CIPS I - REBAC

Transcription

CIPS I - REBAC

The Americas and
International Real Estate
Course Manual
Certified International Property Specialist Network
National Association of REALTORS®
International Operations Division
430 N. Michigan Avenue
Chicago, IL 60611-8047 USA
2006
1.800.874.6500 ext 8412 in the US/Canada
1-312.329.8412 Internationally
Fax: 1.312.329.8358
[email protected]
www.realtor.org/international
Copyright 2006, National Association of REALTORS®
CIPS The Americas
Table of Contents
Introduction..................................................................................... Intro-1
Chapter 1: Review............................................................................... 1 - 1
Globalization ..................................................................................... 1 - 2
Converting Foreign Currencies and Measures .................................. 1 - 6
Chapter 2: Features of the Americas ................................................. 2 - 2
Nations and Territories .................................................................... 2 - 2
Historical and Cultural Influences ..................................................... 2 - 3
Regions and Relationships ............................................................... 2 - 5
Economic Environments ................................................................ 2 - 10
Chapter 3: Economic Trends and Opportunity for Investment .... 3 - 1
Major Market Characteristics ........................................................... 3 - 2
Regional Trends ............................................................................... 3 - 7
Economic Indicators ...................................................................... 3 - 13
Chapter 4: How to Look at a Country ............................................... 4 - 1
International Market Knowledge ..................................................... 4 - 2
The Country Assessment Model ...................................................... 4 - 4
Sample Analysis of a Country Profile: Brazil ................................ 4 - 13
Chapter 5: Working in the Americas - Mexico ................................ 5 - 1
Real Estate Opportunities ................................................................. 5 - 2
Getting Beyond the Basics ................................................................ 5 -8
Networking and Relationships ........................................................ 5 - 10
Elements of a Transactions ............................................................ 5 - 14
Marketing and Selling Practices .....................................................5 – 22
Continued on next page.
Table of Contents - 1
CIPS The A,mericas
Chapter 6: Country Profiles................................................................6 - 1
Appendix ................................................................................ Appendix - 1
Glossary....................................................................................Glossary - 1
Index .............................................................................................. Index - 1
Resources............................................................................... Resources - 1
Table of Contents -2
CIPS The Americas
Introduction
Last year 6 million ¼” drills were sold and the people buying didn’t even
want them! What did they want? Holes. The drill was a means to an end.
That too is the role of a real estate agent, helping people get what they really
want—property ownership.
In international real estate you can never have enough information. Sifting,
sorting and analyzing the data is a large part of facilitating a successful
international transaction.
As we explore the Americas, statistics will be used to compare individual
countries, examine their patterns of growth and determine their investment
potential.
The Americas have experienced dramatic changes within the last few years.
This course is designed to introduce real estate professionals to the basic
skills and knowledge necessary to facilitate real estate transactions within
the Americas.
The information found here will benefit:
•
experienced international professionals
•
individuals with real estate experience who are considering
international specialization
•
NAR general membership
•
real estate investors
Course Objectives
The Americas introduces participants to the unique dimensions of
international practice in North, Central and South America. The course is
designed to introduce:
•
social, economic, political and geographical characteristics of major
American countries.
•
laws and real estate practices in major American markets.
•
procedures to evaluate American investment patterns, investor
profiles and opportunistic real estate activity.
•
methods to develop a business network that will enhance
international practice with American clients and/or properties.
•
techniques to promote properties, markets and professional services.
Introduction - 1
CIPS The Americas
Introduction - 2
CIPS The Americas
Buenos Dias Neighbor!
I have visited
Mexico
I have
attended an
NAR
convention
I fluently
speak a
foreign
language
I specialize in
international
business
I have a dog!
I hold the
CCIM
designation
I hold the
CRS
designation
I hold the
ABR
designation
I’ve been in
real estate for
20 + years
I’ve had my
license less
than 6 months
I like
chocolate
I have lived in
a foreign
country
FREE
This is my last
CIPS course
I plan to
attend the
next NAR
convention
I have visited
South
America
I speak
Spanish
I have been in
real estate for
10+ years
I have visited
Central
America
More than half
my real estate
practice is
international
I have been to
Brazil
I have been to
Canada
I enjoy winter
sports
I have a cat!
I ride a Harley
Introduction - 3
CIPS The Americas
Course Overview
For centuries trade has moved primarily east and west. Europe, North
America and Asia have benefitted greatly from this movement. For the past
60 years however, immigration of people and trading of goods have begun
moving more predominately in a north-south direction. This has been most
notable in the Americas.
Like any major cultural transformation, pain is involved. It is not easy for a
comfortable way of life to be uprooted and reformed especially when those
most affected do not understand or care about the espoused long-term
benefits. Selling plans to initiate free-trade groups, implementing systems
to reduce crime and poverty, rebuilding after Mother Nature’s wrath,
working to strengthen a devalued currency, and finding common ground on
which to build long-term relationships are significant challenges faced by
many countries of the America’s. Each of these issues becomes a factor
when determining the investment strategy of international as well as local
clients.
The Americas are culturally and ethnically diverse. The real estate
professional must be familiar with the basic social features, business
protocols and currency issues within the region to command the respect of
clients. We will address these issues as well as others the real estate
professional needs to understand when representing clients in USA markets,
as well as advising the USA client in a foreign market regarding the
political and economic characteristics.
A few interesting facts regarding the Americas:
1. Contains the world’s largest free-trade zone, NAFTA.
2. The largest pocket of poverty in the Western Hemisphere is in
Brazil where 1/3 of the population, approximately 53 million
people, live below the international poverty line of less than $2
per day.
3. The largest Japanese population outside of Japan is found in
Brazil.
4. Thirty percent of the immigrants living in the USA are from
Mexico.
5. The Americas contain over ¼ of the world’s land mass.
6. USA, Brazil, Canada and Mexico have GDP’s in excess of
1 trillion dollars.
Introduction - 4
CIPS The Americas
Activities and Class Procedures
This course incorporates a variety of activities designed to involve students,
such as participant work group assignments, group presentations, exercises
and discussions.
Participants are strongly encouraged to ask questions and engage in class
discussions and group exercises. Due to the range of experience levels
among students, there is great opportunity to learn from one another. Your
active involvement will enrich your learning experience over the course of
the program.
Final Exam
At the end of the day participants will be given a multiple-choice exam to
test and reinforce achievement of the course's learning objectives. The
exams are graded in Chicago and following successful completion of the
exam, you will receive a CIPS course certificate.
