| How to
Buy Property in Chile: The Legal Issues |
| There is
more than a little confusion on the Internet about how to buy property
in Chile as a foreigner. There are many articles that cover the great
deals in Chile, which often include a few fuzzy details about the legal
requirements, but a surprising few that really dig into the legal issues
involved.
Here we
hope to sort out some of the misconceptions when it comes to buying property
in Chile as a foreigner.
In this article
we touch on the basics of the procedures, the Cost, the contract requirements,
and the difference between a RUT and RUN ID systems that are required to
purchase a property in Chile. |
|
|
|
|
|
| Purchase
and Sale Contract in the Chilean Legal System
The contract
for purchase and sale is regulated by the Civil Code articles Art. 1793
through 1896.
| Search
4Escape - The International Lifestyles Search Engine |
| -
4Escape is a search engine that searches our network of websites each of
which shares a common theme: International relocation, living ? investing
overseas, overseas jobs, embassies, maps, international real estate, asset
protection, articles about how to live ? invest overseas, Caribbean properties
and lifestyles, overseas retirement, offshore investments, our yacht broker
portal, our house swap portal, articles on overseas employment, international
vacation rentals, international vacation packages, travel resources,
every embassy in the world, maps of the world, our three very popular eZines
. . . and, as they are fond to say, a great deal more. |
|
|
This contract
is usually consensual, (it exists 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
obtain 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. |
|
|
Offshore
Resources Gallery
|
|
|
| (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
-
The formalized
contract. (escritura pública otorgada ante Notario)
-
A copy of the
formalized contract must be taken to the Registry for ownership inscription.
(Inscripción
de Dominio en el Registro de Propiedad del Conservador de Bienes Raíces).
|
|
|
| A copy of
that contract with a stamp from the Office of the Registry with the Number
assigned on the Index Book (Repertorio), year of the Property Archive
(Año del Registro de Propiedad), and number of that inscription
in the year Archive. At this point you own the property.
Before signing
the contract you must have
-
The Title Report
for the property (Estudio de Títulos). Make sure you have
a good title, there are many problems and pitfalls with inscriptions, legal
requirements, and eminent domain laws and regulations. This is especially
common in rural areas. For this report we would highly recommend for you
to hire your own attorney. Most lawyers are qualified, but better make
sure they are experts on the issue.
|
|
|
Offshore
Resources Gallery
|
| Escape
From America Magazine - The Magazine To Read To If You Want To Move Overseas |
| - Began Summer
1998 - Now with almost a half million subscribers, out eZine is the resource
that expats, and wantabe expats turn to for information. Our archives
now have thousands of articles and each month we publish another issue
to a growing audience of international readers. Over 100 people a
day subscribe to our eZine. We've been interviewed and referenced
by the Wall Street Journal, CNN, The Washington Post, London Talk Show
Radio, C-Span, BBC Click Online, Yahoo Magazine, the New York Times, and
countless other media sources. Featuring International Lifestyles
~ Overseas Jobs ~ Expat Resources ~ Offshore Investments ~ Overseas
Retirement - Second Passports ~ Disappearing Acts ~ Offshore eCommerce
~ Unique Travel ~ Iconoclastic Views ~ Personal Accounts ~ Views From Afar
~ Two things have ushered us into a world without borders... the end of
the cold war and the advent of the world wide web of global communications
? commerce. Ten years and over one hundred issues! We're just
getting started - Gilly Rich - Editor |
|
|
|
For the most
part, real estate brokers have their own legal team, or they work in association
with a lawyer. At some point this could be a clear case of conflict of
interest. If there is any pitfalls, they may overlook them just to close
the deal. A good title report is not an easy task, it takes time and expertise.
As far as prices go, you have to bear in mind that Chilean Attorneys are
not as expensive as Americans. So for a little extra cash, you can double
check everything is in order. Now, if you are buying with a loan from
a Chilean Bank, they will take care of everything before approving the
loan. In that case, you just have to rely on the bank's legal team. They
are normally very good. Banks do not want you to have a bad title, on money
they loaned you.
The land is more theirs, than yours until you pay it.
-
If you have a
tourist visa, work visa, or you are a foreign investor, and you do not
have temporary or permanent residency in Chile, you must apply at the National
Tax Office (Servicio de Impuestos Internos SII) for a RUT (Rol Único
Tributario). This is just a number issued for tax purposes, required
for all foreigners without legal residency in Chile for the purchase of
stock, real estate or any acquisition that requires inscription and formalities
in any type of public records. If you have residency, you will be issue
a RUN or identity card number (Cédula Nacional para Extranjeros)
and that same number will be used for tax purposes (to make it clear, in
that case your RUN will be used as RUT also).
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.
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 is to give you an idea of what is involved, and what the
procedures are for buying a property in Chile. Our best advice is to
get help with your purchase. 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.
This article provided by Charles Spencer (www.spencerglobal.com)
Return
To Index |
|
 |
|
Article
Index ~ Chile
Index ~ |
