Argentina

Foreign nationals and legal entities must obtain a prior authorisation from the federal government to purchase land located within 150 kilometres of the international border. Aside from this provision, in general, the Constitution grants to foreign citizens the same legal treatment as nationals. Further, foreign investors have unrestricted access to most economic sectors, including real estate (Article 20, Constitution). However, authorisation from the Antitrust Authority is needed in certain cases. In addition, the Province of Corrientes has enacted certain restrictions on the purchase of land by foreign entities or individuals.

Bolivia

Foreign investment in real estate is generally treated the same as local investment. Foreign investors cannot own or possess, by any means or title, directly or indirectly, individually or as a legal entity, any real estate (soil or subsoil) within 50 kilometres from any border unless the law declares it a national necessity (Constitution). If this rule is broken, any affected property is immediately transferred to the state without a right to indemnification. In addition, all foreign citizens must comply with Bolivian law, and cannot invoke exceptional situations, appeals or diplomatic claims (Constitution).

The state has original ownership of the ground and any natural resources found underground, waters or any physical force subject to exploitation (Constitution). The state has power to grant individual and collective property rights over land, and rights of exploitation and use over other natural resources (Constitution).

Brazil

Foreign individuals and entities (whether resident or not in Brazil) can acquire urban real property without restrictions, except for certain public property subject to specific legal regimes.

In relation to the acquisition of rural property, certain restrictions may apply and authorisations may be required. 

As a general rule, foreign entities with or without authorisation to operate in Brazil, and foreign individuals whether resident or not in Brazil may be restricted or prohibited from acquiring rural property. 

Foreign individuals residing in Brazil can acquire one rural property without prior consent of the federal authorities, if the land is less than a certain size (the amount allowed differs by region). A foreign individual residing in Brazil who wishes to acquire rural property beyond this size, or a second rural property, must get authorisation from the National Institute of Colonisation and Agrarian Reform (INCRA) or federal government approval, depending on the size of the land. If the land exceeds a particular size, its acquisition is in principle not permitted. 

Foreign entities authorised to operate in Brazil can acquire rural property, provided the land is directly related to the development of rural agriculture, animal husbandry, industry or settlement. All such projects are subject to prior approval by the Ministry of Agriculture Development.

Any business which, directly or indirectly, involves the acquisition of an in rem right to rural property located in Brazil's frontier zone (territory measuring up to 150 kilometres in width and running along the country's land borders) requires the prior consent of the National Security Council. This consent is necessary when the person acquiring this right is: a foreign individual; a foreign entity; or a Brazilian entity, in which a major stake is held, in any way, by a foreign individual who does not reside in Brazil, or by a corporate entity headquartered abroad. 

The Brazilian government, through the Advocacy-General of the Union (AGU), has recently issued an opinion regarding the interpretation of the (rather unclear) law regulating land acquisition by foreign persons. The opinion states that the restrictions and authorisations indicated above concerning the acquisition of rural property are applicable to Brazilian legal entities that are controlled by foreign individuals or entities. Given the importance of the real estate market for Brazil's sustainable economic growth, this interpretation may be softened in the future.

Chile

Foreign investment in real estate receives the same legal treatment as any other foreign investment. Apart from the below, there are no limitations on foreign nationals owning real estate: 

Colombia

Foreign investment receives the same legal treatment as local investment. Foreign investors cannot be subject to discriminatory conditions or treatment, nor can they be given preferential treatment over local investors. 

Under current regulations, foreign investment of the following types is allowed without restriction: investment by companies whose business is the purchase and sale of real estate; investment in securities issued by way of real estate securitisation; or investment in construction projects.

Costa Rica

Foreign investment is treated no differently to local investment. In addition, foreign nationals do not need to have any form of residence visa to invest in companies or buy land (although they need some form of residential visa to live in the country). However, there is a general restriction on all investment in the country's maritime zone land, which is the area covered by a strip of land running parallel to the coastline and measuring 200 metres inland from the high-tide watermark. Although any company can invest in maritime zone land developments, over 50% of the entity's shares must belong to Costa Rican nationals, who will therefore be the majority holders of the land. 

