yourself at the head of a fabulous downhill run at the Cerro Catedral ski resort. You’re in the clear mountain air, viewing breathtaking scenery and inhaling the intoxicating aromas from the town’s many chocolate confectioners. Below are chalet-style houses with brightly painted window boxes.

Skiing starts in May at Cerro Catedral, just 12 miles from Bariloche, but the best time to hit the slopes is July to October. Important international competitions take place at Cerro Catedral, which offers 4,500 acres of ski-able terrain and is South America’s first and largest ski resort.

The Arelauquen Golf & Country Club, located just 15 minutes from the center of Bariloche, is a gated lakeside community with an 18-hole golf course. A bungalow here can be purchased for about $130,000 or a quarter-acre lot facing the golf course for $200,000. A pine tree-shaded lot on the shore of Lake Gutierrez will cost $100,000 and up.

The Chapelco Golf & Resort, only 10 minutes from San Martín de los Andes, features an 18-hole golf course co-designed by Jack Nicklaus and Jack Nicklaus II, an international hotel complex, and 432 real estate development lots. On average, lot sizes range from one-third to three-quarter acres, with one as large as 2.75 acres. Prices range from $75,000-200,000 per lot, and monthly membership fees are around $100.

Charming Córdoba is the nation’s second largest city and is located near the center of the country. The cosmopolitan city of 1.3 million residents has a historic city center and trendy restaurants and shops all within walking distance. Regarded as a cultural center, Córdoba is home to music and artistic festivals, and numerous small theaters and performance cafés. Property prices in Córdoba are a bit less than properties you will find for sale in Buenos Aires, and the farther you get from the city into the suburbs, the further your dollar will go.

The northeastern part of Argentina is a rural region with small provincial towns and the area is characterized by nature’s wonders and God’s works: The northwest is a treasure trove of Argentina’s colonial Spanish past. The region borders Bolivia and resembles mountainous Andean countries far more than it does the flat and fertile Pampas. It is an area of cobblestone streets and Spanish-tiled plazas, misty river valleys, craggy red rocks, and a significant flute-playing, Quechua-speaking native population.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

 

REAL ESTATE: Registering Property in Buenos Ares Argentina

Below is a detailed summary of the steps, time and cost involved in registering property in Argentina. It assumes a standardized case of an buyer who wants to purchase land and a building that is already registered and free of title dispute.

Procedure:

# 1 Seller must obtain a certificate of ownership (“dominio”) and a certificate of good standing (“inhibiciones”) from the Real Property Registry

The certificate of ownership (“Certificado de dominio”) proves that the property is free and clear of liens and or encumbrances. According to Executive Order No. 2080/80, article 8, it is mandatory to obtain the nonencumbrance certificate.The certificate of personal annotation (“Certificado de inhibiciones”) proves that there is no judicial order restraining the seller from encumbering or disposing of his assets.

The domain certificate and a personal annotation are valid for 15 days, and they are both requested with a unified form.

When a notary from the Capital Federal requests a domain certificate, the property is “reserved” for 60 days.

If a new Domain certificate is requested during this period, it will state that a transaction is in process.

Pursuant to Technical Resolution N°5/2008 of the Registry of Property dated September 5, 2008, the certificate of personal annotation can be obtained online at the Registry website. Only interested parties pursuant to sections 6,7 and 22, Law No. 17,801 can obtain the certificate online, and they also need to be registered users of the website (e.g. notaries, accountants, lawyers).

Agency: Real Property Registry (Registro de la propiedad inmueble de la Capital Federal)

# 2 Obtain a Real Estate Reference Value (Valor Inmobiliario de Referencia)

Property transfers in the City of Buenos Aires and some parts of the Province of Buenos Aires require a “Valor Inmobiliario de Referencia (VIR)” (Real Estate Reference Value”). The VIR was introduced by Resolution Nº 67-AGIP-10 of February 10, 2010 and later amended by Resolution Nº 435-AGIP-11 of August 3, 2011.

A VIR is assigned to every property by the revenue agency and it sets a minimum base to calculate the stamp tax. The VIR aims to prevent the undervaluation of properties done to pay less stamp duty on property transfers.

The notary has the responsibility to check the VIR, since the stamp duty will be calculated on the greater value between VIR, the fiscal valuation (‘valuación fiscal’) and the sale price agreed by parties. The Procedure is free and it can be obtained online by the notary through the revenue agency website www.agip.gob.ar.

