There is no kind of limitation imposed on foreigners for the purchase of property of any kind in Uruguay and no requirements for such foreigners to set up any kind of domicile in the country. Any person or legal entity, regardless of its nationality or place of domicile, may invest in real estate in Uruguay, whether in tourism or other areas with no limitations of any kind and when selling their property may repatriate the result of its investment without the need of any kind if authorization or intervention by the Uruguayan authorities.
The tax system does not discriminate against foreign investment. However, the tax burden is influenced by the legal vehicle adopted to acquire real estate or perform activities in Uruguay.
The Uruguayan exchange market operates under complete freedom of transaction and holdings in currency and metals. Uruguay has maintained a foreign exchange policy that complements the framework of liberalization of the economy. The financial exchange market is fully liberalized, and the purchase and sale of foreign exchange is subject to no restrictions. Similarly, there is a total freedom in transfers and remittances to and from the country in any currency.
Yes. For foreigners coming to Uruguay, it is important to take note that this country is not a signatory to the Hague Convention regarding legalization of documentation by means of the “apostille”. All documents coming from abroad must be legalized before the Uruguayan consulate of the place in which the document is originated or before the Uruguayan consulate with jurisdiction over such place.
Transparency. Uruguay has strong laws to prevent bribery and other corrupt practices. In 2005, Uruguay was ranked second best in Latin America (after Chile) according to Transparency International’s Corruption Perception Index.
The obtaining of a resident permit in Uruguay does not pose great difficulties. Foreigners are admitted to reside permanently in Uruguay if they comply with the following three general principles: a) they must be of good health, b) they must prove to be of good conduct and, c) that they have enough means to support themselves and their family. Legal citizenship may be obtained by non nationals if they have resided in the country for a term of at least three years (if they have settled down with their families), or of five years (in case they lack a family) and in both cases have been of good conduct.
Uruguayan law contemplates the possibility of separating legal title to a property from the right of beneficial use over the same. In this way title to the realty is divided between the holder of the legal title (“nudo propietario”) and the holder of the usufruct or of the right to use and benefit from such property (“usufructuario”). Upon expiration of the term for which title to the usufruct has been transferred or the demise of the person in favor of which such right to use or benefit from such property has been transferred, full title to the property is returned to the holder of the legal title.
An interest in real property may also be transferred in the form of a lease. A lease conveys the right to use and benefit from the property for a period of time as if the lessee were the owner, subject to the limitations contained in the lease agreement and for the term of the lease. However at the expiration of the term of the agreement, possession returns to the lessor and lessee loses all rights to the property. The law limits the term of lease agreements to a maximum 15 years.
The legal existence and property rights over the units of a country club, the administration of the same and the rights and obligations of the owners of such units are governed by law 10.751 and law 17.292 (said laws, hereinafter the “Law”). The Law establishes the requirements for considering the plots as individual real estate units, the rights of the individual owners of each unit over the areas of the country club which are for the common use of all of the proprietors of the units which are part of the building.
In general it may be stated that such units are recognized by law as separate real property upon the granting of the municipal approval of the infrastructure works of the country club; the registration of the plans of the project and the execution and registration of the “Reglamento de Copropiedad” establishing a mortgage over each of the units of the country club in favor of the other co-owners as security for the payment of common expenses.
Notwithstanding the above, the execution and registration of promises of sale over units with respect of which the above steps have yet not been completed and therefore are still no recognized as independent property is admissible by law.
According to the abovementioned, it is mandatory that the country club has a “Reglamento de Copropiedad”, which rule with detail the administration of the country club and the rights and obligations of the owners of the various units with respect to the upkeep of the country club and their contribution to of one single child the percentage of the estate the testator is allowed to dispose of is fifty per cent of his estate, in the event of two, that percentage is of one third, and in the case of three or more, the percentage is reduced to one quarter of the estate. If there are no children and the forceful heir or heirs are one or both parents, the testator may dispose freely of fifty per cent of his estate.
In the case that the owner of a real estate property located in Uruguay dies, the correspondent heirs must carry out the inheritance judicial procedure in Uruguay in order to obtain a judicial declaration of heirs.
Under Uruguayan Law, upon the death of a person who has died intestate, the direct descendants of the deceased, whether legitimate or natural, and in their absence, his or her ascendants together with the surviving spouse are considered as heirs of the estate of the deceased. In the absence of both parents and spouse, the siblings of the deceased whether legitimate or natural, together with his adopted children are considered as his heirs.
The law considers the direct descendants of the deceased, whether legitimate or natural and in their absence his or her parents, as “forceful heirs” and reserves for such class of heirs a portion of the estate.