Dominican Republic

Foreign nationals have the right to own land in Dominican territory without any restriction based on origin. 

Ecuador

Under the constitution passed by Congress in 1998, foreign nationals receive the same legal treatment as Ecuadorians. However, foreign nationals cannot acquire any rights in land (including rights to economically exploit the land or concessions) in the protected and national security area.

El Salvador

Foreign investment in real estate is treated in the same way as local investment. There are only two restrictions that foreign investors must consider: 

Guatemala

Foreign nationals can buy real estate in Guatemala unless the land falls within the national territorial reserve. This reserve covers land up to three kilometres from the seashore, 200 metres along lake shores, 100 metres from each side of navigable rivers, and 50 metres from populated water sources. 

There are two exceptions to the national reserve: land located in urban zones and registered rights over property recorded in the Official Registry before 1 March 1956.  Foreign nationals can acquire property located in both exceptions with an authorisation from the executive branch of government. However, from a practical perspective, there is no restriction on foreign entities or persons acquiring such property through a local company.  

Mexico

The Constitution stipulates that foreign nationals cannot directly own real estate located in the "Restricted Zone" (a strip of land of 50 kilometres along the coast and 100 kilometres on the borders). The incorporation of a Mexican company or a trust agreement is required to hold title in such land (the investor must adopt the Calvo Clause (accepting the jurisdiction of Mexico's laws and courts) in the company's bye-laws or the trust agreement, depending on which is used). 

Additional restrictions may apply depending on whether the land is to be used for commercial or residential purposes. 

For real estate not located in the Restricted Zone, a foreign national must file for an authorisation, which in practice operates as an automatic permission to acquire the land (unless express denial is published in the Federal Official Gazette).

The Constitution also sets certain limits for individuals or companies acquiring land for agribusiness activities, that is, 100 hectares per individual and/or 2,500 hectares per company (company members' proportional ownership cannot exceed the individual limit). Companies owning agricultural land must issue a special class of shares (T shares); these shares represent the amount of agribusiness land owned by the company. Foreign nationals cannot own more than 49% of series T shares in a company.

Nicaragua

Foreign investment receives the same legal treatment as local investment. The Constitution states that, apart from political rights (which are only granted to Nicaraguan nationals) all individuals have equal rights. This principle, which has been developed by the Foreign Investment Law, sets out the basis for the equal treatment of foreign investors (whether companies or natural persons), abolishing any distinction between local and foreign investment. 

Paraguay

Paraguay gives equal treatment to local and foreign investors, unless there is an international agreement providing otherwise. There are, however, certain restrictions set by the:

Uruguay

In general, there is no difference in the treatment of foreign and local investment, including the ownership of real estate. Rural real estate must be owned by individuals or legal entities, whose shares are nominal and owned by individuals, unless an exception is obtained from the executive branch of government based on specific grounds (such as where the company is listed on a reputable stock exchange).

Country

Relevant matters to review on a stock acquisition

Relevant matters to review on an asset acquisition

Relevant due diligence matters on real estate

Commonly used contracts and vehicles to develop/operate real estate

Nutshell recommendations for real estate due diligence

Argentina

The company should be currently operating and registered at the corresponding company registry.  There should be an absence of liens over the company's stock or shares. 

Review liabilities of the seller and observe rules for the transfer of commercial establishments (including publication in the Official Gazette if the transfer relates to an ongoing concern) to limit the buyer's exposure to liabilities associated with the assets. Ensure evidence of title of assets being transferred and compliance with all formalities to accomplish the transfer, regardless of the share purchase agreement (SPA). Ensure fulfilment of tax and labour obligations; request tax certificate from the tax agency and prevent labour contingencies.