However, not all the properties in the City of Buenos Aires have been assigned a VIR yet. In these cases the notary must obtain a certificate stating that there is no VIR for the property.

Agency: Real Property Registry (Registro de la propiedad inmueble de la Capital Federal)

# 3 Obtain a cadastral certificate (“certificado catastral”)

The notary requests the cadastral certificate (with measures, boundaries and fiscal valuation) at the Cadastral office (“Oficina catastral”). The certificate is valid for one year. In the Capital Federal, there is no need for a surveyor to measure the property.

Note: for some type of properties, it is possible to obtain the certificate on-line in the Province of Buenos Aires.

Agency: City of Buenos Aires government (“Oficina catastral”)

# 4 Obtain a certificate stating that no local taxes related to the property are due (ABL).

This certificate (“Certificado de libre deuda de impuestos municipales-ABL”) is obtained at the Notaries’ association (“Colegio de Escribanos”). Local taxes related to the property being sold are known as ABL (Alumbrado (street light), Barrido y Limpieza (cleaning)). The certificate is valid for 30 days (or the current month), according to the 2009 “Código Fiscal” of the city of Buenos Aires, which shortened the original 1year validity.

Agency: Notaries’ association (“Colegio de Escribanos de la Ciudad de Buenos Aires”)

# 5 Obtain “Code of Offer of Transfer of a Property” (COTI) at tax agency AFIP

Sellers have to declare property transfers of over ARS 600,000.00, to the tax authorities in the City (AFIP).

The declaration shall include the names of the buyer and seller, the property being transferred and the value of the transaction. Once the transaction is declared, the seller will obtain a “Code of Offer of Transfer of a Property” (COTI) from AFIP. The COTI has a validity of 24 months (extendable 12 months if a construction is to be made).

The “Code of Offer of Transfer of a Property” (COTI) may be obtained:

• Online: www.afip.gov.ar. Access to the system is via a tax code

• By phone, 0800-999-2347: in which case it will be necessary to print a certificate afterwards from www.afip.gov.ar. Access to the system is via a tax code 

The COTI was implemented to fight tax evasion on March 1, 2008, through the Resolución General N° 2371Año 2007 from December 14, 2007.

Agency: Tax Agency (AFIP)

# 6 The public deed is executed by the parties with the intervention of a notary public

The public deed is the only document which is mandatory by law to transfer a property’s ownership.

Transactions subject to Capital Gains Tax (CGT) are not subject to Transfer Tax (this is the case when companies are parties to the transaction). CGT is paid by the seller. However, this tax is not applicable if the money collected by seller for the transfer of property is used to buy another property within a year of the sale or for the construction of a new property. In this last case, for the tax waiver to apply, the construction has to start a year after or a year before the transaction and it has to be completed 4 years after the date of the transaction.

The notary will retain the 1.5% for the transfer tax, but if the transaction is subject to CGT, he will use this amount to pay the CGT. If the transaction has been arranged through a broker, his fees will be about 3% of the purchase price.

# 7 The notary public files the property transfer for registration with the Real Property Register

Upon registration, the buyer will have perfect and complete title to the property, opposable to third parties.

The registration fees are usually paid by the buyer. The notary has 45 days to register the property transfer.

At this stage, the property title can be used as collateral for a loan, or the property can be resold.

The majority of registrations are made following the regular Procedure.

Agency: Real Property Registry (Registro de la propiedad inmueble de la Capital Federal).

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Argentina Real Estate Law

  1. 1          Argentina Real Estate Law

    1.1        Please briefly describe the main laws that govern real estate in Argentina.  Laws relating to leases of business premises should be listed in response to question 10.1.  Those relating to zoning and environmental should be listed in response to question 11.1.

    The Federal Constitution and Treaties on Human Rights expressly provides for the right to private property.  Real estate in Argentina is governed by the Argentine Civil Code and by other specific laws (i.e. Law 13,512 on Propiedad Horizontal and Law 24,441 governing trusts).  Law 26,737 imposes limits on the ownership or possession of rural land by foreign individuals or legal entities.

    1.2        What is the impact (if any) on real estate of local common law in Argentina?

    This is not applicable in Argentina

    1.3        Are international laws relevant to real estate in Argentina?  Please ignore EU legislation enacted locally in EU countries.

