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Legal Issues When Buying Property in Peru
By Ricardo Guevara Bringas
Whether you buy a piece of land, a flat or a house, it is essential to be aware of the main legal issues involved in such a process. The purpose of this article is to shed some light on the process of buying property in Peru.
Our analysis will be divided into 3 sections. Section 1 will focus on the legal ownership and covenants. Section 2 will discuss tax issues. Section 3 will treat some Immigration matters.
Buying a good title
Once you have found the property you wish to buy, you will need to gather information on the legal title with the Public Registry known as SUNARP ("Superintendencia Nacional de los Registros Publicos"). The first step is to ask the owner to give you his details and those of the property you are interested in. With these in hand, you can request the "Certificado Registral Inmobilario" (commonly known as a "CRI"). You should have your lawyer help you interpret this document because it reveals the identity of the previous and current owner(s). Also, it details the location and size of the property, as well as the existence of mortgages or liens against the property.
As previously stated, never buy any real estate without performing an investigation of the legal title. Always ask to be provided with the original documentation from SUNARP. Never rely on copies of such documents and ensure that the legal documentation is up-to-date.
Be Careful with the Covenants
If you are buying a house or a piece of land, you need to enquire about the restrictive covenants and other deed restrictions that are in place for the real estate you want to buy. This may apply to a group of homes or lots, usually it is property that is part of a specific development or subdivision. These covenants and restrictions are determined by the municipality. They tell you what you can, or cannot do, with the property. For example, your intention might be to operate an office, or to build an addition to the existing building.
You will need to ask at the municipality in which the real estate is located to give you this information. If you buy land outside the town, you must verify that the land has all the permits to build. In addition, ask for the "certificado de parámetros urbanísticos" (building parameters certificate), "certificado de zonificación" (usage verification certificate) and then check with your architect to assure that the project you envisage is feasible.
Moreover, you will need to ask the municipality if the current owner has paid all the local taxes such as "Arbitrios" (municipal services tax) and "Impuesto Predial" (property tax).
After obtaining the above -mentioned information, your lawyer, or the lawyer contracted by the vendor will draw up the purchase agreement. This document must be certified by a Notary and then filed with SUNARP. You will have to stipulate in the contract which contractual party will assume the duties and legal fees.
Some local tax issues
If you buy real estate property, you must pay a special tax called "Alcabala". This tax amounts 3% of the value of the real estate. In order to assess the amount of what you must pay, you must first deduct 10 UIT from the value of the real estate, which is around US$ 10, 000. ("UIT". stands for "Unidad Impositiva Tributaria"). The "UIT" is a fixed amount determined by the government in order to handle payments for taxation purposes, fines, and other payments made to the government.
Note that you will have to pay the property tax the next year after you have acquired the real estate. You may ask the municipality the amount to be paid. You will also have to pay the municipal services tax.
Some migratory aspects
If you live abroad, you may buy real property in Peru through a power of attorney granted to your lawyer or anybody else at the Peruvian Consulate of your country. If you are in Peru as a tourist, it is wise to obtain a permit to sign contracts with DIGEMIN in Lima, before signing any purchase contract. In effect, as a tourist you are not allowed to perform these transactions.
(This article reprinted courtesy of www. Expatperu.com)
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