Study chain of title of the real property covering transfers for the last 10 or 20 years. Verify agreed prices and that there are no outstanding balances. Study and verify survey background (maps), registration numbers, surface, and delimitation of the property as per the blueprint. Request registry information in connection with: the property (ensure certificates issued match chain of title searches) and the different title holders of the last 10 to 20 years. Verify and pay taxes for the transfer of real property.

Real estate trust that has administration and development purposes. Stock company.  Sale and purchase agreement, and lease agreement.

Perform title study. Gather reports from the Registry of Property. 

Bolivia

Corporate documentation, current bye-laws and registration with the Public Registry of Commerce (Fundempresa).  Certificates of good standing issued by Fundempresa, the National Controller Office and the Tax Administration. Compare price of the stock as against estate value, and determine possible capital gains and tax obligations.

Seller's title to the asset. Public or private documents proving ownership. Encumbrances or liens affecting the asset (mortgages or pledges), pending conditions or price balance, pending litigation over the asset, as well as existing tax debts.  Existence and validity of all required licences and approvals for certain assets, and verify outstanding obligations of the seller and good standing of the seller.

Public deeds affecting the property, title certificate review and verification; also a site plan issued by a certified surveyor ideally retained by the buyer. Title history of the asset (including the last 30 years) at the Real Estate Office along with: a certificate of liens, encumbrances or rights of way, or existence of litigation; and a certificate by the municipal government showing any pending tax liabilities. Verify that the property's title does not conflict with property rights issued by the National Agrarian Reform (returning private land to the communities).

Corporations, limited liability companies, shared risk contracts, operation and/or service agreements.

Undertake extensive review of ownership titles, and obtain title history from the Real Estate Office. Compare this information with the property information filed with the municipal government. Review possible conflicts with National Agrarian Reform titles and verify whether there is any pending litigation in local courts.

Brazil

Labour contingencies,  tax contingencies, regulatory, real estate, environmental and corporate matters.

Existence of liens and encumbrances. Owner's compliance with legal requirements and obligations concerning the assets. Labour, environmental and tax contingencies related to the assets and the seller.

Verify the existence of any lawsuits against the owner and the former owners (as the case may be) related to the real property. Establish existence of any liens or encumbrances over the real property. Review tax and environmental liabilities related to the real property, the owner and certain former owners. Review social security liabilities of the owner. Verify the existence and validity of all required licences, compliance with environmental rules. Verify regularity of construction works.  Review zoning requirements.

Public deeds of purchase and sale; instruments of purchase and sale commitments; lease agreements; build-to-suit agreements; and purchase and sale agreements with property reserve. Limited liability companies, corporations, real estate investment certificates (CRIs), real estate investment funds and partnership investment funds.

Verify any pending litigation related to the real property. Review all tax, environmental, labour and social security obligations of the owner. Review title records, deeds and contracts related to the real property.  Review compliance with all legal requirements concerning real property (registrations, authorisations and licences).

Chile

Good standing of the issuer, the seller's ownership of the stock and encumbrances affecting the stock.  Due diligence of other matters concerning the issuer of the stock, such as: corporate governance, assets, liabilities, relations with clients and suppliers, labour, tax, environmental and other regulatory matters.

Seller's title to the assets. Encumbrances or liens affecting the assets, pending conditions or price balance, pending litigation over the assets. Tax contingencies (whether the sale triggers payment of VAT). Existence and validity of all required licences and approvals for certain assets.

In addition to the matters to review on any asset acquisition, for real estate the following also needs to be reviewed: tax obligations related to the real property, and zoning requirements.

Limited liability company, the corporation and, in the last few years, the real estate trust or fund.

Perform thorough analysis of the legal and physical condition of the property. Prepare effective purchase and sale contract.  Tax planning, depending on the purpose of the real estate and term of the investment.