    No, international laws are not relevant to real estate in Argentina, with the exception of the Treaties on Human Rights (please refer to question 1.1) and general rules provided by investment protection treaties.

  2. 2          Ownership

    2.1        Are there legal restrictions on ownership of real estate by particular classes of persons (e.g. non-resident persons)?

    According to Law 26,737, foreign ownership of rural land shall not exceed 15% of the total amount of “rural lands” in the Argentine territory.  This percentage is to be calculated also in relation to the territory of the province or municipality where the relevant lands are located.  In addition, ownership by the same foreign owner (i.e. foreign individuals, foreign entities or local entities controlled by a foreign person) shall not exceed 1,000 hectares of the “core area”, or the “equivalent surface” determined according to the location of the lands.  Furthermore, foreign investors may not own more than 15% of the real property in the country, province or municipality and the same foreign owner shall not exceed 1,000 hectares of the “core area”, or the “equivalent surface” determined according to the location of the lands.  The Interministerial Council of Rural Lands (Consejo Interministerial de Tierras Rurales), the enforcement agency of the new law, shall define the location of the “core area”.

    Likewise, under security zone regulations, foreign ownership in certain areas of national security, such as frontier zones, requires prior consent of a Federal Agency, which is normally granted.

    In principle, acquisition of real property in the city of Buenos Aires by a foreign entity (in particular, when more than one asset is being acquired) may require the registration of a branch of such foreign entity before the public registry (“IGJ”).

  3. 3          Real Estate Rights

    3.1        What are the types of rights over land recognised in Argentina?  Are any of them purely contractual between the parties?

    The types of rights over land are outlined in Laws passed by the Federal Congress, mainly in the Civil Code, which include ownership, co-ownership, usufruct and easements, among others.  Additionally, Law 25,509 ofSuperficie Forestal allows separation of ownership of land and forestry.

    Some significant real estate transactions are of a purely contractual nature, such as leases.

    3.2        Are there any scenarios where the right to a real estate diverges from the right to a building constructed thereon?

    No.  As a general rule, any buildings or constructions are attached to the real estate in question, in other words, they are incorporated in the real property forming an indivisible unit.

  4. 4          System of Registration

    4.1        Is all land in Argentina required to be registered?  What land (or rights) are unregistered?

    In general, all land and related real estate rights over such property (and its encumbrances) must be registered with the local real estate registry.

    4.2        Is there a state guarantee of title?  What does it guarantee?

    There is no title insurance system in Argentina.

    4.3        What rights in land are compulsory registrable?  What (if any) is the consequence of non-registration?

    Real estate rights over land which are not registered are not effective against third parties.

    4.4          What rights in land are not required to be registered?

    Certain contractual rights over property (for example, leases) do not need to be registered.

    4.5        Where there are both unregistered and registered land or rights is there a probationary period following first registration or are there perhaps different classes or qualities of title on first registration?  Please give details.  First registration means the occasion upon which unregistered land or rights are first registered in the registries.

    This is not applicable in Argentina.

    4.6        On a land sale, when is title (or ownership) transferred to the buyer?

    Ownership is transferred to the buyer upon the date that the notarial deed of conveyance is executed.  Possession by the acquirer is required for the conveyance of legal title.

    4.7          Please briefly describe how some rights obtain priority over other rights.  Do earlier rights defeat later rights?

    Priority against third parties is obtained through timely registration of the notarial deed with the relevant real estate registry.  Priority among different registrations is granted by the date and order number of the notarial deeds given by the real estate registry at the time of the filing.

  5. 5          The Registry / Registries

    5.1        How many land registries operate in Argentina?  If more than one please specify their differing rules and requirements.

    There is one real estate registry for each Argentine province and another one for the city of Buenos Aires.  Each real estate registry has its own particular rules.

    5.2        Does the land registry issue a physical title document to the owners of registered real estate?

    The Land Registry of the applicable jurisdiction issues a certificate stating that the title has been duly registered.

    5.3        Can any transaction relating to registered real estate be completed electronically? What documents need to be provided to the land registry for the registration of ownership right? Can information on ownership of registered real estate be accessed electronically?