Resources
Please note that the appendix of this manual contains many resources for
expanding on the material presented. These resources are as up-to-date as
possible. However, it is important to keep in mind that it is the real estate
professional’s responsibility to remain current on trends and issues in the
ever-changing real estate market. The following websites are useful
resources for the CIPS courses and your work in international real estate.
They are:
National Association of REALTORS®: www.realtor.org/international
International Consortium of Real Estate Associations (ICREA):
www.worldproperties.com
CIA: www.ciaworldfactbook.gov
Denver University Global Real Estate Project: burns.dcb.du.edu
Introduction - 5
CIPS The Americas
Introduction - 6
CIPS The Americas
Chapter 1
Review
Chapter 1
CIPS The Americas
Chapter 1
CIPS The Americas
Chapter 1: Review
Overview
Chapter 1 offers a quick review and summary of the fundamental ideas
introduced in International Real Estate for Local Markets.
Objective
Review the basic principles of globalization, capital flow, market
assessment and the skills of converting currency, area and time.
Application
To analyze the potential of an international property investment, a real
estate professional must have a good understanding of the essential skills
necessary to conduct business in world markets.
Chapter 1-1
CIPS The Americas
Globalization
•
Globalization is the movement by countries, companies, organizations
and people toward a single market environment.
•
An economy is a system functioning within a single country.
•
Part of that system is the demand for real estate.
•
World economies have evolved into regional and supranational
networks.
•
Global system of supply and demand.
•
Global investors enter and leave markets to create business
opportunities and seek investments.
•
International investors expect real estate professionals to have
knowledge of:
o Markets
o Economies
o Social and business cultures
o International business transactions
Real Estate and Capital Flow
Chapter 1-2
•
Expanding markets require foreign capital.
•
International real estate professionals know where and why investments
are being made.
•
They are familiar with the patterns of capital flow around the world.
•
Capital flows according to supply and demand and investment return.
•
Capital flow moves currency, assets, credits and debt around the world
almost instantly.
CIPS The Americas
Currency
•
Currency exchange rates:
o show economic and financial performance.
o allow comparison of one currency to another.
•
If the GDP and positive trade of one country exceeds that of another,
their currency will be worth more.
•
When a currency gains against another, its exchange rate falls
o A stronger currency requires fewer units to purchase a weaker
one
o If Canadian dollar strengthens against the Mexican peso, it will
take fewer Canadian dollars to buy an equivalent amount of
pesos
o It then requires more of the weaker peso to buy Canadian goods
•
Investors buy real estate because of the favorable trend of their local
currency against the foreign currency
•
International specialists must understand the impact of exchange rates
on investment alternatives
Exchange Rate
Currency
Example
Increases
Weakens
Takes MORE to
buy the same
amount of goods
Decreases
Strengthens
Takes LESS to buy
same amount of
goods
Market Assessment
•
Evaluate
o The real estate market
o Cultural influences
o Political influences
o Local real estate practices
o Stability
o Population equilibrium
o Free market philosophy
Chapter 1-3
CIPS The Americas
o Social harmony
o Democratic institutions
o Infrastructure
o Underlying economic strength
Market information is valuable on two levels; it provides both general
trends and specific details. This course reviews some general trends, but
can only touch on specific market details for any given country. Focusing
on a foreign market requires specific details, which are most valuable when
they are up to date. While the business press can provide general
information, more in-depth data can be obtained through colleagues via
CIPS membership, the internet, market visits, specialized newsletters and
professional meetings.
Cultural Influences
•
Building business relationships is vital in international transactions.
•
Do not make assumptions about investment objectives.
•
Consider cultural elements:
o Historical influences
o Language
o Religion
o Class structures
o Customs
o Values
o Stereotypes
o Prejudices
Conducting Business
•
Identify banks and financial institutions with international experience.
•
Tasks for international transaction are much the same as domestic ones.
•
Differences are:
o distances are greater
o transactions may take longer
o business channels are more complex
o cultural differences may affect interactions
Chapter 1-4
CIPS The Americas
•
International rewards:
o intensely loyal clients
o large transactions
o referrals
o opportunity to learn and see the world
Chapter 1-5
CIPS The Americas
Foreign Currencies and Measures
•
Information about markets is given in local measures.
o International real estate prices are quoted in a country's currency
units.
o Sizes are quoted in square meters.
o Rents are quoted per square meter per month.
•
In the USA, prices are given in dollars per square foot per year.
•
Must convert between domestic and foreign sizes and currencies.
•
Three conversion steps impact real estate transactions:
n Convert
The
Currency
Reciprocals
1. You know the
exchange rate of the
domestic currency.
2. To determine the
exchange rate of a
foreign currency to a
domestic currency, use
the reciprocal (divide by
1).
3. The reciprocal is 1
divided by the foreign
exchange amount.
4. In this example the
reciprocal is 1÷10.6945,
which equals .0935.
o Convert
The
Area
p Convert
The
Time
Convert the Currency
•
Use the most recent exchange rate when converting currencies.
•
Exchange rates show the foreign units that equal one domestic unit.
•
Calculate domestic unit to foreign unit by using the reciprocal.
o A reciprocal equals 1 ÷ foreign exchange amount.
•
These factors allow easy conversion from one currency to another.
Exchange Rate
Conversion Factor
USA dollars to Mexican pesos
US$1 = MXN10.6945
Mexican pesos to USA dollars
MXN1 = US$0.0935
or 1 ÷ 10.6945 = .0935 (Reciprocal)
Formula for Converting Quantities of Currency
Currency Units X Exchange Rate
Example: Convert MXN850 to US$
MXN850 X US$
= US$
[Currency Units] X [Exchange Rate]
=
Example: Convert US$250 to MXN
= MXN
US$250 X MXN
Chapter 1-6
CIPS The Americas
Area Conversion Factors
Sq. Ft. in 1 Sq. Meter = 10.7639
Sq. Meters in 1 Sq. Ft. = .0929
Convert Area
•
Metric is the business measurement of the world.
•
In the USA properties are measured in square feet.
•
Conversions must be made both ways.
Converting Square Meters to Square Feet
Formula: Meters to be converted X 10.7639
Example: Convert 1250 m² to square feet
Price Per Unit
ofX Area
1250 m²
__________ = ___________ sq. ft.
•
Convert the price or rent per square foot to the price or rent per square
Converting Square Feet to Square Meters
meter and vice
versa. Square Feet to be converted X .0929
Formula:
Example: Convert 20,000 square feet to square meters
20,000 sf X ________ = ________ m²
Convert Price or Rent to a New Area Denomination
Formula: Price or Rent X Area Conversion Factor [See Box Above]
Example: Apartment rents for 1000 pesos/m²/month. Rent in sq. ft. would be:
1000 pesos X ___________ = ____________ pesos/sq.ft./month
Example: Office space rents for US$25/sq.ft./mo. Rent in sq. meters would be:
US$25 X ____________ = ____________ US$/m²/month
A conversion chart of square measures is available in the appendix.
Convert the Time Period
IF:
Price is quoted per month then MULTIPLY currency amount by 12 to get
price/year
Price is quoted as an annual amount then DIVIDE by 12 to get price per month
Chapter 1-7
CIPS The Americas
Putting It Together:
Currency, Price per Area, and Time Conversions
•
Example:
o The rental rate on office space in Mexico City is 258 pesos per
square meter per month.
o Your client wants to know the equivalent of that price in
USA dollars per square foot per year.
o The currency exchange rate is MXN 1 = US$10.6945.
o The reciprocal is US$1 = MXN1 = US$.0935.
o The area conversion rate is 1 square foot = .0929 m².
o The reciprocal is 1 m² = 10.7639 square feet.
•
Convert the Currency
______________________________________________________
•
Convert the Area
______________________________________________________
•
Convert the Time
______________________________________________________
Chapter 1-8
CIPS The Americas
Key Point Review