Colombia

Certificate of Existence and Legal Representation (issued by the Chamber of Commerce of the corporate domicile) which contains essential corporate data (such as legal representatives and board members). Bye-laws. Shareholders' registry, which also shows liens, attachments and other useful observations.

Certificate of Existence and Legal Representation. Financial statements for the last five years (at least). Documents evidencing title to personal property.

Certificate of Tradition and Freedom showing title history (issued by the relevant office of the Registry of Public Instruments). Public deeds affecting the property granted during the last 20 years, and any relevant corresponding regulations (for horizontal property). Check receipts and documents to establish if real estate is up to date regarding payment of taxes and expenses necessary for transfer.   Zoning requirements and restrictions (known as the Urban Guardianship in Bogotá or municipal planning in other cities).

Commercial companies. Autonomous estates or fiduciary entrustments (both created by a trust agreement).

Review at least the documentation previously mentioned. Obtain legal advice from experts in the field. 

Costa Rica

Bye-laws and all relevant corporate documentation. Financial statements and certificates issued by the social security administration concerning compliance with social security benefits payments. Threatened or pending claims and litigation against the company. Outstanding obligations (loans, indentures, financing, guarantees or indemnity undertakings and so on). Material information or documents provided to both stockholders and directors for the past two years.

Threatened or pending claims, litigation or investigations against the selling company or its bodies (that is, the board). All currently effective loans, indentures, debt instruments and other financing instruments. All related material documents that could affect any real estate that the selling company owns.

Review property title's history as well as existence of liens and encumbrances. Verify the relevant municipality's land use restrictions (land use and zoning). Verify land use restrictions with environmental agencies (MINAE and SETENA). Cadastral survey showing possible overlaps and actual surface. Check compliance with, and/or restrictions under, maritime zone laws (concessions, private property and forest areas administered by MINAE).

Corporation (sociedad anónima), limited liability company (sociedad de responsabilidad limitada), trust agreement, joint venture and real estate development investment funds (REDIFs). A Costa Rican limited liability company can elect to be treated as a disregarded entity for US tax purposes.

Undertake the searches and reviews mentioned previously and obtain legal advice.

Dominican Republic

Certificate of Mercantile Registration, issued by the Chamber of Commerce of the entity's jurisdiction of incorporation, which also shows current legal standing. Tax authority certificate of standing, which shows tax liabilities of the company. Certificate of status from the labour ministry, to reduce any or all potential labour liabilities. Certificate of pending litigation in the courts of the entity's domicile.

Depending on the nature of the asset in issue, verify if the asset is subject to registration and the effects of such registration (ownership transfer, publicity, and so on).  Confirmation that the asset(s) has not been used as collateral for any transaction (credit or simple guarantee) by the owner or third party. Financial statement of the owner, to determine accounts payables and creditors. Obtain unequivocal protection clauses from the seller in the event of third party liabilities relating to the asset(s) sold. Legal or contractual restrictions on the transfer of assets (that is, contractual rights, concession rights, permits or licences).

Title certificate review and verification. Certificate of liens and encumbrances issued by the relevant title registry and property chain of transfer record. Certificate from tax authorities showing any tax liabilities outstanding on the land in question. Request information from the land courts regarding any litigation started or pending affecting any rights (property or accessory) related to the land (including the owner and his spouse if listed under a personal name).  Site plan issued by certified surveyor, ideally retained by the acquirer.

Direct acquisition. Limited liability companies through contribution-in-kind agreements and later share transfers. Joint ventures.

Review at least the documentation mentioned previously. Obtain legal advice and support from experts in the field. 

Ecuador

Registration and good standing of the company, governance structure, directors and officers. Assets and liabilities of the company, that is, tax and labour liabilities, financial commitments and obligations, and pending litigation. Major contracts and agreements with main suppliers and contractors of the company.  Books, records, stock certificates and ledgers to verify if shares are free from encumbrances or liens.

Title of property and confirmation of whether the assets are unencumbered. Legal standing and capacity of seller to transfer asset and compliance with tax obligations. Pending litigation and contracts or agreements on the asset. Zoning reports and regulations and permitted uses of the property. 