    Transactions cannot be completed electronically but the follow up of certain filings may be accessed online.  Broadly speaking, information on ownership is not available online; in the city of Buenos Aires’s registry, it is possible to obtain the identity of the owners of a given property online, though.  For purposes of requesting registration, a copy of the public deed together with a formal petition shall be furnished to the land registry.

    5.4        Can compensation be claimed from the registry/registries if it/they makes a mistake?

    Yes, compensation can be claimed under general rules of tort liability.

    5.5        Are there restrictions on public access to the register?  Can a buyer obtain all the information he might reasonably need regarding encumbrances and other rights affecting real estate?

    There are no restrictions on public access to the register, but the petitions can only be signed by certain professionals (lawyers, notary publics, engineers, accountants, surveyors or real estate brokers).

  6. 6          Real Estate Market

    6.1        Which parties (in addition to the buyer and seller and the buyer’s finance provider) would normally be involved in a real estate transaction in Argentina?  Please briefly describe their roles and/or duties.

    (a)   Selling and purchasing agents (or realtors)

    A real estate broker may intervene as an intermediary on behalf of either the seller or the purchaser.

    (b)   Lawyers

    Legal advice is recommended in connection with the negotiation or execution of any binding document.  Lawyers usually provide tax and foreign exchange advice for transactions involving any international parties.

    (c)   Notaries

    The deed of conveyance (escritura pública) has to be executed before a notary public, who is responsible for verifying that the seller has good title on the property.

    (d)   Others

    A surveyor (agrimensor) should check that the boundaries of any property outside city centres as described in the real estate registry correspond to the parties’ understanding of same on the ground.

    6.2          How and on what basis are these persons remunerated?

    Some of the persons detailed above, such as notaries, may have regulations on fees depending on local rules and regulations, although, in many cases, these regulations are not followed by the parties involved.  In general, fees are agreed as a percentage of the transaction’s price.

    6.3        How has the real estate market in Argentina recovered or reacted following the global credit crunch and worldwide recession in 2008/2010? What were the most important real estate transactions in Argentina in the past year?  Please include both local and international investors in your answer.

    During the crisis, real estate transactions declined significantly for both local and international investors.  In addition, in recent months, some real estate transactions have been adversely affected by foreign exchange restrictions, mainly, as a consequence of a general restriction pursuant to which the ability of Argentine residents to acquire foreign currency for this type of transaction has been suspended indefinitely.  The impact by this new regulation has been significant on the market, since, historically, real estate transactions involving the acquisition of real property are denominated and paid in a foreign currency.  The market has not yet recovered from these restrictions.

    6.4        Is there a trend in Argentina towards the investment in retirement homes / nursing homes due to the increased ageing of the population?

    After the 2001 turmoil and current inflation, real estate transactions are considered a safe shelter for investors; consequently small apartments are the trend.  Although no particular trend towards retirement homes or akin has developed locally yet, there are signs of new investment in this sector, mainly focused on foreign residents, who could take advantage of a well-developed private health care system in Argentina.

  7. 7          Liabilities of Buyers and Sellers in Real Estate Transactions

    7.1        What (if any) are the minimum formalities for the sale and purchase of real estate?

    Execution of the deed of conveyance between the buyer and seller and registration of such deed with the local real estate registry is required to transfer real estate.  Beforehand, parties may execute a preliminary contract (Boleto de Compraventa).  Recent regulations state that sellers must inform the tax authority about every offer, negotiation or transfer involving an immovable property for an amount exceeding AR$300,000 (approximately US$62,000).

    7.2        Is the seller under a duty of disclosure?  What matters must be disclosed?

    Yes.  Under the general duty of good faith common to any contract, the seller should reasonably disclose any encumbrance or hindrance which may impede the buyer from fully enjoying the property.  Besides, these kinds of representations and warranties are contractually agreed, whereby the seller ensures he or she has good title.

    In addition, disclosure is required by the consumer protection law.

    7.3        Can the seller be liable to the buyer for misrepresentation?

    Please refer to question 7.4 below.

    7.4        Do sellers usually give contractual warranties to the buyer?  What would be the scope of these?  What is the function of warranties (e.g. to apportion risk, to give information)?  Are warranties a substitute for the buyer carrying out his own diligence?

    Real estate transactions are customarily negotiated on an “as is” basis.  However, the Argentine Civil Code provides for certain implied warranties on a sale granted by the seller to the buyer.  These warranties consist of the following: (i) that the seller has good title and the property is free of encumbrances (Garantía deevicción) (see question 7.5); and (ii) that the property has no hidden defects (Garantía por vicios redhibitorios).