International real estate requires an understanding of:
o Globalization
o Capital flow
o Market assessment
o Cultural differences
o Local real estate practices
o Currency and area conversion skills
Practice Problems
1. You have found a good site for the client referred to above. The rent
is quoted at 260,000 Chilean pesos per square meter per year. If the
exchange rate is US $1 = 735 Chilean pesos, how does this compare to
the client’s budget per square foot?
2. Assume the same client decides to lease the property at the rate of
260,000 Chilean pesos per square meter per year. If the space is 2,000
square meters and the exchange rate remains stable (US $1 = 735 pesos)
throughout the first year, how much will the lease cost in dollars for the first
year?
3. For the same client, if the exchange rate changes to US $1 = 600 Chilean
pesos immediately after signing the lease and remained the same for the
rest of the year, what would the financial impact be on the client?
Chapter 1-9
CIPS The Americas
Chapter 1-10
CIPS The Americas
Chapter 2
Features of the Americas
Chapter 2
CIPS The Americas
Chapter 2
CIPS The Americas
Chapter 2: Features of the Americas
Overview
•
Dynamics of the Americas market
•
How American countries interact with one another and world economy
•
Key cultural issues
o historical heritage
o business climates
Objectives
•
Define the Americas region.
•
Identify its major countries and territories.
•
Describe important social and economic sub regions.
•
Discuss any treaties that influence interaction between them.
•
Evaluate the business environments and general economic
conditions of the region’s principal countries.
•
Identify market-unifying trends.
Application
A good understanding of the historical, cultural and economic features of a
region is particularly important in evaluating the investment dynamics of
individual markets. This knowledge will be useful in identifying and
assisting clients as well as facilitating and closing international transactions.
Chapter 2-1
CIPS The Americas
Nations and Territories
•
The Americas are known as the Western Hemisphere
•
They consist of North, Central and South America and the islands of the
Caribbean
•
Nations in the Americas range from highly developed and wealthy to
undeveloped and impoverished
•
Total population approximately 815 million, about 14% of world
population
•
Contains 28% of world’s total land mass
•
Total GDP exceeds $8.6 trillion
•
35 independent nations
•
16 dependent nations or territories
Independent Nations
Antigua-Barbuda
Argentina
Bahamas
Barbados
Belize
Bolivia
Brazil
Canada
Chile
Columbia
Costa Rica
Cuba
Dominica
Dominican Republic
Ecuador
El Salvador
Grenada
Guatemala
Guyana
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
St. Kitts-Nevis
St. Vincent-Grenadines
St. Lucia
Suriname
Trinidad and Tobago
USA
Uruguay
Venezuela
Dependent Nations/Territories
Chapter 2-2
Great Britain
France
Netherlands
USA
Anguilla
Bermuda
British Virgin Islands
Cayman Islands
Falkland Islands
Montserrat
Turks and Caicos
French
Guiana
Guadeloupe
Martinique
St. PierreMiquelon
Aruba
Netherlands
Antilles
Puerto Rico
US Virgin Islands
CIPS The Americas
Historical and Cultural Influences
The Americas region is shaped by numerous historical and cultural
influences, which create both diversity and similarity among the individual
countries. In order to look at the Americas as an arena for international real
estate activity, two common notions must be dispelled.
1. Contrary to popular belief, Canada and its neighbor, the USA, are
not identical. Like all other countries, the two nations differ in
historical, cultural and economic foundations.
2. South American countries are not a monolithic cultural bloc.
Despite some broad cultural similarities, historical origins, such as
the indigenous and/or European people who entered and settled the
various areas, provide for enormous variety throughout the region.
Influential Cultural Groups
•
The Americas have been developed by a number of different groups
•
Cultural and historical influences have led to a regional diversity
o Multi-cultural [creoles, mestizos, metropolitans]
o Multi-ethnic
o Multi-racial [Hispanic, Black, Indian, European]
•
Prominent groups include:
Type
Influential groups
Aboriginal numerous Amerindian groups; Mayan, Inca and
Aztec empires
Colonial
Spanish, English, Dutch, French and
Portuguese
Immigrant
voluntary [various Europeans and others] and
involuntary [slaves]
Religious
indigenous animism, Roman Catholicism,
African animism, Protestant Evangelicalism
Chapter 2-3
CIPS The Americas
Cultural Subgroups
•
Much of North, Central and South America can be described as
mainly Spanish or Portuguese
•
Canada can be identified as mostly English or French
•
Other existing cultural groups continue to distinguish the American
countries from one another
•
An overview of the groups in select countries is as follows:
Country
Cultural Subgroups
Argentina
Araucanians, Guaraní, Tierra del Fuegans, Spanish, Italians,
Germans, English
Brazil
Guaraní, Tenetehara, Vaupes Indians, Xingu Park Indians,
Yanomamo, Portuguese, Africans, Italians, Germans, Poles,
Asians, particularly Japanese.
Canada
English, French, Scottish, Irish, other Europeans, Eskimo,
various Amerindians
Chile
Araucanians, Incas, Tierra del Fuegans, Spanish, Irish
Costa
Rica
Spanish, small groups of Indians and Africans
Mexico
Aztecs, Mayas, Yaqui, Zapotec, Spanish, other Europeans
Puerto
Rico
Spanish, Africans
Venezuela Guajiro, Pemon, Yanamono, Spanish, Portuguese, Italians,
Germans
USA
Chapter 2-4
Indian, European, African, Latin American, Asian
CIPS The Americas
Regions and Relationships
•
Any of the American nations or territories might be of interest to the
international real estate professional
•
Survey major sub regions both geographically and economically
•
Examine how various nations interact with one another and the
world
•
A few nations or territories stand out due to sheer size, economic
weight, or anticipated investment interaction. They are:
o Argentina
o Brazil
o Canada
o Chile
o Costa Rica
o Mexico
o Puerto Rico
o United States of America
o Venezuela
Geographic Sub Regions
•
Given its geographic and cultural complexity, it is no wonder that
Americans, as well as others, attempt to divide the region into
meaningful units that are smaller than the continents but larger than
the countries.
•
Based on general geographic, economic, and to some extent, cultural
ties, the following major sub regions can be identified:
o Canada and the USA
o Central America and Mexico
o The Andean Countries (Bolivia, Colombia, Ecuador, Peru,
Venezuela)
o Argentina
o Brazil
o The Caribbean (Antigua, Barbados, Belize, Grenada, Jamaica,
etc.)
Chapter 2-5
CIPS The Americas
Economic Sub Regions
•
In economic terms, as defined by inter-regional trade and various
efforts at integration, similar groupings appear.
o Canada and the USA are more culturally connected than either is
to Mexico, though all three nations have increasingly become a
single economic market due to the formation of the North
American Free Trade Agreement (NAFTA).
o Despite important cultural distinctions between Portugueseoriented Brazil and the Spanish-oriented nations of Argentina,
Paraguay and Uruguay, the four nations have come together to
form The Southern Cone sub region.
o In August 2005, The Central American-Dominican Republic
Free Trade Agreement [CAFTA-DR] was enacted by the United
States, El Salvador, Guatemala, Honduras, Nicaragua and the
Dominican Republic. Approval is pending in Costa Rica.

