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[BUYING & SELLING REAL ESTATE IN URUGUAY]
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2. Other issues to keep in mind 2.1. Preference acquisition right in favor of the Municipality Pursuant to Article 66 of Law 18.308, the Municipalities in Uruguay have a preference right to buy real estate. In this sense, it is mandatory for the seller to offer the property to the corresponding Municipality under the same terms that those agreed in the “Boleto de Reserva” entered into with a third buying party. If the Municipality considers that it is a good offer, it can buy the plot, and the buyer will have no possible claim. However, in the practice this is not common. 2.2. Colonization Institute for rural land Article 35 of law 11.029 as amended by law 18.187 establishes the obligation before its sale, of offering any rural property with an area equal to or greater than 500 hectares with a coneat index of 100 (good lands), for sale to the National Institute of Colonization (these requirements could vary in some municipalities). The hectares must be multiplied by the coneat index of productivity and if the result is greater than 50.000, the referred Institute has a first right refusal. The National Institute of Colonization will have preference for the purchase in the same value and term of payment, that is, in the same conditions established in the deal without being able to modify them and will have a period of 20 working days to make a statement, after which, a tacit rejection shall be understood in absence of reply from the Institute. Consequences of not offering it: absolute nullity of the legal business between seller
and buyer, which will operate in full right. Besides, the seller will pay a fine equivalent to 25% of the real value for each of the plots included in the transaction. The other parties of the legal deal, as well as the Notary Public acting in the transaction will be collaterally responsible. In addition, the Institute understands that if after it accepts the offer, the seller decides not to sell, then such seller could be fined in an important amount. In cases where the offer must be made to the National Institute of Colonization (INC), it is not necessary to make the offer to the Municipality mentioned in the previous paragraph. 2.3. Ownership of rural real properties and farms Ownership of rural land and performance of agribusiness activities in Uruguay are subject to a specific regime. Such regime mainly regulates and restricts the persons entitled to be owners of rural estate or to develop agricultural activities. In this sense, act 18.092 declares of general interest that the holders of property rights over rural real estate and agricultural exploitations where rural activities are developed, be natural persons or companies which membership interest or shares are in registered form and owned by individuals. However, act 18.092 entitles the Executive Power to authorize certain entities to own rural real estate or engage in agricultural activities as long as such entities prove that the number of shareholders, the members of the legal person or its legal form, prevent the capital stock to be owned exclusively by individuals. In that sense, section 2 paragraph “A” of decree 225/007, as amended, establishes a
ILN Real Estate Group – Buying and Selling Real Estate Series
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