    7.5        Does the seller warrant its ownership in any way?  Please give details.

    The Civil Code provides for an implied warranty to title in all sale contracts.  Although parties may include a contractual provision restricting or waiving this implied warranty, it is a widespread practice to include a clause pursuant to which the seller declares that it has good title to the property and that it is free from any charges or encumbrances.

    7.6        What (if any) are the liabilities of the buyer (in addition to paying the sale price)?

    There are certain legal charges attached to immovable property relating to municipal and provincial taxes, expenses and maintenance of building common areas and the charges levied by the utilities companies.

  8. 8          Finance and Banking

    8.1        Please briefly describe any regulations concerning the lending of money to finance real estate.  Are the rules different as between resident and non-resident persons and/or between individual persons and corporate entities?

    Since 2002, foreign exchange controls impose restrictions on persons (or entities) to borrow from foreign persons (or entities), or make payments of principal or interest thereto.  Furthermore, Central Bank registrations and approvals may be necessary.

    The repatriation of funds may also be subject to restrictions.  In principle, foreign residents investing in Argentina are subject to a one-year deposit equivalent to 30% of the total funds introduced into the Argentine exchange market.  There are certain exceptions, including foreign direct investments, which include, with certain limitations, investments in real property.

    Cross-border financings to Argentine residents -as a general rule- carry the obligation to repatriate and liquidate the funds into the foreign exchange market as well as the maintenance for a one-year minimum term and, unless an exception applies, are also subject to the 30% mandatory deposit.  Note that there is an exception commonly used for financing the acquisition of real estate that requires the loan to have an average term (considering the repayment schedule for principal payments and interests) of not less than 2 years and the investment of 100% of the proceeds in fixed assets or inventory.

    Also, during the last semester of 2011, new foreign exchange regulations have limited the ability of local residents to purchase foreign currency to the extent the amounts in question are not consistent with their tax returns.  This has limited the number of real estate transactions being closed since most of the real estate market uses foreign currency as a payment method.

    8.2        What are the main methods by which a real estate lender seeks to protect itself from default by the borrower?

    Mortgages and trusts are the most common collateral in connection with real estate.  A mortgage remains in full force and effect until all secured amounts have been paid in full or the mortgage is otherwise cancelled by mutual agreement.  However, unless extended, the registration of a mortgage will automatically expire 20 years as from the registration date.

    8.3        What are the common proceedings for realisation of mortgaged properties? Are there any options for a mortgagee to realise a mortgaged property without involving court proceedings or the contribution of the mortgagor?

    Mortgages may be realised by judicial or private procedures.  Regarding judicial procedures, the mortgagee may commence an ordinary declaratory trial, an expedited trial, a mortgage expedited trial or a provincial foreclosure trial.

    If the debtor issues mortgage letters (“letras hipotecarias”), the mortgagee may realise it by private procedure without the contribution of the debtor.  The mortgagee may: a) request directly to the register the issuance of a second copy of the deed; or b) require the payment of the debts that exist on the property regarding ordinary expenses, taxes and fees that weigh on the property.  Should the debtor not pay the debt within ten (10) business days from the request, the mortgagee may auction the property as if debt free.  In that case, the lender will order itself, without court intervention, a public auction sale of the property, by an auctioneer appointed by and with the usual conditions of that place.  Notices shall be published.  The base of the auction will be the amount of debt at the time of the sale.

    8.4        What minimum formalities are required for real estate lending?

    None, except for the registration with the relevant real estate registry of mortgages or trusts over land.

    8.5        How is a real estate lender protected from claims against the borrower or the real estate asset by other creditors?

    Trusts are also widely used as security devices.  A trust will be formed upon the transfer of ownership in trust of a property by a settlor to a trustee who will undertake to exercise the rights in respect of it for the benefit of certain beneficiaries.  The trust property forms a separate estate from both the trustee or the settlor’s estate (except fraud).  The trust’s duration may not exceed thirty years.  The benefits of the trust in guarantee over the mortgage include: the property remains bankruptcy remote from the debtor’s assets; out-of-court foreclosure is allowed; and rotation of beneficiaries is easier.

