A guide to buy real estate in Mendoza

Real estate transactions in Argentina are made in cash and in dollars. So, potential foreign buyers should consider this fact, since they will need cash to complete the transaction. Foreigners have basically three ways of getting cash into Argentina:

a. Bureau de Change: Bureaux de change work as little private banks that transfer money to the country. The most respectable bureaux de change will require that the future buyer prove the origins of the sum of money to be transferred before giving him information on the international bank account. The bureau de change will notify the future buyer when he can go to their office in Mendoza to receive the money (generally, 48 hours after the transfer is completed). In fact, no transfer is made. The bureau de change will give the future buyer money withdrawn directly from their bank account in Mendoza, thus reducing the costs of converting money from one national currency to another twice. Bureaux de change charge 1.5%-2.5% of the total sum of money transferred for their services.

b. Official Bank: Working with official banks is very expensive, especially if the foreign buyer does not have an account in an Argentine bank. After transferring money to Argentina from any place in the world, the sum of money is automatically converted into Argentine pesos, and the bank charges 1.5% of the total sum of money transferred for its services. Since real estate transactions in Argentina are made in dollars, the money should be converted again from pesos to dollars, which costs approximately 1.5% of the total sum to be converted. So, working with an official bank costs 3%-4% of the total sum of money transferred.

c. Plane: Even though it is risky, the foreign buyer may bring the sum of money in cash to Argentina whit him. However, he should bear in mind that he is obliged to declare at the customs office any sum of money exceeding US$10,000.

Furthermore, the foreign buyer will need a Clave de Identificación (a tax identification number, hereinafter referred to as “CDI”). To apply for a CDI, foreigners should first go to the Police Station corresponding to their address to apply for a Certificado de Domicilio (Residence Certificate, hereinafter referred to as “Residence Certificate”), which is a document that proves the person is living in Argentina. This certificate establishes the address that will appear on the CDI. Since this document certifies the current address of the person, it is allowed to indicate the address of a hotel.

The following day, a police officer will go to the indicated address to personally deliver the Residence Certificate. The police officer will not give the certificate to third parties because the purpose of this document is to certify that the person lives in the indicated address.
Holding the Residence Certificate, the foreign buyer must go to the Administración Federal de Ingresos Públicos (the Argentine equivalent to the Internal Revenue Service, hereinafter referred to as “A.F.I.P.”) corresponding to the address indicated in the certificate. At the A.F.I.P., the foreign buyer must submit the original passport together with two photocopies, and appoint a local representative for tax purposes (pursuant to A.F.I.P. General Resolution Nº 1375/02). If there is no problem, the A.F.I.P. will issue the CDI number at the moment.

If the foreigner does not speak Spanish fluently, it is highly recommended that he go with somebody trustworthy or with a professional to help him fill in the forms.

Buying real estate

After finding the property, the buyer should ask the seller to show him the following documents regarding the property:

* A photocopy of the Property Title.

* Proof of Payment of the Real Property Tax: The seller must be up-to-day with the payment of taxes regarding the property. If he is not, the buyer must deduct the total amount of unpaid taxes from the total property price.

* Registration Report: The registration report exhibits the taxes on the property when it was acquired, and certifies that the seller is the true property owner and that he does not have any judicial prohibition to sell the property.

* Property Plans: All the information regarding the property, such as its area and distribution, is exhibited in the Property Plans.

Offer an reservation sum 

Once the buyer verifies all the documents regarding the property he wants to buy do not present any problem, he must make an offer and pay a reservation sum to the real estate agency in order to declare his intention to buy the property. The property owner may accept or reject the offer or even counter-offer (generally, the owner sets a higher price in order to leave room for negotiation).

By paying the reservation sum, the real estate agency cannot offer nor show the property during the term the owner has to decide whether to accept or reject the offer, or to counter-offer. In case the parties do not reach an agreement as regards the price, the real estate agency must return the reservation sum to the buyer.

If the buyer works directly with the property owner, i.e. without a real estate agency as intermediary, it is not necessary to pay a reservation sum.

Purchase agreement

If the parties reach an agreement, they may sign a purchase agreement, in which the property transfer date and the intervening escribano are indicated -see 3.2.4 Escribano<‘s Role-. When signing the purchase agreement, the buyer pays approximately 30% of the total property price (which will be completely paid on the date indicated therein) and the real estate agency receives a 3% – 4% commission for the services rendered.

If the buyer backs out after signing the purchase agreement, he loses the 30% he had already paid to the owner; while, if the seller backs out, he must double the 30% paid by the buyer.

After the parties sign the purchase agreement, the escribano studies all the documents regarding the property. If the escribano finds any problem, the purchase agreement becomes invalid and the property owner must return the amount of money to the buyer.

Dow payment, title deeds, and property transfer

Signing a purchase agreement is not an obligatory legal requirement to make the property purchase effective. In fact, the parties can directly sign the escritura (title deeds, hereinafter referred to as “title deeds”). However, before signing the title deeds, the buyer must generally make a seña (down payment, hereinafter referred to as “down payment”) of approximately US$10,000 to the property owner. After the down payment is made, the parties are subject to the same terms established in a purchase agreement. The difference between a purchase agreement and a down payment lies on the amount of money the buyer is required to pay the property owner: 30% of the total property price vs. US$10,000.

The property transfer is completed on the day in which the title deeds are signed. Said day, the buyer pays the due amount of money, and the escribano transfers the property title to the new owner. By signing the title deeds, the escribano certifies that all the documents regarding the property do not present any problem and that there is no legal restriction preventing the owner to sell the property. After both parties and the escribano sign the title deeds, the escribano gives the new property owner a certified copy of the new title.

Generally, the escribano’s fees are paid according to laws in force: 70% is paid by the buyer and 30% is paid by the seller. However, the parties may agree on other percentages.

Escribanos role

An escribano is a public officer vested by the State with public faith, thus every act notarized by an escribano is authentic. Even though his functions are similar to the ones ordinarily exercised by notaries public, to become an escribano in Argentina, one must first earn a law degree and then complete a post-graduate degree.

The intervening escribano is generally picked by the buyer with the seller’s consent. It is recommended that buyer ask for advice from an escribano before signing the title deeds in order to reduce the risks associated with property purchases.

Before writing the title deeds, the escribano studies the property title to check that the prior title deeds are authentic and requests for documents from the Registro de la Propiedad (Real-Estate Registry Office, hereinafter referred to as “Real-Estate Registry Office”) to guarantee there is no lien, mortgage or legal restriction on the property. Furthermore, the escribano requests for certificates of tax and building maintenance fees due, since he is also vested by the State with the power to withhold due payments.

Once the escribano checks that no document presents problems, he writes the title deeds according to the agreement of the parties. By signing the title deeds, the escribano attests that the purchase is authentic and guarantees the identity of the parties. The escribano issues a certified copy of the title deeds and files it with the Real-Estate Registry Office.

To carry out this transaction, it is very important that the parties have good communication. Therefore, if the buyer is a foreigner and does not speak Spanish fluently, it is recommended that a translator, an interpreter or a trustworthy person accompany him during the whole buying process to avoid misunderstandings and clear up any possible doubt.


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