Even by means of a will, a person who at the time of his death has “forceful heirs” may not dispose of more than a certain percentage of his estate in the benefit of third parties or may not alter the percentage of the estate that corresponds to any one of such “forceful heirs”. The percentage of the estate to be assigned to such heirs depends upon their number. In the case of one single child the percentage of the estate the testator is allowed to dispose of is fifty per cent of his estate, in the event of two, that percentage is of one third, and in the case of three or more, the percentage is reduced to one quarter of the estate. If there are no children and the forceful heir or heirs are one or both parents, the testator may dispose freely of fifty per cent of his estate.
In the case that the owner of a real estate property located in Uruguay dies, the correspondent heirs must carry out the inheritance judicial procedure in Uruguay in order to obtain a judicial declaration of heirs.
The Uruguay Civil Code contemplates the existence of two kinds of wills: the solemn open will which must be executed before a notary public and before three witnesses in the form of a public deed and the solemn closed will which is executed in the form of a private document and delivered to a notary public, before five witnesses to be introduced into an envelope, which is duly sealed and stamped to assure that it may not be replaced.
The Civil Code contemplates for very special circumstances the possibility of less solemn wills, but the general principle is that wills executed in the form of private documents or which do not follow the legally prescribed solemnities are considered null and void and produce no effects.
Uruguay has an excellent real estate legislation akin to the Torrens System, under which title to real estate and all rights pertaining to real estate, in order to be valid before third parties, must be registered before the pertinent public registry. The chronological order in which such rights are registered give precedence to the various rights registered with respect of a property. The system is so safe that title insurance is unheard of in the country.
Further, all real estate transactions and most contracts which create rights such as security rights over real estate must be executed before a notary public (“Escribano”) in the form of a public deed and registered with the registry of real estate of the department of location of the land in question.
It is customary that the parties, upon reaching an agreement for the purchase and sale of any kind of realty, whether of an urban building, a summer house or a ranch, execute a preliminary agreement, usually called a “Boleto de Reserva”.
Usually the preliminary agreement will establish a term of 30 to 60 days to conduct the due diligence work and title search with respect of the property and will subject the execution of final agreement to the existence of good and clean title in the name of the seller.
The Boleto de Reserva, similarly to a memorandum of understanding, states the main terms and conditions of the projected deal.
Uruguayan law contemplates, in the event of a realty transaction where the purchase price is to be paid in more than one installment, the execution of a promise of sale to be executed before a Escribano and substantially in the form of a definitive purchase and sale agreement which, upon registration with the real estate registry shall grant full protection to the rights to the promissory buyer over the property in question with respect to any other right created over such land, any attachment or encumbrance ordered or imposed by a competent court with respect of the same or any other circumstance which could affect the right of the vendor to dispose of its property which may be registered subsequently to the registration of the promise of sale.
This law contemplates the possibility that in the event of the vendor were to default in his obligation to execute the purchase and sale agreement or were unable to do so for any reason (including his death, liquidation, bankruptcy, etc), the pertinent court, upon verification that the purchase price has been paid in full or of the deposit of the purchase price before such court, shall execute the conveyance of the property to the vendee on behalf of the vendor.
As stated above, purchase and sale agreements as well as the promise of sale the object of which is real estate must be executed before an Escribano in his books. A sale and purchase agreement executed in a private document is null and void and produces no effects.
The registration of the purchase and sale deed will cause it to be valid and in force before third parties as from the moment of registration. If not registered, the agreement will only be valid between the parties thereto.
All real estate transactions are subject to a land transfer tax (the “LTT”) equivalent to two per cent (2%) of the fiscal value of the property which is paid both by buyer and by seller. Generally the fiscal value of the property is considerably lower than its market value, and at a risk of generalizing may be estimated at close to 50% of the market price, though of course, in some cases this estimate may not be too accurate.
The LTT is deposited with the Escribano upon the execution either of the promise of sale or the purchase and sale agreement, and it is he who will proceed to its payment prior to registration of the deed.
When prior to the execution of a purchase and sale agreement, the parties have entered into a promise of sale agreement, in occasion of which the LTT has been paid, then such tax is not paid again at the moment of execution of the purchase and sale agreement.
Another expense to take into account are the pension funds contributions on the fees of the Escribano, which add up to approximately 0,55% plus VAT (22%) of the purchase price. Originally a part of the notary’s fees currently it has become customary to consider them as a separate expense.
According to Uruguayan conflict of law rules, the spouses legal regime regarding the goods acquired during their marriage is the one of the country in which the spouses had their first domicile.
Therefore, should the first domicile of the spouses was abroad then the law of such country would regulate the regime of goods of the spouses.