  9. 9          Tax

    9.1        Are transfers of real estate subject to a transfer tax?  How much?  Who is liable?

    a)         Income tax

    Non-resident individuals or legal entities without a permanent establishment in Argentina are taxed only on income from Argentine sources; income arising from assets placed or used in Argentina is deemed to be from an Argentine source.  The corporate tax rate applicable in Argentina is 35%, whereas the tax rate for individuals ranges from 9 to 35%.  Income Tax Law provides certain particular rules applicable to real estate transactions such as a roll over alternative in order to defer the income allocation (venta y reemplazo).  Income tax treatment must be analysed on a case-by-case basis.

    b)         Tax on Presumed Minimum Income

    This tax applies to all assets of Argentine companies and other entities, such as trusts, common investment funds, permanent establishments of foreign entities and individuals in Argentina or foreign individuals who own rural immovable property.  This tax applies, at a 1% rate, should the total assets value exceed AR$200,000 (around US$52,000) at the end of the financial year.  Any tax payable hereunder is allowed as a credit towards normal corporate income tax.

    c)         Personal assets tax

    The Personal Assets Tax Law provides that all individuals residing in Argentina are subject to a tax upon their worldwide assets, while individuals not residing in Argentina are only liable for this tax upon their assets located in Argentina.  In general, the tax on personal assets goes from 0.5% to 1.25% depending on the total value of tax assets as of 31 of December of each relevant fiscal year.  A tax rate of 1.25% is applicable to non-resident individuals holding assets subject to this tax.

    d)         Transfer of immovable property tax

    A federal tax upon the transfer of immovable property (Impuesto a la transferencia de inmuebles, “TT”) is applicable to individuals who transfer real property if certain requirements are met.  The current rate is 1.5% of the transfer value of the property.

    e)         Stamp tax

    Stamp tax is a provincial tax levied on public or private instruments executed in Argentina, or, if executed abroad, when negotiated assets are in Argentina or have effects in Argentina.  In general, this tax is calculated on the economic value of the agreement and the parties who executed the document (and the notary public if applicable) are severally and jointly liable for its payment.

    9.2        When is the transfer tax paid?

    TT becomes due when the immovable property is deemed to be transferred (i.e. the time a preliminary contract is executed and possession is granted, or at the time the public deed of conveyance is executed; whichever occurs first).

    Income Tax is payable on a yearly basis for Argentine residents.

    Non-residents pay the Income Tax by means of withholding.

    Personal Assets Tax and Tax on Presumed Minimum Income are payable on a yearly basis.

    Stamp tax must be paid within a number of days as from the date the document is executed (usually 10 or 15 days).

    9.3        Are transfers of real estate by individuals subject to income tax?

    Please refer to the answer to question 9.1.

    9.4        Are transfers of real estate subject to VAT?  How much?  Who is liable?  Are there any exemptions?

    VAT is applicable only to certain immovable property transactions, such as sales of new buildings and sales of refurbished buildings.  In the case of sales of new buildings, VAT is payable (10.5% for residential buildings and 21% for other buildings) upon that proportion of the price which relates to the new building, and in the case of refurbished buildings, on the proportion of the sale price which relates to the refurbished parts of the building.

    9.5        What other tax or taxes (if any) are payable by the seller on the disposal of a property?

    Please refer to the answer to question 9.1.

    9.6        Is taxation different if ownership of a company (or other entity) owning real estate is transferred?

    Yes.  The sale of shares of an Argentine corporation by a non-Argentine resident is exempt from Argentine income tax.  In contrast to this, in principle, an assets sale performed by an Argentine resident company would be subject to Argentine income tax at a rate of 35% on the difference between the sale price and the residual tax value of the asset.  During 2012, the Government disclosed its willingness to modify this regime and provide some form of taxation to stock transfers but, as of today, no amendment to the existing regime has been passed.

  10. 10         Leases of Business Premises

    10.1      Please briefly describe the main laws that regulate leases of business premises.

    Leases are governed by the Argentine Civil Code and by the Urban Leases Law (“ULL”).  Certain law provisions (the bulk of them aimed to protect the lessee) are considered public policy and therefore mandatory for the parties.  Lease contracts need only be in writing without requiring notarial deed or any registration, yet.

    10.2      What types of business lease exist?

    The types of business leases that exist are urban leases, rural leases and commercial leases, each of which are governed by a different set of rules.

