In Uruguay there is no restriction for the purchase of real property by foreigners, there is no differential treatment between foreigners or Uruguayans; both buy under the same conditions.
The purchase process requires the involvement of an "Escribano" (Conveyance attorney or Notary), who is appointed by the buyer.
After choosing the property and agreeing the terms and conditions of the purchase with the seller, the buyer must request the involvement of his/her Notary. The Notary is the legal professional qualified to give professional advice to the buyer in relation to all legal issues connected with the purchase of a real property.
Una vez acordadas las condiciones del negocio, el escribano será el encargado de redactar el Reserva (o Boleto de Reserva), que es el contrato preliminar que fijará el precio y establecerá las condiciones del mismo y los derechos y obligaciones de cada parte.
Once the conditions of the business have been agreed upon, the Notary will be the person in charge of wording the "Reserva" or "Boleto de Reserva" (Reservation agreement), which is the preliminary agreement that will set the price and establish its conditions and the rights and obligations of each party.
In order to try to secure the transaction agreed, a fine is established in the Reservation agreement, which usually is equivalent to 10% of the purchase price. In accordance with the foregoing and, as a guarantee, the buyer must deposit with his/her own Notary the amount equivalent to the fine, while the seller generally deposits with the same Notary the original title deeds of the property to be sold.
Once the reservation agreement has been subscribed by both parties, there follows a stage where the buyer’s Notary studies the title deeds in order to know the antecedents related to the ownership of the property covering a period of 30 years, their lawfulness, and information from registries is applied for in order to know the potential existence of attachments, liens, etc., payment of taxes, utility bills, etc.
Upon ending of the study stage, and once the Notary is certain that all the documents are in order and that there are no debts encumbering the property, the parties shall proceed to subscribe the final sale-purchase deed of the property or, as the case may be, a promise of sale-purchase shall be subscribed before the execution of the final sale-purchase deed. It should be noted that the promise of sale-purchase recorded with the Registry creates, in favour of the prospective buyer, a right in rem very similar to the ownership granted by the sale-purchase deed.
Simultaneously with the execution of the sale-purchase deed, the price is paid and the property is delivered (other situations are possible depending on the agreement between the parties).
At the time of the execution of the sale-purchase deed the buyer must pay:
1. Tax on Conveyances of Properties (Spanish acronym: ITP), which is 2% of the cadastral value updated by each party.
2. Notarial fiscal stamp, which is 15.5% of the purchase price and must be necessarily paid to the Notaries Pension Fund.
3. The fees agreed with the Notary.
4. Expenses incurred, including fees of certificates from registries, registration fees, etc.
5. The seller must pay the Income Tax.
Once the sale-purchase deed has been subscribed (which is subscribed in the Notarial record of the Notary appointed by the buyer) a first copy of such deed is issued, which must be immediately recorded with the Registry of Real Properties of the Department where the property is located.
It is important to note that if the property to be bought is a rural property, a few additional proceedings shall be carried out and the registration with the Social Security Bank is applicable.
Finally, once the property has been acquired, its owner must pay the following taxes:
As the owner of a real property, the buyer must pay the following taxes and utility bills:
* Real Estate Tax (which may be paid in 1 or several installments).
* Elementary School Tax (which may be paid in 1 or 3 installments).
* Domicile taxes and Sanitation rate (which are paid bimonthly and are only for real property located in Montevideo).
* Monthly shared expenses (if it is a condominium unit);
* Utility bills (electricity, water, gas, etc.).