The treaty will take effect on a date agreed to by all
parties.
o The Andean countries [Bolivia, Colombia, Ecuador, Peru,
Venezuela]
o The Caribbean
Key Alignments, Allegiances and Organizations
The nations and territories of the Americas have formed commercial
alliances among themselves that help define trade relationships. All
economic sub regions are facilitated by at least one common market
structure or free trade agreement. All of the agreements are designed to
promote free trade among members by establishing a common external
tariff and diminish the common tariff over time. Some of the most
important alliances and organizations are listed on the next page.
Agreements are discussed in more detail in Chapter 3.
Chapter 2-6
CIPS The Americas
Alliance
Economic
sub region
Participating countries
North American Free
Trade Agreement
[NAFTA]
Canada, USA
and Mexico
Canada, USA and Mexico
Central American
Common Market
[CACM]
Central
America
Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua, Mexico
Caribbean Common
Market [CARICOM]
The Caribbean
Antigua-Barbuda, Bahamas, Barbados,
Belize, Dominica, Grenada, Guyana,
Jamaica, Monserrat, St. Kitts-Nevis, St.
Lucia, St. Vincent-Grenadines, Trinidad and
Tobago, Suriname
Andean Group
Common Market
([NCOM]
Andean
countries
Bolivia, Colombia, Ecuador, Peru,
Venezuela
Southern Cone
Common Market
The Southern
Cone
Brazil, Argentina, Paraguay, Uruguay
Central American
Economic Action
Plan [PAECA]
Central
America
Honduras, Nicaragua
Latin American
Integration
Association [LAIA,
ALADI]
various
Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, Mexico, Paraguay, Peru, Uruguay,
Venezuela
Free Trade Area of
the Americas [FTAA]
all
Entire Western Hemisphere [not approved
by all nations as yet]
Caribbean Basin
Initiative [CBI]
The Caribbean
Anguilla, Antigua-Barbuda, Bahamas,
Barbados, Belize, Cayman Islands, Costa
Rica, Dominica, Dominican Republic, El
Salvador, Grenada, Guatemala, Guyana,
Honduras, Jamaica, Monserrat, Netherlands
Antilles, Nicaragua, Panama, St. KittsNevis, St. Lucia, St. Vincent-Grenadines,
Suriname, British Virgin Islands, Trinidad
and Tobago, Turks and Caicos
Central AmericaDominican Republic
Free Trade
Agreement[CAFTADR]
Central
America, USA
United States, Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua and the
Dominican Republic
[MERCOSUR]
Chapter 2-7
CIPS The Americas
Organization of American States (OAS)
•
Established in 1910
o Known as the Pan American Union until 1948
o OAS encompasses every country in the Americas

