[BUYING AND SELLING REAL ESTATE IN ARGENTINA]
13
where it is located; (iii) it will be implemented in underdeveloped zones; and (iv) it mainly employs Argentine workers. b) Protection of Rural Lands Ownership Act (Act 26,737) (“PRLO”). The PRLO limits the ownership or possession of rural land by foreign individuals or companies (which are referred to as Foreign Owners). Rural Land is defined as any real estate asset located outside the limits of cities. It provides that all Foreign Owners cannot own or possess more than 15% of the total rural land of Argentina. Likewise, Foreign Owners cannot own or possess more than 15% of the total rural land in each Province or Administrative Department. Additionally, Foreign Owners of the same nationality cannot own or possess more than 30% of the rural land owned by Foreign Owners. Moreover, a single Foreign Owner cannot own more than 1,000 hectares in the core area or an equivalent surface in other locations to be determined by the governmental authority. Finally, Foreign Owners cannot hold an interest on rural land adjacent to bodies of water of certain importance. Moreover, any change in the composition of the corporate capital of local companies’ owners of rural land should be informed to the authorities to verify compliance with the PRLO. The PRLO considers the following to be Foreign Owners: a) Individuals of foreign nationality (although there are some exceptions for foreign nationals who have resided in Argentina for more than 10 years, or have Argentine children, or have been married to an Argentine national for more than 5 years); b) Companies, incorporated in Argentina or abroad, whose capital is owned in more than 51% (or a sufficient
percentage
to
adopt
decisions
in
shareholders’
meetings)
by
foreign
individuals or companies. The regulations of the PRLO provide that in the case of usufruct and surface rights, it will only control the owner of the property and not the holders of said rights. The PRLO has created a National Registry of Rural Land which oversees compliance with the PRLO. The application of the PRLO is triggered when dealing with the acquisition of real estate assets or participation in companies which own real estate assets which qualify as rural land. As noted before, the PRLO bans the acquisition of rural exceeding 1,000 hectares in the core area, or adjacent to bodies of water of certain importance, or in excess of the 15% maximum of the rural land allotted to Foreign Owners at national, provincial and municipal level. Before the granting of the deed of acquisition of the rural real estate asset the intervening notary must procure with the National Registry of Rural Land a certificate of clearance, confirming that the above limits are not breached by the intended transaction. If the certificate of clearance is not obtained the transaction cannot be implemented. c) “UVA” mortgage loans. UVA mortgage loans are a new form of mortgage loans aimed at the purchase, repair or expansion of real estate property. They are granted by both public and private banks and represent a comparative advantage over other forms of mortgage loans, since they offer a more convenient interest rate. These loans are expressed in Purchasing Value Units (“UVAs”), which reflect the
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter