Buenos Aires Real Estate Buying Guide
BUENOS AIRES REAL ESTATE GUIDE: THE BUYING PROCESS
Buying a property is always an excellent way of investment. Buying a property in Argentina has become a priceless opportunity of best getting results from investment. There are many reasons that justify investing in Argentina, as the capital appreciation, the increasing cash flow from renting the property, low expenditures on the property, and a current low tax policy in property, among others.
Buenos Aires Habitat wants to help foreign investors in the buying process with this friendly to read guide. This guide aims to easily describe the buying process for a prospective buyer.
Foreigners can purchase property in Argentina without restrictions (except in certain areas of national security). In order to buy real estate in Argentina you are required to have a Tax ID or CDI (Tax Identification number) that you can get it through your lawyer or by yourself.
Follow this guide and you will be ready to make the perfect real estate investment in Argentina!
1. Searching for the ideal property in Buenos Aires
Searching for properties can be very time-consuming. Therefore, Buenos Aires Habitat offers a Property Finder Service that will help you find the perfect property and save you valuable time and money. Through our experience and network of contacts, clients have access to the best properties available on the market that will perfectly match their requirements, without having to book appointments with several different real estate agencies.
When looking for the ideal property in Buenos Aires, there are many things take into consideration:
- Distance from main avenues: It is important to note how far the property is from main avenues like Santa Fe, Alvear, Callao, etc.Santa Fe Ave. is one of the main dividing lines; to the south of Santa Fe properties will be cheaper, to the north more expensive. The same happens with Alvear Av. The South of the city is less wealthy and developed than the North (Recoleta, Barrio Norte, Palermo, Belgrano). The area in the South that best developed in the last years is Puerto Madero, becoming one of the most expensive areas of the city.
- Safety of the area: As many big cities in the world Buenos Aires has a delinquency rate. Therefore we suggest staying in some neighborhoods where safety is granted. Recoleta, Palermo, Puerto Madero, and Barrio Norte, are the most demanding areas for living not only for their good location but for their unique beauty and safety.
- Building status and environmental review: Before suggesting a property Buenos Aires Habitat will make a complete examination of the building and any urban development scheduled in its area that may affect your property to be.
- Title: It is important to make sure the property is free of any legal liaison, and that the seller of the property owns the legal title of the selected property. Buenos Aires Habitat always offers properties from sellers the company has a consistent relationship with.
Buenos Aires Habitat will provide you, buyer, with all the useful information of the apartment: price, selling conditions, commission details, etc., and will show you the unit. We will also inform you about the home association fees of the apartment (“Expensas”), what does that include (in some cases it may include the water and cable bill), and the approximate cost of the Municipal Tax called ABL.
2. Making the offer: Reservation
Having found the property you were looking for, it’s time to make an offer and proceed with the reservation.
The offer, known as the Reservation (“Reserva”) consists of a document that outlines the terms and conditions of the purchase offer including price, transaction terms, and the relevant payment terms.
The Reservation process requires a good faith deposit of approximately 1% of the ownership value. This deposit credits the buyer as a serious claimant, and secures priority over the ownership before any other subsequent offers.
During the term of validity of the Reservation, the seller cannot offer and/or sell his or her property to any other party. However, if the transaction doesn’t go through in the terms set in the Reservation, the buyer will loose the good faith deposit. On the other hand, if the seller does not fulfill his/her obligation to transmit the property rights as it is established in the “Reserva” he or she will have to give the buyer double what the good faith deposit amounted (half of it as a compensation for damages).
It is advisable to obtain legal advice when negotiating the wording of the Reservation prior to making any payment. In addition, the terms of the Contract of Purchase and Sale and the Title Deed are normally negotiated and prepared by the lawyers acting for the parties. The Public Notary then reproduces the terms of the draft deed prepared by the lawyers.
The seller may accept, reject or counter-offer the “Reserva”. In most cases he/she will counter-offer. When both parties agree on the price, you buyer will proceed to sign the contract of purchase.