The present government of Cuba has been suspended
since 1962 but has not been expelled
o OAS programs include scientific exchange, education, economic
and social development, and human rights promotion.
•
Objectives of the Organization of American States include:
o Working for peace and justice
o Promoting solidarity among the American states
o Aiding the economic, social and cultural development of the
hemisphere
Inter-American Development Bank (IDB)
•
The Inter-American Development Bank [Banco Interamericano de
Desarollo] was created in 1959
•
Created to accelerate economic and social development in Latin
America and the Caribbean
•
The IDB is the oldest and largest multilateral development
institution in the region
o Original members included 19 Latin American, Caribbean
countries and USA
o Eight other Western Hemisphere nations joined the Bank
o Eighteen non-regional countries joined between 1976 and
1993
o Total membership increased in 2005 to 47 nations when The
Republic of Korea became a member country.
•
In carrying out its mission, the Bank has mobilized financing for
projects that represent a total investment of $194 billion
o Annual lending $294 million in 1961
o Annual lending $16.4 billion in 2004
•
Lending covers entire spectrum of economic and social development
o Agriculture and industry
o Physical infrastructure sectors of energy and transportation
Chapter 2-8
CIPS The Americas
o Social sectors of environmental and public health
o Education
o Urban development
•
Current lending priorities include
o Poverty reduction
o Social equity
o Modernization and integration
o Environment
•
The Bank’s debt is AAA-rated in USA and other major capital
markets
•
Offices in each borrowing member country, Washington, DC, Paris
and Tokyo
Economic Environments
The degrees and types of organization vary widely throughout the Western
Hemisphere. When facilitating an international transaction, it is helpful to
have a solid understanding of the environment in a country’s economic sub
region. Following are sketches of business environments in those regions.
These sketches are only generalizations and do not define the economic
cultures. It is the real estate professional’s responsibility to do thorough
research so he or she may have access to the most current information.
Canada,
USA,
Mexico
•
NAFTA implemented in 1994
•
Designed to eliminate tariffs and quotas by 2003
•
World’s largest free trade zone in terms of combined
GDP
•
Canadian economy more competitive
o Rise in exports
o Largest trade partners

USA

EU (excluding Germany & France)

Japan
o Bilateral trade flow between USA and Canada
is largest in the world
o 2/3 of exports are automotive parts
Chapter 2-9
CIPS The Americas
•
USA economy
o Leading exports

Agricultural products

Chemicals

Machinery

Technology
o Leading imports

automobiles, food products

clothing, electronic equipment

fuel
o Highly integrated, self-contained economy
o World’s largest economy
o World’s largest consumer market
•
Mexico economy
o Recovered from 1994 crisis
o Political difficulties disrupted economy
o Devalued the peso 44%
o Strong capital inflows built productive
capacity
o Oil prices and oil futures have enabled growth
without excessive inflation
o One of world’s most open economies
o ¾ trade with USA and Canada
o Largest exports