Review of property title. If the owner is a company, review the certificate of good standing of the company conferred by the Superintendent of Companies, bye-laws, and appointments of officers or legal representatives of the company. Certificate from the Registry of Property to verify history of title and verify whether asset is free from encumbrances, easements or liens. Verify payment of property and other taxes, through certificates of tax payments granted by the municipality as well as utilities. Zoning regulations and reports.

Corporations and real estate trusts.

Verify property title. Verify and determine tax consequences of transactions.  Conduct an inspection of the property and verify zoning regulations. Retain local counsel.

El Salvador

Articles of incorporation and/or bye-laws.  Company books (stock records, shareholders' meetings and board minutes). Company's compliance with tax laws.  Shareholders' agreements. Company's financial statements (last 5 years). List of all outstanding loans.  Company's annual permit to conduct business activities issued by the Registry of Commerce.   Any pending legal claims.

Evidence of ownership. Conduct a search of the Registry of Commerce for any pledge or encumbrance levied on the asset. Any real estate purchase over US$28,571.43 (as at 1 September 2010, US$1 is EUR0.8) is subject to a real estate transfer tax of 3%. For the real estate transaction to be registered, seller and buyer must have clearance from the tax authorities.

Official summary of the property in the local Real Estate Office. Conduct title research. Clearance from the tax office (needed to purchase or transfer and/or impose a lien on the real estate).

Purchase and lease agreements. Real estate investments are mostly made by local companies (variable capital companies) as El Salvador does not yet have legislation regulating special purpose vehicles such as trusts or partnerships.

Retain good legal counsel. Conduct title searches. Request from the seller clearance from the tax office.

Guatemala

Restrictions or special authorisations in the bye-laws, and corporate resolutions regarding subscription and payment of new stock. Amount of paid-in capital of the company (stock actually paid), shareholders or voting agreements. Notice of the issuance of stocks delivered to the General Mercantile Registry of Guatemala.

Public or private documents proving ownership. Outstanding obligations of the entity that owns the assets, and compliance with any law, regulation or any legal provision that the entity owning the asset or the asset itself could be subject to.  Existence of any liens or mortgages over the assets, requiring a thorough investigation of the Public Property Registry. Obtain and review public certificates to check whether assets are properly recorded. 

Public or private documents proving title. Existence of any mortgages, rights of way or registered rights affecting the property, requiring a thorough investigation of the relevant public records.  Obtain and review public certificates concerning property. Determine location of the assets to determine any specific restriction or any other local requirements. Proof of payment of real estate taxes and public registered value of the property.  Review and ensure that powers granted to the legal representative of buyer appear in sale agreement.

Commercial entities, such as trusts or corporations.  

Proper and thorough research and analysis of the relevant public records, including investigation of any prior registrations and review of documentation supporting such registrations (check legitimacy of all transactions previously recorded).

Mexico

Articles of incorporation, current bye-laws, powers of attorney and their registration with the Public Registry of Commerce.  Mercantile folio, issued by the Public Registry of Commerce.  Corporate books and financial statements.

Documents proving title to personal property, such as invoices, bills and contracts.  Compliance with tax, labour and social security obligations.  Absence of liens (pledges or attachments) and contracts associated with the assets.

Property title (formalised in a public deed issued by a notary public), duly recorded at the Public Registry of Property. Certificate of liens and real folio (when available) or chain of title for the last 20 years, issued by the Public Registry of Property.  Absence of agrarian claims from adjoining landowners. All contracts, deeds and covenants affecting the property. Land use and zoning certificates and licences.

Stock companies. Limited liability partnerships. Administration and guarantee trust agreements. Operation and/or service agreements.

Perform thorough analysis of the legal and physical conditions of the property.  Prepare an effective purchase and sale contract and include representations and warranties relating to the legitimate use and possession (no criminal activities to be pursued, among other things) of the real property.

