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| Chile Real Estate Law: Buying property in Chile |
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The contract for purchase and sale is regulated by the Civil Code articles Art. 1793 through 1896. This contract is usually consensual, (it exist and has legal authority from the moment the buyer and seller agree what to sell and for how much) except in those cases where the law requires certain formalities. In the case of real estate, article 1801 of the Chilean Civil Code has established that the contract is not perfect or valid until the signing of a formal document called escritura pública. In order to get this document (which contains the contract itself) the text must be written in a certain format, in most cases prepared by an attorney. The draft prepared by the attorney must be transfered to an archive copy, usually a task for the Notary staff, and that copy is signed by the parties at the Notary's office. This formality does not imply just signing a document at the Notary. It is a special type of document that will become part of an Archive or Public Record at the Notary itself. At this point you just have a title. In order to be the actual owner of the property you must take a copy of the formalized contract and complete the ownership inscription at the Property Archive of the Registry. (Inscripción de Dominio en el Registro de Propiedad del Conservador de Bienes Raíces). That ownership inscription is the legal obligation to complete the transfer of property to your name. Until completed, you have simply bought the right to register as the legal owner. After that long description of the legal procedure, confusing as it might be, the real question is: What do you I need for a legal transfer of a property in Chile? Well, like most things related to law, the devil is in the details. What you must have to own a property in Chile:
Before signing the contract you must have:
There has been endless confusion and misunderstandings about what a RUT is, and what is the difference is with it and a RUN (Rol Único Nacional), or the Chilean Identity Card Number for Foreigners (Chileans also have a RUN). It is very simple. If you apply for residency you will get an identity card with a RUN number. The same number will be your all purpose tax number. If you do not apply for temporary residency, and you are going to receive any kind of payment or purchase, you will need a tax number or RUT. You must declare at the tax office that you will receive some kind of payment, but you are not intending to apply for residency. Later, if you decide to change your status and apply for your residency, you will be issued an identity card with a RUN number. The old temporary RUT will be canceled, and you will receive a RUN number and that will be used for taxes (i.e. as a RUT). So, RUN is the national ID number. RUT is the national tax payer ID number. All Chileans have an identity card number (RUN) issue when first register as soon as they are born. That same number is used for tax purposes as a RUT. At one time they where different numbers. That number is also used as the Chilean passport number. Additionally you have to make sure the seller has: The Property Tax Debt Certificate. In order to be allowed to signed that contract at the Notary the seller must have a certificate proving that all property taxes have been paid. (Certificado de Deuda Contribuciones de Bienes Raíces). The Notary will not authorize the signing of the contract without it. They have the legal obligation to report to the Chilean Tax Office (SII) the transfer of the property and that the property is clear of all tax debt. The expenses keep in mind that, traditionally, in Chile buyer and seller share almost all expenses related with the contract and the negotiation of the contract; except for the title report and the inscription at the Registry, which must be paid by the buyer. This also includes the real estate Agent fees and commissions. These prices are a guideline. If the property is very expensive, the cost could be less for attorney fees. If the property if very cheap, the cost will tend to be a higher percentage of the value. For example, a 2% charge on a $1,000,000 peso sale, would not be worth it for many lawyers. Another thing to keep in mind is that a package deal can often be worked out with an attorney for a better price, if they are to do all work related to the sale of a property. So, it is worth shopping around. You must pay:
Formalities of the Contract itselfThe real estate purchase contract must have the following:
There is no need to mention the background facts as to why the parties are doing the deal (e.g. Good friends, etc). As far as things like environmental issues, hazardous waste provisions, or insurance, there is little to nothing about those issues at the legal end of the contract signing. You must check that independently. The Buy-Sell agreement (Contrato de Promesa) The purchase (Buy-sell) agreement whereby a person agrees to sell and another to buy a specified article for an agreed price on a given date or depending on a certain conditions (Contrato de Promesa), is very common as a way to close the deal. Make sure you are committed to buy before signing this contract, because the penalties are very high in case of a breach of the agreament. The intention of this article was to give you an idea of what is involved, and what the procedures are for buying a property in Chile. Our best advise is to get help with your purchase. With this article, we hope that we have given you and idea of what sort of help you are going to need in going through the process of buying property in Chile. About the Author: Zandra Valenzuela Delgado is a Chilean attorney. She is a graduate of the University of Chile Law School, and studied Public International Law in Europe. She is currently a professor of Public International Law at Catolica University and the Austral University in Southern Chile. |
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