Oil

Manufactured goods
o Largest imports
Central
America
•
•
Chapter 2-10

Machinery

Equipment
Includes all countries south of Mexico that connect
Mexico to Colombia
Good potential for lasting revival and growth
CIPS The Americas
The
Caribbean
•
Central America accounts for ¼ of the total GDP of
Latin America
•
International trade highly regulated
•
Belize has remained separate from the Central
American Common Market by trading instead with
USA, Great Britain, the Netherlands, Japan, Mexico
and the Caribbean
•
Panama is a major international finance center which
attracts financial services investors
•
Civil war and other internal problems have obstructed
economic growth in Nicaragua
•
Central America and Mexico maintain numerous ties
•
Costa Rica is largely Caucasian with strong cultural
ties to Europe and the USA
•
As Asian production costs rise, Central America will
become a more desirable locale for manufacturing
•
Consists of all islands between North and South
America from Cuba to Trinidad and Tobago
Many countries members of CARICOM, the
Caribbean Common Market
•
Andean
Countries
•
Tourism major economic support except for Cuba
•
Many countries export agricultural products
•
Economies vulnerable to droughts and tropical storms
•
Most islands import foodstuffs and manufactured
goods
•
Trade among themselves throughout region
•
Tourism attractive for investment opportunities
•
Cayman Islands are offshore financial center
•
Banking assets exceed $500 billion
•
•
Named for close proximity to Andes Mountains
Consist of Bolivia, Colombia, Ecuador, Peru and
Venezuela
•
Majority of population is rural, poor and lacks access
to transportation and distribution networks
Chapter 2-11
CIPS The Americas
Southern
Cone
•
Foreign investors favor smaller urban markets
•
Andean region contains South America’s richest
natural resources
•
All governments freely elected
•
With the exception of Venezuela, business
environments tend to be stable, regardless of changes
in government
•
Oil prices are basis of Venezuelan economy
•
All countries in the region subscribe to the Andean
Group Common Market free trade agreement
•
Decision 291 restricts all members on foreign
investment
•
Anticipated relaxing of Decision 291 could encourage
foreign investment in the Andean region
•
Southern Cone consists of Argentina, Brazil, Chile,
Paraguay and Uraguay
With the exception of Chile, all member nations are
in the Southern Common Market (MERCOSUR)
•
Chapter 2-12
•
Southern Cone nations have rich natural resources
•
Chile is world’s largest copper producer
•
High copper prices in the 1990s allowed Chile to
maintain an average economic growth rate of 5%
•
Unsteady economic performance of Argentina and
Brazil in the 1990s led to stagnation in the region
•
A 1999 decision to free float the Brazilian currency
let to a devaluation of the real as much as 40%
•
Brazil is still recovering from devaluation effects
•
Positive growth of 5.1% GDP expected in 2004
CIPS The Americas
•
CAFTADR
Central America-Dominican Republic Free Trade
Agreement
o Separate from NAFTA
o Bi-lateral trade agreement between the USA,
Honduras, Nicaragua and Dominican
Republic
•
CAFTA-DR countries enjoy duty free access to USA
markets
•
CAFTA-DR will level the playing field for USA
agricultural products by reducing and eliminating
export tariffs over the next 10 years
•
CAFTA nations have a total population of 44 million
•
Costa Rica has stable democracy and business
environment making it desirable for investment
•
El Salvador adopted US dollar as its currency
o El Salvador is striving to open new export
markets, encourage foreign investment,
modernize the tax and healthcare systems, and
stimulate the sluggish economy
•
Guatemala is largest and most populous Central
American country
o Coffee, sugar and bananas main crops
o 75% of population live below poverty line
•
Honduras and Nicaragua are two of the poorest
countries in the Western Hemisphere
o Growth dependent upon USA trade,
commodity prices and reduction of high crime
rate
o Nicaraguan income distribution one of the
most unequal on the globe
•
Dominican Republic services sector has overtaken
agriculture due to increased tourism and free trade
zones
o Dominican Republic President Fernandez,
elected in mid-2004, promised belt-tightening
reform
Chapter 2-13
CIPS The Americas
Exercise
After reviewing the information below, what will you tell an investor about
these countries of the Americas that might be helpful to them in making
their buying decision? Why are these items important when evaluating a
country?
Chapter 2-14
Country
GDP
Per
Capita
GDP
Argentina
Brazil
Canada
Chile
Colombia
Costa
Rica
Dominican
Republic
Honduras
Mexico
8.3%
5.1%
2.4%
5.8%
3.6%
3.9%
Nicaragua
Venezuela
USA
$12,400
$ 8,100
$31,500
$10,700
$ 6,600
$ 9,600
Debt
as %
of
GDP
118%
52%
N/A
12.8%
51.8%
16%
Population
below
poverty
line
44.3%
22%
15.9%
20.6%
55%
18%
5.9%
7.6%
1.9%
2.4%
5.9%
11.5%
14.8%
11.5%
7%
8.5%
13.6%
6.6%
1.7%
$ 6,300
61.1%
25%
55%
17%
4.2%
4.1%
$ 2,800
$ 9,600
74.1%
23.5%
53%
40%
7%
5.4%
4%
16.8
4.4%
$ 2,300
$ 5,800
$40,100
69.5%
43.1%
65%
50%
47%
12%
9.3%
22.4%
2.5%
28.5%
3.2%, 25%
underemployment
7.8%
17.1%
5.5%
Oil
Consumption
486,000
bbl/day
22.19 M
bbl/day
2.2 M bbl/day
Internet
Users
4.1 million
240,000
bbl/day
252,000
bbl/day
37,000
bbl/day
129,000
bbl/day
29,000
bbl/day
1.75 M
bbl/day
25,770
bbl/day
500,000
bbl/day
3.57 million
Country
Exports
Imports
Argentina
33.78 B/yr
Brazil
95 B/yr
22.06
Billion
61 Billion
Canada
315.6 B/yr
256.1 B/yr
Chile
29.2 B/yr
22.53 B/yr
Colombia
15.5 B/yr
15.34 B
Costa
Rica
Dominican
Republic
Honduras
6.184 B/yr
7.842B
Oil
Production
755,000
bbl/day
1.78 M
bbl/day
3.11 M
bbl/day
18,500
bbl/day
531,100
bbl/day
N/A
5.446 B/yr
8.09 B/yr
-0-
1.457 B/yr
3.332 B/yr
-0-
Mexico
182.4 B/yr
190.8 B/yr
Nicaragua
750 M/yr
2.02 B/yr
3.46 M
bbl/day
-0-
Venezuela
35.84
B/yr
14.98 B/yr
2.6 M
bbl/day
Inflation
Unemployment
14.3 million
16.1 million
2.73 million
800,000
500,000
168,600
10.03
million
90,000
1.27 million
CIPS The Americas
USA
795 B/yr
1.476
T/yr
7.8 M
bbl/day
19.65 M
bbl/day
159 million
Key Point Review

The Americas are culturally, economically and geographically
diverse, which has led to the development of both cultural and
economic subregions.