3. The Contract of Purchase and Sale
Once the two parties agree on the purchase, the next step is usually the Contract of purchase and sale. However, the parties sometimes agree to go directly to the signature of the Title Deed after the reservation. One legal advantage of executing a contract of purchase is that in case the seller went bankrupt, buyer after a 25% down payment can ask for a signature of the Title Deed on his behalf, paying the bankrupt amount as the property price.
The Contract of Purchase and Sale (“Boleto de compraventa”) is a contract between the parties where the seller commits himself to transfer the property of the apartment to the buyer on a certain date, and you (the buyer) agree to make the payment/s. The contract regulates the conditions of the property sale.
At the time of the Contract of Purchase signature, the buyer will have to make a down payment consisting of a percentage of the price agreed in the contract. The standard down payment is from 30% to 50% of the property value.
The “Boleto de compraventa" does not transmit the title of the property, but compels the seller to do it, and also obligates the buyer (you) to pay the agreed price. Under this agreement, both seller and buyer can legally force each other to close the transaction. After the signature of the contract of purchase, the buyer will be able to go to court in Argentina and request the transfer of the title (prior deposit of the balance of the price), and the seller will have the right to demand the balance payment from the buyer.
The parties establish in the contract the name of the Public Notary who will arbitrate and determine time and venue for the Title Deed to be signed. Parties are allowed to choose the Public Notary to execute the Title Deed. However, it is general practice for the buyer to select the Notary.
4. Title Deed (“Escritura”): ownership
Although the Contract of Purchase and Sale of a property will contain valid binding obligations between the parties under Argentine law, it will not be accepted for registration in the Real Estate Registry unless the terms of transfer have been included in a Title deed executed before a Public Notary.
The Escritura( Title Deed) brings the final property title transfer. At this stage, you (the buyer) will pay the remaining purchase price. The Public Notary (“Escribano”) will do the due diligence on the property and will clear the title.
Immediately prior to signature of the Title Deed, the Public Notary will request the Real Estate Registry to issue a certificate ("Certificado de dominio") which temporarily blocks the property in the Register, so that no attachment, mortgage or encumbrance can be filed over the property for a period of 15 calendar days. In the event that the Title Deed is not executed before the Notary during those 15 calendar days, the Notary will ask the Real Estate Registry to extend the validity of the certificate. No Title Deed may be executed unless a valid certificate (i.e. of less than 15 days) "Certificado de dominio" is held.
The Public Notary is responsible for checking the title deed of the property and ensuring that there are no charges or encumbrances over the property of which the purchaser is unaware of. Further, the Notary will have to notify the transaction to the Argentine tax authorities.
The Title Deed does not transfer the ownership rights. The ownership rights are transferred when you receive the “possession” of the apartment (called “Tradición”).The possession is perfected by the Title Deed signature when the property keys are given to the buyer.
Once the Public Notary certifies the price and effective payment under his presence, the seller can acquit of all the rights over the property, and transfer them to the buyer, also giving the possession of the property. As soon as the buyer accepts this transfer he/she becomes owner of the property.
You will be registered by the Notary as owner of the relevant property before the Real Estate Registry of the jurisdiction where the property is located.
The Title Deed allows your property rights to be acquired along with the possession. Afterwards the due registration in the Real Estate Registry (“ Registro de la Propiedad”) makes the buyer’s ownership rights valid for the buyer vis-à-vis third parties.
Title Deed, the effective possession and the due registration in the Real Estate Registry will allow the buyer to become the owner of the property with the transfer of the subsequent rights.Every legal act affecting the property and any related real estate rights (easements, mortgages and other encumbrances) must be registered before the Real Estate Registry of the jurisdiction where the property is located for validity vis-à-vis third parties.
* Legal restrictions on ownership for non-resident persons
* Transfer money to Argentina
* CDI (Tax Indentification number) & Taxes involved in the purchase of property
* Warranties granted to the buyer
* Intermediaries and rates