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1 Page 1 of 8 Argentina Juan Manuel Quintana and Iván Burin Zang Bergel & Viñes Abogados 1. Are foreigners and entities controlled by foreigners permitted to own real estate directly, or are there specific licence requirements or restrictions in place that must be complied with for a noncitizen to own real estate? Are there restrictions on ownership of beachfront or coastal land, or land near beachfront? Although in general there are no specific restriction for foreigners or entities controlled by foreigners to own real estate, a law has recently been passed that restricts the ownership of rural real estate by non-argentinians, imposing limitations on the size and amount of land. Said land also forbids foreigners and entities controlled by foreigners to own rural land that includes rivers and lakes of considerable size. There are no limitations on the ownership of beachfront or coastal land that apply specifically to foreigners (although sea beaches are state owned), but there are zones that are near the Argentine frontier with other countries that are deemed Security Zones and on those zones strict limitations apply to the ownership of land for foreigners and entities controlled by foreigners. Next Back to top Back to question list 2. Is all real estate capable of being owned as fee/freehold, or is the land owned by a government or monarch with only the ability to acquire leasehold rights? What other forms of real property ownership exist other than fee/freehold or leasehold? Generally, real estate can be owned as a freehold. There are other, forms of owning land in our legal system that are: Tenants in Common, Horizontal Property, Fiduciary Property and Forest Land Surface Right. 3. What overriding rights of the public exist that may affect land, such as inalienable rights to access certain natural resources or the use of beaches? Who owns mineral or riparian rights? There are mandatory easements right for the owner of a plot of land over another plot of land if they boxed out of accessing roads, natural resources and even electrical services. There are specific limitations on how near a coast a property can be owned by any individual and there is a limitation called towship road (camino de sirga) that imposes a 35 meter wide road for public use on any property fronting a river or a channel used for sailing. All of our mineral rights have a specific legislation and according to the classification that such mineral is given in that legislation, it will be owned by the owner of the land, or the person who asks for their rights to the government authorities. Is title insurance available and customary to obtain in connection with a purchase or a loan? Title insurance is not customary in Argentina since we have a good land title registration system and the notary 4. that necessarily intervenes must analyze any problem that could arise from the title and its precdents twenty years

2 Page 2 of 8 back from the date of purchase. There may be some insurance company that offers such product but is not customary at all. 5. Are boundary or others surveys typically completed delineating particular property boundaries, or is reliance placed on registered maps? How are boundary disputes customarily resolved? Depending on the jurisdiction, some require a new survey delineating the boundaries of the property every time there is a sale of it. Others rely on what is registered in the real estate registry. There are special procedures in most Civil and Commercial Procedure Codes (each jurisdiction has its own) that provides a swift resolution to these disputes. 6. What taxes or other fees are payable in connection with the purchase or sale of real property (e.g., notary fees, recording, alien licensing), and what are the amounts of such taxes and other fees? Although taxes change form one jurisdiction to the other, there are no significant differences between them. Following are the taxes and fees payable in connection with a transfer or property in the City of Buenos Aires that, although not accurate if the property is located in another jurisdiction, it will give a good idea of what has to be paid: Stamp Tax on the deed of transfer: 2.5% on the value of the property (this tax is usually paid halfway between buyer and seller). The Income Tax for corporations (3%) or Transfer of Property Tax for individuals (1.5%) and this is paid by the seller). Notary expenses (debt and encumbrances certificates from the property and personal certificates from the buyer and seller). These have a fixed price but may vary from jurisdiction to jurisdiction and depending on the particulars of the operation. Notary fees, ranging from 1.5% to 3% of the value of the property and is usually paid by the buyer. 7. Which party customarily pays taxes and fees in connection with a purchase/sale of real property- the purchaser or the seller? What is the allocation of responsibility between a purchaser and seller of all taxes and fees payable to consummate a conveyance of real property? Customary, the fees in connection with a sale of real estate property are paid by both parties, but more by the buyer than the seller. The seller will pay for the registry certificates, the title analysis made by the notary, any expense to get the deed to sell the property and half the stamp tax for the deed of transfer. On the other hand, the buyer will pay for half the stamp tax for the deed of transfer, any tax for registering the deed of transfer in the registry and any expense, including the fees of the notary. Although this is customary, the parties can freely decide the way the expenses for the transfer of the property will be paid. Nonetheless, both parties are fully responsible for paying all taxes before the revenue authority, regardless of the way such expenses were allocated amongst themselves. Each jurisdiction has its own custom.