    10.3      What are the typical provisions for leases of business premises in Argentina regarding: (a) length of term; (b) rent increases; (c) tenant’s right to sell or sub-lease; (d) insurance; (e) (i) change of control of the tenant; and (ii) transfer of lease as a result of a corporate restructuring (e.g. merger); and (f) repairs?

    a)         Length of term

    The ULL provides for a minimum term of three years for urban business (commercial) leases.  Any lease contract entered into for a shorter term than the legal minimum will be considered as executed for the minimum term irrespective of its actual provisions.  Lease agreements are also subject to a maximum term of 10 years.  Recent case law has allowed longer terms though.  A maximum term of 50 years for this type of leases is contemplated in the Bill to Reform the Civil and Commercial Codes (the “Bill”). The Bill has not yet been passed but is expected to be approved during 2013.

    b)    Rent increases

    Parties are free to agree staggered price mechanisms unless this implies some way of indexation (for example, a rent increase by means of a clause taking the inflation index into account would be void).

    c)     Tenant’s right to sell or sub-lease

    A tenant may sub-lease in whole or in part the leased premises unless otherwise agreed.  It is customary, though, that an express prohibition to sub-lease is included in the agreement.

    d)    Insurance

    Usually, parties agree that the tenant must insure the property.

    e)     (i)         Change of control of the tenant

    There are no mandatory provisions on this matter under applicable law.

    e)         (ii)         Transfer of lease as a result of a corporate restructuring (e.g. merger)

    There are no mandatory provisions on this matter under applicable law.

    f)     Repairs

    The regulation of this matter is generally left to the parties but the general principle reflected in the Civil Code is that the tenant shall be responsible for carrying out minor repairs and regular maintenance of the leased property.  The tenant is also responsible for those repairs arising from the tenant’s fault or wilful acts.  Any defects in the structure of the property or more serious repair works must be borne by the landlord.

    10.4        What taxes are payable on rent either by the landlord or tenant of a business lease?

    VAT is applicable to rentals of all types of immovable property (other than that used for the lessee’s personal housing), if the rental exceeds AR$1,500 (approximately US$400) per month.  However, there are some exemptions and the tax treatment must be analysed on a case-by-case basis.  For other taxes, please refer to question 9.1 above.

    10.5      In what circumstances are business leases usually terminated (e.g. at expiry, on default, by either party etc.)?  Are there any special provisions allowing a tenant to extend or renew the lease or for either party to be compensated by the other for any reason on termination?

    In addition to usual termination clauses (term expiration, default, breach of contract, etc.), termination of the lease is triggered by the total destruction of the leased property.  In all cases where the termination is not caused by the fault or wilful misconduct of the parties, such termination will not result in any obligation for compensation, except for the repayment of all sums paid in advance.  Notwithstanding the minimum terms indicated in the answer to item (a) of question 10.3, after the first six months of the lease have elapsed, the tenant has a legal right to terminate the lease prior to the expiry of the minimum contractual term.  In order to benefit from this right, the tenant must give the landlord notice of its decision to terminate the lease at least 60 days prior to the date on which it intends to vacate the property.  Should the tenant exercise this right during the first year of the tenancy, it is also obliged to compensate the landlord in the amount of one and a half month’s rent.  This compensatory payment is reduced to one month’s rent after one year of tenancy.

    10.6      Does the landlord and/or the tenant of a business lease cease to be liable for their respective obligations under the lease once they have sold their interest?  Can they be responsible after the sale in respect of pre-sale non compliance?

    The fact that title to the freehold property is transferred does not affect the underlying lease; the lease contract remains in full force and effect against the new owner of the property.

    10.7      Green leases seek to impose obligations on landlords and tenants designed to promote greater sustainable use of buildings and in the reduction of the “environmental footprint” of a building.  Please briefly describe any “green obligations” commonly found in leases stating whether these are clearly defined, enforceable legal obligations or something not amounting to enforceable legal obligations (for example aspirational objectives).

    Green leases are not common in Argentina.  However, parties are free to agree such kinds of obligations.

  11. 11         Public Law Permits and Obligations

    11.1      What are the main laws which govern zoning and related matters concerning the use and occupation of land?  Please briefly describe them and include environmental laws.

    Urban development in Argentina is basically governed by provincial and municipal zoning regulations and building codes; therefore, they differ in each jurisdiction.

