Real Estate

 

It seems that no matter how much you read or hear about a subject, you don’t really get a handle on it until you really do it. You can read all about cross-country skiing but until you put on the skis you don’t really know what it is like. Same with riding a bicycle. Same with living overseas.

This is the reason we suggest that you rent and live in a country before you decide that you want to make your home there. No matter how much we read about it, that is never the same as living there. Maybe you will like it just as much as the writers did who wrote about it—or maybe you won’t!

Same with buying and selling real estate overseas. This week we were in Uruguay closing a deal on some real estate we were selling there. It was not our second experience dealing in real estate by a long way, but was our second experience in doing a real estate deal in Uruguay. The first was several years ago when we bought a commercial building in downtown Montevideo. This one was a sale.

As with any real estate or other business deal where money changes hands or where we might incur financial or other liability, of course it is necessary to move with great caution. We decided to just tell you about our experience and hope that you will benefit from our story.

We think that the first condition before you buy or sell is to have a good escribano (lawyer in South America who handles real estate transactions). The escribano is responsible for being certain that the real estate has a clear title, that there are no encumbrances against it, no unpaid taxes that you could be required to pay later and so on. If you get one who is not thorough and misses something important, you could be in for trouble later. If you decide to buy in Uruguay and don’t know the name of a reliable escribano, don’t hesitate to ask us. We know several. We are not paid for our recommendations so we have no interest in that regard in anything other than helping you find good people upon whom you can depend.

Two months ago we came to an agreement with a buyer. His escribana drew up the buy-sell agreement. Our escribana was responsible to approve it and did require some changes. We requested that a copy of the buy-sell agreement be sent to us before the date of signing so that we could review it ourselves. Even though we always pay an attorney, we never trust ourselves completely even to the attorney. We double check for ourselves. You may say, “But I don’t know anything about real estate.” As with anything else, we learn most things with practice–by doing it. In this case you should also be backed up by your attorney.

We did find a few things we wanted to change. But then I asked our local Argentina attorney to read the contract. Since he is not licensed to practice in Uruguay, I explained that we didn’t expect him to know Uruguay law or advise us as an attorney, but just to read it as if it were his contract and see if there was anything in it that he would not like. He found the same things we did. Having him read the contract cost an extra $350.00 but we do not hesitate to pay for good legal advice. It can be less expensive in the long run. But we want it to be GOOD! Not lackadaisical. And we want to be treated fairly.

One thing that we did not like is a clause stating that if certain things were found to be unpaid after the closing, we would be responsible for it and we said no. Do your research now because once it closes, it closes.  And so that was taken out of the contract at our request.
There were some school taxes found unpaid that we didn’t even know about and for which we were never billed. But they were, indeed, unpaid so we paid them before the closing, made copies of the receipt and took it with us to closing. Their escribana found the unpaid school tax. That’s her job to find things like that. Otherwise the buyer would later be responsible for that tax.

Then we requested a meeting with our attorney to review the closing statement before the date of closing. In Uruguay the escribano is responsible to deduct the capital gains tax for the government and we wanted to know exactly what all the deductions would be and the amount of the check that we would receive. It is our practice to try to clear up any questions before closing. If there is a problem, we want it to show up before closing when there will not be pressure to sign a contract when we have doubts. We would not do that, but it is easier to avoid a mistake if we review everything and have time to think it through ahead of time.

For those of you considering Uruguay, or who are already living there, we are happy to report that both in buying and in selling, everything has gone smoothly for us. Everything seemed above board. We have been very satisfied with the process.

I have heard horror stories from real estate buyers or sellers in Uruguay—as you will hear in almost any country, including “back home.”  I’ve heard them in the country of my birth as well—sometimes from people who have not done the research they needed to do and, above all, signed the contract without reading it. It is surprising the number of people who will sign a legally binding contract without reading it. Our rule is that we don’t even fully trust the attorney—no matter how good his or her reputation. We read it ourselves–many times–and, in this case, even seek the opinion of a second attorney in whom we have confidence (Gabriel Celano, whom we described before as our immigration attorney. Mr. Celano has a specialist in his firm, Javier Paz, who read the contract for us.)

We recount our first-hand experience for you as evidence of the real estate environment you will find in Uruguay. Prices of real estate have risen significantly in Uruguay in the last four years. But Uruguay real estate has more recently become a bit static. We think that there is a chance that prices will begin to fall due to Argentina’s fiscal problems. Much of the economy of Uruguay is dependent on Argentina and with Argentina skirting an economic crisis, Uruguay has experienced a significant reduction in tourism as well as real estate investment from Argentina people.  This could be good news to potential real estate buyers in Uruguay.

Note: The terms “escribano” (male) and “escribana” (female) are Spanish for “notary.” But a notary in South America is completely different from a notary in the United States , and so we stayed with the Spanish term in order not to be confusing. A notary here is an attorney who is qualified for real estate closings. A person can be an attorney here , yet may not be qualified to close real estate contracts—unless he or she is also an escribano.

We are interested in hearing about your experience buying or selling real estate in Uruguay as well. Let us know if it was positive or negative.
Until next week . . . see you then.

Arlean

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