3 Page 3 of 8 8. Can real estate be indirectly conveyed by purchasing the shares or ownership interests of a corporation or other entity that owns real estate? What taxes and fees would be payable upon a purchase of shares of a company that owns real estate as compared to a purchase of the real estate directly? Although in practice it can be done, our revenue agency understands that if the transfer of the shares of the company was solely made to indirectly convey a real estate property, then the parties may be liable to fines if any taxes were skipped by doing it this way. In a transfer of shares of a company, the parties will only pay the price of the shares and, if the person buying or selling are not usual buyers or seller of shares, no other tax must be paid. There is no necessity for the intervention of a notary, but there is less certainty of the title of the property and a full due diligence is required for the company that is being bough since there could be hidden liabilities linked to the shares. 9. What taxes and fees are paid on the conveyance of personal property accompanying a conveyance of real property, and in what amounts? Is it more favourable to allocate purchase price towards personal property or real property for tax purposes? There are no specific formalities for the conveyance of personal property and, on the other hand, there are quite a few for real estate property. Therefore we could assume that there are no taxes or fees that are paid aside from Income Tax from the gain of the sell and Value added Tax, depending on the nature of the personal property sold. The VAT is levied with 21% on the price of the goods sold. In any case, there is a minimum price that the government states for every real estate property (called Valor Inmobiliario de Referencia or Reference Estate Price) over which you have to pay taxes, if the price on the transfer deed is lower than that. So, aside from eluding taxes, there is no real use to allocate part of the price of the real estate as a sell of goods since you will have to pay taxes according with the Reference Estate Price that is usually near the market value of the property. 10. What recurring annual fees or real estate taxes are payable in connection with the ownership of real property? Aside from any personal tax on wealth that the property could amount to, the real estate per se is levied with municipal taxes (in some jurisdictions, the municipal tax is differentiated from the tax for the cleaning and lightning of the streets). In any case, each jurisdiction applies its own taxes on the property so it may vary from one to another. 11. Are memorandums of understanding or other concession agreements typically negotiated between purchasers/developers of real property and the government? What types of matters are incorporated into such memorandums of understanding or concession agreements?

4 Page 4 of 8 There are no typical MOA or concession agreements negotiated between developers of real estate property and the government. 12. What rights of first refusal or other rights exist by law in favour of third parties or tenants of real property? There are no legal rights of first refusal existing by law in favour of third parties or tenants. Any transfer of a property with an ongoing lease agreement in favour of a third party must be respected by the new owner until it finishes (they have a maximum term of ten years), but there is no right of first refusal imposed by law. That doesn t mean that two people can t agree on giving one another this right, but is not imposed by law. In some provinces, the government reserves a right of first refusal for itself for certain types of productive lands. 13. How is real property conveyed- by deed or other instrument of conveyance? What is the procedural process for completing a conveyance- is there a registration or recording process? In our legal system, property is conveyed by title (deed) and the effective transfer of the real estate to the buyer. The notary will have to be present when both parties sign the deed of transfer and there is should be stated that the seller gave the physical possession of the estate to the buyer. With the signatures from the buyer, the seller and the notary, the transfer of the property is completed. Then it must be registered in the real estate registry according to the location of the property to give the transfer publicity before third parties. 14. When is title actually and officially conveyed to a purchaser- upon execution of a deed or other instrument of conveyance, upon submission of the instrument of conveyance to a recording office or registrar, upon acceptance of such instrument of conveyance for registration or recording, or upon the happening of some other event? The real estate is actually conveyed with the signing by the parties and the notary of the deed of transfer that complies with all the requirements imposed by our law and regulation. The recording or registering of such transfer before the real estate registry is just to make that transfer opposable to third parties. What types of governmental liens or encumbrances on title could result in a forfeiture of the land? Real estate taxes, governmental owned utilities? We have what we call propter rem debts that follow the property irrespective of the owner. Those are the 15. municipal taxes on the property (called Alumbrado Barrido y Limpieza in the City of Buenos Aires) and expenses in a Horizontal Property. In the City of Buenos Aires, these debts must be cancelled when a property is transferred or the notary must withhold such money of the purchase price to cancel them.

5 Page 5 of Upon a sale of real property, would any portion of profits or proceeds be required to be paid to any third party? For example, are employees entitled to a share of profits? Only if there is a debt on the property (tax) that should be paid before the transfer of the property, then the notary must withhold such moneys and pay the debt. No employees are entitled to share of profit when a real estate property is transferred. 17. Upon a sale of real property, what taxes must be paid in connection with any gain, and are there withholding taxes? The Income tax will be three per cent (3%) of the amount of the property value and can be deducted from the income tax declaration. 18. Are there any environmental regulations, and are environmental assessments customarily performed prior to acquiring real property? Depending on the location, type and uses, there could be environmental assessments needed or required. In general terms, when the property was used as a factory or any other use that could have environmental hazard (i.e.: gas station), an environmental assessment is required. 19. Are there building and zoning codes? Yes, in all urban areas there are building and zoning codes that regulate the type and size of what can be built and/or exploited there. 20. Are there laws permitting or contemplating condominiums or otherwise subdividing air rights, or creating multiple ownership and freeholds existing on one plot of land? Yes, our legislation contemplates Tenants in Common, Horizontal Property and in some jurisdiction, there are regulations for the ownership of gated communities. Also, we have the fiduciary ownership. Are there any restrictions on or specific legislation relating to subsurface rights and air rights? 21.