    The federal government sets the minimum environmental standards for the protection of the environment, and the provinces and municipalities establish specific standards and implementing regulations.  The Argentine Constitution forbids the introduction of hazardous waste into the country.  Federal laws relate to various environmental issues such as industrial and waste management and disposal, air, land and water pollution, etc.  Provinces have also enacted environmental laws requiring companies to prepare and file environmental impact statements in order to obtain the relevant permits.

    Certain provinces such as Buenos Aires and Santa Fe have enacted specific regulations for the so-called “large commercial areas” which apply to supermarkets, malls, shopping centres and department stores (large retailers).

    The right to private property is guaranteed by the Federal Constitution.  However, both the federal State and the provinces are empowered to governmental taking (expropiación) providing the following requirements, among others, are met: (i) the Federal Congress (or the provincial legislature as the case may be) must enact a law declaring the public interest triggering the taking; and (ii) prior and due compensation must be paid to the owner.  The compensation may be judicially determined should the parties fail to agree on it.  In principle, loss of profits is not compensated though case law has loosened this restriction in certain special circumstances.

    11.2      Can the state force land owners to sell land to it?  If so please briefly describe including price mechanism.

    National and local governments may force a land owner to sell land to it.  According to national proceeding, the land should firstly be declared as of “public use”.  After that, declaration starts an administrative procedure to determine the scope of the compelled sale and to value the property.

    If the land owner does not agree with the conclusions of such procedure, the government must fill in a judicial claim to force the sale.  The judicial decision will only rule on the price of the land.  The price only includes the “objective price” of the property and direct damages of the expropriation; personal circumstances or lost profits are not taken into account.

    11.3      Which bodies control land/building use and/or occupation and environmental regulation?  How do buyers obtain reliable information on these matters?

    Control of proper zoning, land use, building codes and other restrictions are carried out by provincial and municipal authorities.

    Environmental compliance is controlled at the federal, provincial and municipal level.  The provinces have recently begun to work actively on these matters.  Buyers usually obtain reliable information on environmental matters through due diligence on existing administrative or judicial cases and from any claims initiated before administrative authorities.  Further, prospective buyers usually inspect the property on site.

    11.4      What main permits or licences are required for building works and/or the use of real estate?

    It is not possible to provide a complete list of permits and licences required for the use of real estate because there may be as many regulations as the number of Argentine provinces and municipalities.

    11.5      Are building/use permits and licences commonly obtained in Argentina? Can implied permission be obtained in any way (e.g. by long use)?

    Building or use permits are regularly obtained, although it may take some time.  The cost of and timing for the issuance of building or use permits have to be analysed on a case-by-case basis.

    11.6      What is the appropriate cost of building/use permits and the time involved in obtaining them?

    Please refer to the answer to question 11.3.

    11.7      Are there any regulations on the protection of historic monuments in Argentina? If any, when and how are they likely to affect the transfer of rights in real estate?

    There are national and local regulations on the protection of historic monuments.  In general, the declaration of “public use” of a particular property only limits its use, but should the conservation of the historic monument be jeopardised, the government may compel the sale.

    11.8      How can e.g. a potential buyer obtain reliable information on contamination and pollution of real estate? Is there a public register of contaminated land in Argentina?

    Argentina has no national register on pollution or contamination.

    11.9      In what circumstances (if any) is environmental clean up ever mandatory?

    If damage to the environment is determined, clean up (or remediation) will be mandatory.

    11.10    Please briefly outline any regulatory requirements for the assessment and management of the energy performance of buildings in Argentina.

    The Federal Government has taken some general measures in order to reduce electricity and gas consumption by means of charging higher tariffs when consumption increases are detected.

  12. 12         Climate Change

    12.1      Please briefly explain the nature and extent of any regulatory measures for reducing carbon dioxide emissions (including any mandatory emissions trading scheme).

    Argentina is not a party to Annex 1 of the Kyoto Protocol, so there are no mandatory reduction targets applicable to activities held in our country.

    12.2      Are there any national greenhouse gas emissions reduction targets?

    Please refer to the answer to question 12.1.

    12.3      Are there any other regulatory measures (not already mentioned) which aim to improve the sustainability of both newly constructed and existing buildings?

    No, there are no rules of general application on this matter.

    The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

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www.kierjoffe.com