{"id":380,"date":"2011-09-09T02:01:19","date_gmt":"2011-09-09T02:01:19","guid":{"rendered":"https:\/\/kierjoffe.com\/news\/?p=380"},"modified":"2018-07-19T15:39:00","modified_gmt":"2018-07-19T18:39:00","slug":"real-estate-summary-and-critique-of-argentinas-rural-land-law","status":"publish","type":"post","link":"https:\/\/www.kierjoffe.com\/news\/lawyer-argentina-attorney-buenos-aires-law-firm\/real-estate-summary-and-critique-of-argentinas-rural-land-law\/","title":{"rendered":"Real Estate: Summary and Critique of Argentina\u2019s \u201cRural Land Law\u201d"},"content":{"rendered":"

Argentina\u2019s Rural Land Law<\/strong><\/p>\n

<\/strong>Last week, in an extraordinary session before summer recess, the Argentine Congress enacted a controversial law to restrict foreign ownership of rural lands. Law 26,737, introduced by the Executive Branch, passed with almost no floor debate. According to statements made by public officials, the law protects national sovereignty over natural resources by, among other things, limiting foreign ownership of rural lands to 1,000 hectares (approximately 2,500 acres) for each foreign person. Supporters of the law point to the massive holdings of Benetton and Ted Turner (Patagonia) and Douglas<\/em><\/p>\n

Tompkins (northern Argentina wetlands) as examples of foreign wealth locking up sovereign resources. Read on for more about these restrictions and the disquieting uncertainties prompted by the law.<\/em><\/p>\n

<\/em>Summary of the Rural Land Law<\/em><\/strong><\/p>\n

<\/em><\/strong>The Rural Land Law restricts ownership and possession of rural land by natural and legal foreign persons. \u201cRural land\u201d is broadly defined as \u201call land outside the urban area,\u201d regardless of its location or use. While the Rural Land Law does not affect already acquired property and rights, it would affect future investments such as the acquisition of companies with rural land holdings.<\/p>\n

Restrictions<\/em><\/p>\n

<\/em>The law imposes three restrictions on foreign ownership:<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Foreign persons may not own more than 15% of all rural land in Argentina.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Of that 15%, no more than 30% may be owned by foreign persons of the same nationality.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Any one foreign person may not own more than 1,000 hectares (roughly 2,50 acres) in any \u201ccluster\u201d (zona n\u00facleo<\/em>) (a term that is not defined by the law). The Rural Land Law bans outright all foreign persons from owning coastal lands or other land adjacent to significant bodies of water. The law further prohibits foreign ownership of land within \u201cborder security zones,\u201d absent consent from the Ministry of Internal Affairs, consistent with the exceptions and procedures established by law.<\/p>\n

To implement its restrictions, the Rural Land Law calls for the creation of a \u201cNational Rural Land Registry,\u201d a subdivision of the Ministry of Justice, and an Inter- Governmental Council of Rural Lands. The National Registry will be charged with<\/p>\n

creating a database of rural lands owned by foreign persons. Current rural land owners subject to the \u201cforeign person\u201d definition are required to notify the National Registry within 180 days of the release of implementing regulations by the Executive Branch (which has not occurred yet). Any change in the ownership of a legal entity holding rural land must also be notified to the National Registry within 30 days of its occurrence.<\/p>\n

Defining Foreign Persons<\/em><\/p>\n

<\/em>Foreign natural persons are not defined by the law but presumably the term excludes both natural-born and naturalized Argentine citizens. The law exempts three categories of foreign natural persons from its restrictions:<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Those with 10 years or more of permanent and continuous residence in Argentina;<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Those having Argentine children and at least five years of permanent and continuous residence in Argentina; and<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Those married to an Argentine citizen for at least five years before acquiring the rural land (or interest in a legal person holding the land) and five years or more of permanent and continuous residence in Argentina.<\/p>\n

As to legal persons domiciled in Argentina, the law defines them as \u201cforeign\u201d when:<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Foreign natural or legal persons own more than 51% of its capital;<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 They are effectively controlled by any foreign legal person (which is presumed when foreign ownership exceeds 25%);<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 They have issued negotiable obligations or debentures, which allow a foreign holder to convert the instrument into equity representing more than 25% of the company\u2019s capital stock; or<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 In the case of a trust holding rural land, when foreign beneficiaries have an interest in excess of 25%.<\/p>\n

The law further declares rural land as a \u201cnon-renewable natural resource,\u201d the acquisition of which will not be considered a protected investment under any Bilateral Investment Treaty to which Argentina is a party.<\/p>\n

Commentary: Whose Interest is Being Protected?<\/em><\/strong><\/p>\n

The Rural Land Law is fraught with uncertainty, making it hard to assess its application. The law is patently contradictory in defining foreign legal persons (e.g., does a 51% or a 25% ownership threshold apply?). The law prompts obvious questions (e.g., would a foreign secured creditor be barred from foreclosing on a rural land mortgage? What is the<\/p>\n

consequence of exceeding a nationality threshold? If a quota system, does a perspective buyer await an opening? How are natural persons with dual nationality to be considered?). Some or even all of these questions may be answered by the Executive Branch when it releases regulations. Nonetheless, it is unclear when this will be done.<\/p>\n

The absence of meaningful debate only adds to the confusion prompted by the Rural Land Law. While a government may rightly assure that a country\u2019s natural resources be available to its citizens, it would appear that the legislators have confused sovereignty with nationality. The owner\u2019s nationality does not affect the State\u2019s power to tax, to regulate, to condemn or even to expropriate in the public interest. It is hard to understand<\/p>\n

the Rural Land Law as upholding any national interest, unless one accepts that the law will rightfully keep Argentine rural lands from being a world market commodity, thereby protecting the ability of Argentine citizens to acquire large landholdings without competing with foreign wealth. If so, it is hard to imagine the Argentine landed gentry as a class requiring the State\u2019s protection.<\/p>\n

The best Law firms, top Lawyers, Attorneys, Advocates, Solicitors and Barristers in Buenos Aires, Argentina.\u00a0\u00a0Agriculture,\u00a0Argentina,\u00a0Farmland.<\/p>\n

The proven Buenos Aires \u2013 Argentina lawyer professionals at the\u00a0Kier Joffe law firm<\/a>\u00a0have experience working with foreign clients involved in all kind of cases\u00a0in Argentina.\u00a0Buenos Aires Argentina attorney<\/a>\u00a0professionals 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 \u00a0lawyer in Argentina.<\/p>\n

www.kierjoffe.com<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Argentina\u2019s Rural Land Law Last week, in an extraordinary session before summer recess, the Argentine Congress enacted a controversial law to restrict foreign ownership of rural lands. Law 26,737, introduced by the Executive Branch, passed with almost no floor debate. 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