While economic environments are not completely dissimilar
throughout the Americas, there are notable regional differences,
which are important for investors and/or real estate professionals
to know and understand.
Discussion Question
Group Question
What changes have occurred in Latin America since this was written in 1999?
“The velocity of capital flow to . . . Latin America is likely to increase, with much
of it determined by the extent to which leadership and proactive measures are
exercised by the governments involved. How willing these countries are to ease
the barriers to the foreign investment and to open the spigot to large scale asset
sales will determine the relative speed by which their economic pain can be eased
and recovery can begin.”
-Ernst & Young Kenneth Leventhal Group, Online Magazine, 1999.
Chapter 2-15
CIPS The Americas
Chapter 2-16
CIPS The Americas
Chapter 3
Economic Trends and
Opportunities for Investment
Chapter 3
CIPS The Americas
Chapter 3: Economic Trends and
Opportunity for Investment
Overview
This chapter focuses on economic factors affecting international real estate
investment, such as:
•
offshore banking
•
trade agreements and common markets
•
general economic developments
Objectives
•
Identify capital flow in the Americas.
•
Evaluate efforts to achieve economic integration in the Americas.
•
Recognize the role of offshore banking and havens in international
real estate transactions.
•
Identify important political and economic developments and
proposed reforms needed to enhance the investment climate in Latin
America as a whole.
•
Identify major investment trends, risks and opportunities in the
region.
Application
A real estate professional should be aware of and understand:
•
cultural and economic climates of the region
•
changing economic conditions and trends
•
how trends may affect investment values for the client
Chapter 3-1
CIPS The Americas
Major Market Characteristics
In the Americas, it is important to keep track of major economic
developments throughout the region due to the many correlations between
countries and sub regions.
The major characteristics of this region influencing capital flow include:
•
various trade agreements
•
offshore banking opportunities
Free Trade Treaties and Agreements
In response to the globalization of world economies, the region is
developing ways to expand trade throughout the Americas and become
more competitive.
The traditional approach to integration in the Americas, particularly in Latin
American countries, is focused on increasing market size. The current
philosophy is that the diversity of resources in each country should lead to
different patterns of specialization, creating a more efficient and productive
structure for the whole region. Following are descriptions of some of the
trade agreements that help create and continue to uphold the approach to
economic integration in the Americas.
North America Free Trade Agreement (NAFTA)
The creation of NAFTA in 1994 allowed Canada, the USA and Mexico to
become the strongest trading block in the Americas. This agreement took
advantage of their proximity and complementary economies by gradually
eliminating trade barriers between the three countries in 2003.
This free-trade area now represents about one-third of the world’s
total GDP. This is significantly larger than that of the EU. In
addition, the agreement provides the USA and Canada improved
access to low-cost production in Mexico while providing Mexico
with an infusion of technology and capital.
After 10 years of NAFTA implementation, the statistics involving
increased exports, investment flows, total trade and broader
economic trends are as follows.
1.
All member economies have grown significantly:
a.
Chapter 3-2
USA
38% economic growth
CIPS The Americas
b.
Canada
30.9% growth
c.
Mexico
30% growth
1. USA exports to Canada and Mexico grew from US$134.3 billion to
US$250.6 billion
2. Mexican exports to USA exceeded US$138 billion
3. Mexican exports to Canada increased 227% from US$2.7 billion to
US$8.7 billion
4. Canada’s exports to the USA and Mexico increased by 104% in value
5. The total volume of trade expanded from US$289.3 billion in 1993 to
US$623.1 billion in 2003
6. NAFTA conducts nearly US$1.7 billion in trilateral trade each day
7. In the past 10 years the NAFTA member productivity rose:
d.
28% in the USA
e.
55% in Mexico
f.
23% in Canada
Statistics provided by the Office of United States Trade Representative
[http://www.USTR.gov/Trade_Agreements/Regional/NAFTA/NAFTA_at_10/Section_Index.
html.]
Central American Economic Action Plan (PAECA)
• Approved in 1990 by the governments of Costa Rica, El Salvador,
Guatemala, Honduras and Nicaragua.
•
PAECA was developed to reactivate the Central American Common
Market (CACM), which had some early success at eliminating trade
barriers during the 1960s, but declined by 1969.
•
The PAECA goals include:
o a common tariff structure
o cooperation on rebuilding infrastructure
o free movement of people and merchandise
o elimination of trade barriers
o cooperative restructuring of industry and privatization
Dominican Republic--Central America Free Trade Agreement
(CAFTA-DR)
Though not completely ratified, here are some of the items within the
agreement.
Chapter 3-3
CIPS The Americas
•
Nearing ratification in fall of 2005
•
Free trade agreement, not a treaty
•
USA, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and
Dominican Republic (joined negotiations in 2004)
•
Approved by U.S. Senate by 54-45 vote and HOR by 217-215.
•
Passage required majority vote in both houses
•
Tariffs on 80% of USA exports will be eliminated immediately and
the rest phased out over the next decade
•
Governments promise to grant ironclad guarantees to foreign
investment
•
All government purchases must be open to transnational bids
•
The dismantling of national monopolies
•
The reduction of government corruption
Central American Common Market (CACM)
• The CACM is a common trade alliance that was established among
Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua in
1963.
•
CACM’s internal trade rose from 450 million USA dollars in 1986
to 1.5 billion in 1997.
•
CACM member countries have established a free trade area with
Mexico.
o This agreement is expected to help Central America
equalize its trade deficit with Mexico and spread the
benefits of Mexico's economic expansion to the CACM.
•
The CACM is considering a similar free trade agreement with
Venezuela.
Caribbean Common Market (CARICOM)
• CARICOM was created in 1973
Chapter 3-4
•
Designed to remove barriers between the Caribbean countries.
•
In 1991, the members of CARICOM moved toward a common tariff
on non-CARICOM countries.
•
The largest countries in the region, Barbados, Guyana, Jamaica,
