Main characteristics

• Economic, political and social stability.

• Exchange rate freedom.

• Free transfer of capital and profits.

• Open foreign trade.

• Member of MERCOSUR and trade agreements with other countries.

Foreign investors can carry out any type of activity, in the same conditions as local investors. In some sectors that are specifically regulated by the State, foreign investors can carry out activities under the public works concession scheme.

Any investor can operate in the country by incorporating a corporation (Sociedad Anónima – SA), which is the most frequently used company type, of which it can own 100% of share capital.

Investors may also operate through limited responsibility companies (Sociedad de Responsabilidad Limitada – SRL) or other forms of partnership, integrated by members who can be either local or foreign individuals or legal entities.

Foreign investors may also choose to operate in the country through a branch of a foreign company. Tax treatment for the various corporate vehicles differs in many aspects; therefore, a careful analysis should be conducted before choosing the company type to be used.

As a result of the rule of law and economic stability, Uruguay has traditionally offered a safe environment to foreign investors.

In addition, it is a member of international organizations promoting investment safety, such as the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes of the World Bank Group.

Furthermore, Uruguay has entered into several treaties for the promotion and mutual protection of capital investments with many countries, such as United States, Germany, Spain, Portugal, Sweden, United Kingdom, Belgium, the Netherlands, Italy, Switzerland and Finland.

Un mercado inmobiliario fuerte y robusto

La variedad y calidad de las construcciones, asi como la solidéz del mercado inmobiliario hacen de Uruguay una excelente opción para invertir en propiedades.

Resulta muy atractiva la posibilidad de que los extranjeros puedan comprar propiedades con iguales derechos que los ciudadanos, así como la posibilidad de traer fondos de inversión con la posibilidad de repatriarlos luego de pagar los impuestos correspondientes.

Los derechos de propiedad privada en Uruguay están protegidos por la Ley. Las propiedades están mayormente libres de hipotecas lo que ofrece una mayor estabilidad y seguridad al mercado.

Buying Real Estate Property in Uruguay

Property may be bought by one or more individuals or legal entities, companies, partnerships, or any combination thereof.

The nationality or residence of said individuals or legal entities, companies or partnerships is not relevant for the purpose of purchasing property.

The transfer mechanism for real estate property from seller to buyer and related requirements are described below.

The only restriction currently in force refers to rural property: Law No. 18.092 of January 7th 2007 (amended by Law No. 18.172) imposes certain restrictions regarding the possession and exploitation of rural or agricultural real estate properties in Uruguay.

In general terms, this law states that rural real estate property can only be owned or exploited by individuals or by certain types of legal entities, companies and partnerships.

Registration of In Rem Rights

Uruguay has an excellent system of in rem rights. According to this system, in order for property ownership titles and in rem rights to be enforceable against third parties, they need to be registered with the Real Estate section of the Property Registry.

Titles and rights over the same property have preference based on the chronological order of their registration.

The system is so safe that the concept of owner’s title insurance does not exist in the country. In addition, all real estate property-related operations, as well as most agreements that create rights over real estate properties (including encumbrances) must be authorized by a Notary Public through a public deed and registered with the Real Estate section of the Property Registry.

The buyer is the one who appoints the Notary Public that will act in the operation and authorize the public deed of sale. Said Notary will conduct an audit of said property’s ownership titles, obtain information from the corresponding public registries and will verify whether all fiscal, tax and legal obligations in general have been complied with.

Process for Real Estate Operations

A. Reservation Fee or Pre-Contract Deposit
Usually, once the parties have agreed the commercial terms of the sale operation of a real estate property (either a house, an apartment or even a rural property), a Pre-Contract Deposit Agreement (boleto de reserva) is signed. A part of the price for the operation – usually 10% - is simultaneously deposited by the buyer with the intervening Notary Public, who will keep such funds in custody as a performance bond for the buyer’s obligations and will only release them when the sale agreement is executed. The Pre-Contract Deposit Agreement usually provides a term of 30 days for the legal audit and analysis of titles, in order to confirm that the seller has good title. It is common practice to agree that if any relevant observations regarding ownership titles arise and the parties fail to reach an agreement with respect such observations, they shall be referred to the Uruguayan Association of Notaries, to get an in-depth opinion about this issue. Some Pre-contract Deposit Agreements also state that the buyer may unilaterally desist the operation if its Notary raises well-grounded objections. The Pre-contract Deposit Agreement includes all the main aspects of the operation; therefore, once the terms have been agreed with the seller, the buyer should immediately get in touch with a Notary to get assistance in the proper negotiation and drafting of this document.

B. Preliminary Sale agreement
In case of operations to be paid in installments, Uruguayan legislation regulates the execution of a preliminary sale agreement, governed by provisions established in Law No. 8.733. The preliminary sale agreement is authorized by a Notary Public appointed by the buyer and it includes substantially the same terms as a final sale agreement. Once registered with the corresponding registry, it protects and gives preference to the buyer’s rights over the real estate property and with respect to any other right to be constituted in the future over such property: encumbrances, interdictions, subsequent sales or any other circumstance that may affect the seller’s power to dispose of said property. The buyer – called promising buyer – may even assign the rights acquired by virtue of said preliminary sale agreement to third parties. In addition, this law states that if the seller – or promising seller – fails to comply with its obligation to execute the final sale agreement or if it is prevented from doing so due to any reason (including death), the corresponding judge, after confirming that the price agreed has been fully paid to or deposited with such court, will execute the final sale agreement for and on behalf of the promising seller in favor or the promising buyer (or its successors or assignees). This structure is often used for the purchase of units in condominiums under construction, since it is a procedure that allows the buyer to ensure its ownership rights over said unit while it allows the seller to receive partial payments during the construction stage thereof.

C. Sale Agreement
Sale agreements for real estate property must be authorized by a Notary Public in a public deed and entered to their Notarial Record. As mentioned before, the Notary’s work is not limited to the preparation and authorization of the sale agreement; said professionals also have a public role as control agents, verifying whether the seller is up to date with the payment of taxes, social contributions related to works on the property, whether all authorizations and permits have been duly obtained, etc. The inclusion of clauses that control all these aspects in the deed of sale is mandatory, in order to be able to register said sale with the corresponding Real Estate Section of the Property Registry. The registration of the sale agreement makes it enforceable against all third parties as from the date of registration. If the sale is not registered, it is only valid between the executing parties.