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Real Estate
Sales
Realtor
Escribanos
Title
Inspection
Closing
Insurance
Taxes
Maintenance
Uruguay encourages and welcomes
foreign ownership; foreign ownership is awarded the same constitutional
guarantees granted Uruguayan citizens.
The transfer of property is a simple procedure but certain real
estate practices are unique to the country. Agent relations, title transfer,
insurance, and payment method are dissimilar to American practices, but
easily understood and managed. The new owner is entitled to all topsoil rights under the law,
however
the state retains subsoil rights.
Once an offer is tendered, the process can move swiftly. As many homes are owned by absentee landlords, a property can be
transferred in short order and the paper work completed in about a
month.
Homes are usually conveyed without kitchen appliances though some are sold
fully furnished; dishwashers are rare. Ask your realtor for particulars.
Measurements are in the metric system. The value of a property is based on
the square meter (1 m = 3.28 ft) and for land on hectares (1 hectare = 2.5
acres).
Take into account that banks do not readily extend mortgage credit to
nonresidents. Cash transactions are the norm, though sometimes owner
financing is available. As more U.S. citizens purchase second properties or
retire abroad, some U.S. institutions are considering mortgage loans for properties
overseas.
Realtor
Some listings are exclusive, though not the norm. Multiple agency listings are
more common. Several realtors may represent a property or bring buyers to the
table. The high-priced portfolio properties are often listed with an agent
who represents the seller but accepts offers from third parties. Agents
usually represent the interests of the seller. Agent commission fees are regulated
to
approximately 3.3% of the purchase price.
Escribanos
The licensed professionals who draft the deed, transfer the property, and
record the transaction are known as escribanos. An escribano is required by
law to oversee and manage all real estate transactions. They search the title, usually going 30 years
back, and check the property for encumbrances, liens and mortgages. They
coordinate the closing, gathering all the relevant documents for the
transfer of deed required by the Real Estate Property Registration office.
The escribano also administers the financial transaction. They collect good
faith deposits and at closing collect the purchase price and all
related closing fees, agent commissions, taxes, and any unpaid
bills on the
property, and then distributes the proceeds accordingly. The fee charged by
the escribano is generally 2% of the sales price.
The escribano is employed by the seller. It is recommended that the
purchaser also hire an escribano to represent his/her interests.
Title
After conducting the title search, escribanos render a clear and
unencumbered title. Title insurance is not common. Because of the
increase in foreign property ownership by American citizens, First American
Title Insurance Company now offers policies for Uruguay.
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Inspection
Properties are sold “as is.” The practice of a final “walk through” prior to
closing does not exist nor do licensed property inspectors. The buyer
inspects property visually, and may contract with plumbers, electricians,
and architects to review the condition of the property at his own expense.
Closing
Real estate transactions are standard. When an offer is accepted a contract
is drawn, title searched, deed written, titled recorded, payment made, and
deed exchanged. A good faith deposit is called boleto de reserva and
generally amounts to 10% of the offer.
The costs associated with closing are nearly 10% of the sale price:
• Approximately 3% commission to the agent + IVA (tax=22% of commission)
• 2% to the escribano + IVA (tax = 22% of fee)
• property tax of 2% assessed value to the state
Insurance
Insurance is not required by law, home blanket policies are not available. Insurance is individualized, the owner selecting the insurance type and
coverage.
Taxes
As a rule
of thumb, property taxes are based on the assessed value of the property and
paid once a year in January. At purchase, both the buyer and seller pay 2%
taxes on the property’s assessed value, which is generally lower than the
purchase price.
A new law has increased taxes on
rental income. Also, included in the law is a tax on the capital gains on a
sale.
Maintenance
Water and electricity are readily available. Shortages are rare. The water
is clean and can be drunk from the tap. Garbage placed on an elevated basket
is collected daily
from the street curb. Most homes use security services, and are wired with
alarms. Maintaining the property is inexpensive; gardening and housekeeping
can range between 150 to 300 dollars per month, depending on the size and
location of the property.
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