6 Page 6 of 8 Although there is no specific legislation, the subsurface will be regulated by any mining regulation or fossil remains preservation laws. The same goes for air rights; aside from any zoning restriction, there are is no legislation on the air use. 22. Are there any laws relating to the preservation of views or light? There is no one legislation that governs the preservation of views or light. Every jurisdiction will impose its own regulation depending on the situation and zone. 23. Is a lender for a real estate project in your jurisdiction required to register or be licensed in such jurisdiction? No, if it is a private financer, there is no need for registration or license. 24. What determines the priority of a mortgage or charge- the date of the loan, the date of execution of the mortgage or charge, the date such mortgage or charge is actually recorded or registered, or some other factor? With regards to real estate, our registration system makes the rights registered opposable to third parties. So a mortgage or charge will be valid for the parties and those who should have known of it since the day of execution of the mortgage or charge and opposable for third parties as of the day it is registered before the real estate registry. Same goes for priority, if it is a priority between third parties, it will be the register date that counts, but amongst parties that should have known (our legislation states when this is so) then this principle may give up for the date of the execution of the mortgage. 25. What taxes or fees are payable by a borrower or by a lender in connection with a loan and mortgage in your jurisdiction? There are no specific taxes imposed on a loan, aside from stamp tax and any impact that the loan could have on income tax. The mortgage has to be made through a deed by a notary. The borrower usually pays for the notary s fee (usually 0.65 per cent of the amount of the mortgage), the stamp tax and the registration expenses. Those expenses vary from one jurisdiction to another. 26. What typical remedies does a mortgage lender in your jurisdiction have in the event of a default by its borrower?

7 Page 7 of 8 The remedy is the foreclosure of the property. It can be done judicially or non-judicially, according to the way it was agreed on by the parties. 27. Is there judicial or non-judicial foreclosure in your jurisdiction, and what is the foreclosure process generally? There is judicial and non-judicial foreclosure in our jurisdiction but to make a non-judicial foreclosure, this must be agreed upon by the parties in the deed where the mortgage is made. The foreclosure proceeding starts in court, where the lender must file a claim stating that the debtor missed his payment and the amount defaulted. Then the lawsuit is served to the debtor for him to present his defence. If the Court finds not enough the debtor defences, it rules that the debtor must pay the amounts and if he fails to do so in ten days, then the lender ca ask for the auction of the property. An auctioneer must be named and all the reports on the property debts must be presented at Court so as to habilitate the auction. 28. What rights does a tenant have by law that cannot be varied by agreement or a lease? A couple of decades ago, there was a housing crisis in our country and as a result a law was passed called Urban Location Law. This law is mandatory, meaning that its dispositions can t be varied by an agreement of the parties and applies only to leases in urban zones. Amongst the rights that are always in favour of the tenant and not the landlord- are: Minimum term for leases, 10 days summon before the start of a lawsuit, the tenant can terminate the lease at any time after six month with a 60 day notice and payment of a month and a half or only a month as compensation (depending on the time when termination is made) and for housing leases the landlord can t demand more than one month payment in advance. 29. How long can someone own property as leasehold? What statutory or legal rights does a longterm leasehold owner have with respect to its property? Clarifying that in Argentina the tenant is not considered owner, because the lease is a personal right, the maximum term for a lease is ten years. There has been some exceptions lately granted by the court, where the parties prove that the tenant needs to make and investment in the property that needs more than ten years to recover. But any exception must be granted by Court. 30. What are the most common reasons for a dispute or a conveyance of real property in your jurisdiction not to be completed? The most common reason for a dispute nowadays could be a problem in the title or in its precedent or a problem with the currency of payment. Our real estate market is priced in dollars and there have been some restrictions to the purchase of foreign currency so the buyers find themselves unable to comply with the specified currency agreed upon for the payment of the property.

8 Page 8 of Does your legal system incorporate or defer to the laws of another country? When it comes to real estate, our legal system will always impose the law where the real estate is located. In other issues, foreign law can be agreed by the parties. Back to top Back to question list Copyright 2012 Law Business Research Ltd. All rights reserved Lancaster Road, London, W11 1QQ, UK Tel: / Fax: editorial@latinlawyer.com