Nicaragua

Thorough review of the company's structure. This should include an examination of the company's registration and corporate books.   Labour contingencies must be examined, as well as tax and judicial contingencies, including regulatory matters, if applicable.

Review the seller's title to the asset. Analyse the asset's registration to determine the origin of title. If title originates from an agrarian reform title, further analysis must be done to determine that the previous owner has been duly compensated. For purchases of real estate based on an agrarian reform title, approval (solvency) must be granted by the Attorney General's Office before recording the property. Analysis to detect any encumbrances or liens over the property. Review the fiscal status of the property.

Examine title(s) to the property involved in transaction. Determine origin of title and any possible contingencies relating to previous owners. Examine titles going back 30 years, to verify origin of property (for example, whether it originates in the agrarian reform or as a result of confiscation). Determine necessary authorisations needed for any development, if applicable. Review tax issues and the existence of any liens and/or encumbrances over the property.

Main vehicle used is a corporation.  Main documents to execute include an initial memorandum of understanding and a sale and purchase agreement.  Other documents include servicing and operations agreements and management contracts. 

Perform thorough investigation of the properties and their titles.  Review registration history over the past 30 years.  Determine and assess any possible material contingencies.

Paraguay

Bye-laws and their amendments. Copy of the public deed, history and its registration. Directors, managers and officers. Certificate of stocks and book of shareholders to verify if the shares are subject to any encumbrances and/or liens, and corporate books and company records. Pending litigation, encumbrances and liens. Contracts and agreements. Tax and labour considerations.  Financial matters.

A copy of the registration is required depending on the nature of the asset. Verify if the asset is affected as collateral or is subject to any encumbrance and/or lien.  Pending litigation. Documents proving just/fair title to the asset. Seller's legal capacity to transfer.  Tax and labour obligations.

Research property title and its history (last 20 years) in the Real Estate Public Registry. Obtain certificate issued by the Real Estate Public Registry office relating to the existence of any encumbrance and/or lien that may be pending. Judicial or private measurement of land. Any environmental licence or governmental authorisation previously granted. Tax payment certificate. Environmental regulations.

Contracts and/or vehicles can be used by an individual or by legal entities, which can be: corporations, limited liability companies, joint ventures, trusts, branches, subsidiaries, agencies and representations.

Review and verify: all corporate, tax, labour and financial documents; history and documents concerning the property title; pending litigation, encumbrances and/or liens; environmental regulation; and border restrictions. Obtain expert legal and financial assistance.

Uruguay

Due incorporation and valid existence of the company and due appointment of representatives. Verify bye-laws and request a good standing certificate from the Public Registry. Verify that the shares are not pledged or subject to any lien.  Confirm absence of legal or contractual restriction for transfer, both in the corporate books and through Public Registry certificates. 

Review seller's liabilities and observe rules for the transfer of commercial establishment (including publications in the Official Gazette, and registration of the SPA with the Public Registry) to limit the buyer's exposure to liabilities associated with the assets for future debts of the seller. Proof of title of assets being transferred and compliance with all formalities for transfer, regardless of SPA. Fulfilment of tax and labour obligations (request tax certificate from the tax agency and prevent labour contingencies).

Study chain of title for the last 30 years. Verify that corresponding letters of payment have been granted for the agreed prices and that there are no outstanding balances. Study and verify background survey (maps), registration numbers, surface, and delimitation of property as per blueprint. Request registry information in connection with the property (check that any certificates issued match chain of title searches) and the different title holders for the last 30 years (attachments, validity of powers of attorney and so on). Establish and pay taxes for transfer of real estate.

Stock companies, trust agreements or management contracts.

Perform an exhaustive study of the property titles (and title background) of the real property to prevent the absence of an essential element (consent, capacity, purpose or motive) and comply with legal and contractual formalities. Request registry information in connection with the property and its current and past owners.