LEGAL STEPS FOR THE PURCHASE OF A PROPERTY IN URUGUAY
The procedure begins with the search. Once the buyer has found the property these steps must be followed:
A) A “Pre Purchase Agreement (Boleto de Reserva)” is drawn. This “Pre Purchase Agreement” is not registered. This is a private document that establishes personal obligations between buyer and seller and real estate agencies taking part in the deal. In it, several things are stated: price, delivery date, names of the people involved, condition of the property, real estate agents commission, etc. This paper is the most important legal document of the transaction because the rights and obligations of each part are set.
B) Once the “Pre Purchase Agreement” has been signed, the Notary Public intervenes. He receives the following documentation from the selling party: last copy of the title, blue prints, receipts of property taxes, school taxes, etc. with the understanding that the seller is obliged to hand over all documents pertaining to the property in question. The assigned Notary must review and study the history of the property going back thirty years. This is done covering different aspects such as trusts or other corporations if they exist, previous purchase-sale transactions, payment of taxes, compliance to building codes, etc.
C) The Notary requests from different organisms to extend certificates going back thirty years in relationship with the property and to the various owners as well as the land surveying office. He also requests from all related public offices the status in which the property is at present regarding different aspects.
D) Two to three days prior to the signing, the Notary coordinates between all parts, (seller, buyer, real estate agents and third parties involved (lenders, etc.)) a set day and time, and at the same time the documents are registered at the Real Estate Property Registry. By doing so the mechanism of priority reservation is put in motion allowing for a 30 day period in which the property is “blocked” from any legal proceedings. In this time the Notary must write the “Deed”, pay the taxes corresponding to the transaction and register the first copy of the Deed at the Registrar’s Office.
E) The Deed is authorized and granted.
F) The Notary acts as the agent withholder of taxes, makes payments before the government’s revenue office of the corresponding tax to real estate transactions (2% of the officially registered value, usually much lower than the real value, due by each party). The seller pays this 2% and the buyer also pays a 2%.
G) The first copy of the Deed is then recorded at the Registry of Property Real Estate Division.
H) As a final act, a first original and registered copy of the Deed and all other documents (blue prints, tax receipts, etc.) for the last thirty years, product of the study done by the Notary, are given to the buyer. An intermediate contract between the “Pre Purchase Agreement” and the “Deed” can be drawn. This is the “Promissory Deed”. This is a contract that it is also given before a Notary Public and it holds the power of the “Deed”. It is used when a legal element is missing to grant the “Deed”. At the same time if the “Promissory Deed” is signed and recorded, in the event of the death of seller, bankruptcy, seizure or simply refusal to sign the final Deed by the seller, the judge can order to have the “Promissory Deed” recorded and in accordance with the law 8.733 will grant the final Deed. Rental agreements, are granted between the owner or someone authorized by the owner (could be a real estate agent) and the future tenant. The rental agreement does not require the presence of a Notary Public. In general these documents are handled by real estate offices. They need not be recorded, nor is it necessary to have the signatures certified. They can be recorded in which case certifications become necessary.