by the Seller versus the actual needs of the property, which may configure deceptive advertising and leave the Seller liable for infringing Chile's Consumer Protection Act. IV. FORMS OF OWNERSHIP 1. Residential property is usually held to an individual's name, or the name of a company controlled by the Buyer. Joint ownership is allowed in the percentage determined by the joint purchasers, even if it is not a 50-50% assignment. 2. Commercial property is usually held to a commercial real estate (" inmobiliaria ") company's name. 3. Rural property is usually held either to an individual's name (especially in case of small plots of at least half a hectare) or to a rural real estate (" agrícola ") company's name. V. FORMALITIES 1. The purchase of real estate in Chile is categorized in Chilean law as a formal agreement. This means that the transfer of ownership does not happen when the parties sign the Purchase and Sale Agreement, but only when two copulative requisites are fulfilled: i) execution of the Purchase and Sale Agreement through a public deed granted before a notary public, and ii) the deed is then registered at the competent Real Estate Registrar. 2. If any of the parties needs to appear represented by a proxy, for example, in case they are unable to be physically present on the day of execution, a power of attorney must be granted by public deed and said power of attorney must give all the necessary authorities to the proxy, including agreeing the sale price and form of payment, granting settlements and waiving resolutory actions. If the property is owned

by a legally incapable person (such as a minor), the sale must be authorized by the competent judge. VI. CLOSING COSTS/ADJUSTMENTS 1. The notary public's costs for authorizing the Sale and Purchase Agreement are usually borne 50% by each party, unless agreed otherwise. Costs of registering the Sale and Purchase Agreement before the competent Real Estate Registrar are usually borne by the Buyer. The fee paid to the Real Estate Registrar is of 0,002% of the sale price, considering a maximum price ceiling of CH$ 128,000,000.- (USD 205,000.- approx.) 2. Buyer and Seller adjust for land taxes, which must be paid every quarter. In addition to the previous, if the property is commercial, adjustments are also made for rents, third party operating expenses and everyday area maintenance expenses. 3. Land that has been subjected to agricultural purposes may be subject to taxes and payments derived from obtaining agricultural/forestry subsidies. Those subsidies must usually be respected by the Buyer or previously terminated by the Seller. For example, subsidies for irrigation works make the property owner, even after it is sold by the owner who obtained the subsidy, liable for failure to maintain the irrigation works that were paid through the subsidy. 4. The sale is subject to VAT if the property is sold fully furnished, or in other specific cases, i.e., in case of a rural property, if the Seller obtained fiscal credit derived from investments in the property. VII. OTHER CLOSING DOCUMENTS 1. Condominiums: The Seller will provide the Buyer with a copy of the corresponding

ILN Real Estate Group – Buying and Selling Real Estate Series

Made with FlippingBook Online newsletter