Trinidad and Tobago, have already put the new tariffs in place.
•
The tariff protects domestic industries, but lowers the tariff on noncompetitive imports.
CIPS The Americas
•
CARICOM members also adopted a measure creating a monetary
union to support the common market.
Caribbean Basin Initiative (CBI)
• The Caribbean Basin Initiative was established in 1984.
•
Originally called Caribbean Basin Economic Recovery Act.
•
Trade agreement objectives are to:
o stimulate private investment in the Caribbean
o aid members in diversifying their economies
o encourage general market reforms
•
Costa Rica
o negotiated the framework for a free trade agreement with
the USA
o expanded its nontraditional exports by 25%
o These successes have attracted the attention of investors
from the USA and Canada.
Andean Group Common Market (ANCOM)
• The Andean Group Common Market developed from an original
free trade alliance called the Cartagena Agreement
•
ANCOM member governments began to phase in the free trade area
in 1992
•
Includes a common external tariff schedule for Colombia,
Venezuela, Peru, Bolivia and Ecuador.
Common Market of the Southern Cone (MERCOSUR)
• Treaty establishing a common market between the Argentine
Republic, the Federal Republic of Brazil, the Republic of Paraguay
and the Eastern Republic of Uruguay
•
The MERCOSUR treaty, signed in 1991, established its common
market in 1994
•
Tariff barriers were lifted to allow goods, services, labor and capital
to move freely throughout the Southern Cone
•
MERCOSUR elevated trade in the region from 3 billion USA
dollars in 1986 to almost 4.7 billion in 1997
•
With its member countries’ mineral and agricultural resources,
waterways, hydroelectric power capacity, industrial base and
Chapter 3-5
CIPS The Americas
entrepreneurial class, MERCOSUR could become significant in
the world economy
Due to the parameters of all of the aforementioned trade agreements, there
are major "rivers of trade" and flows of capital that bind the regions to one
another. Canada and Mexico trade largely with the USA. At the same time,
Mexico trades extensively with the Central American countries, the Central
American countries trade with the Caribbean and South American
countries, and the South American countries trade among themselves as
well as with other American countries.
•
In 1994, the Free Trade Area of the Americas (FTAA) was
introduced at the Summit of the Americas.
•
The FTAA was agreed to by 34 heads of state and aims to
progressively eliminate barriers to trade and investment
throughout the entire Western Hemisphere by 2005.
•
If the FTAA can be carried out, it would create a trading area
twice the size of the European Union in both population and
potential GDP.
•
The negotiations stalled at the 2005 Summit of the Americas in
Argentina.
•
It would be a big advantage for the countries of the hemisphere
to get capital flowing north and south as well as east and west.
Offshore Banking and Capital Havens
Capital continues to flow into the Caribbean region from a variety of
nations. Desirable residential and world-class recreational properties,
coupled with special tax and banking advantages have been of particular
interest to the international real estate community for many years.
Tax considerations are noteworthy from a regional investment perspective.
•
The Caribbean hosts a number of offshore banking centers
(OBCs)
•
OBCs are financial institutions licensed to do business only
outside of the jurisdiction in which they are chartered
•
An OBC bank is not located in the country where the depositor
lives
•
OBCs attract foreign capital
•
There are four major offshore banking centers in the Americas
o Bahamas
o Cayman Islands
Chapter 3-6
CIPS The Americas
o Netherlands Antilles
o Panama
•
OBCs take deposits and make loans in currencies other than
those of the host country
•
Host country government regulations controlling the banks are
few, if any
•
OBCs have lower reserve requirements and more liberal interest
rate limitations
•
Considered tax havens because the host government levies low
taxes on various categories of income and property
•
A tax haven is based on the concept that a foreign firm can avoid
a number of taxes by establishing a subsidiary in a nation with
an OBC and shift a portion of income into it
Example
A USA firm exports goods to a European affiliate though a sales
subsidiary in the Cayman Islands. The parent company in the USA
undercharges the subsidiary, reducing its tax liability in the USA,
while the subsidiary overcharges the European affiliate, thus shifting
the income from Europe to the tax haven. The taxable income in the
USA and in the European country decreases, as it increases in the
tax haven. Meanwhile, the goods, the money, nor the
documentation ever actually go to the haven.
•
•
•
•
USA firm:
Exports to affiliate
Through sales subsidiary
in Caymans
Undercharges subsidiary
Reduces USA tax liability
•
•
•
•
Exports
•
•
European affiliate
Pays USA firm through the
subsidiary
Taxable income decreases
Sales Subsidiary in Caymans
Overcharges European affiliate
Shifts income for USA firm from
Europe to tax haven
Taxable income increases
Low or no taxes apply to subsidiary
in tax haven
Previously, it was possible for an offshore investor to establish a
corporation in one of the havens, finance the purchase of foreign real estate
through this corporation and an OBC, and lower its tax exposure in both the
foreign country and at home.
Laws and reforms have now been established to reduce the attractiveness of
the tax havens for investors in foreign real estate. The USA Tax Reform Act
Chapter 3-7
CIPS The Americas
of 1986 limits or eliminates legal means of deferring USA taxes on interest,
dividends and capital gains of subsidiaries until the income is repatriated,
which was formerly an important incentive for mounting operations through
one of the tax havens.
Chapter 3-8
CIPS The Americas
Regional Trends
Latin America
Latin America's ongoing market-oriented reforms are aimed at participating
in the general expansion of world trade to make the region both more
efficient and more competitive. The recent revival of integration schemes
and the concept of a free trade area for the whole Western Hemisphere
promise renewal and growth for the region.
•
Central and South America have begun to work toward:
o outward orientation
o market integration
o privatization
•
As a region, Latin America faces four major challenges:
o achieving adequate and sustained growth
o reducing poverty and income disparities
o conserving natural resources and protecting the environment
o settling foreign debts
•
To achieve growth, the Latin American nations are addressing:
o trade liberalization
o private sector development
o public sector reform
o human resource development
o infrastructure development
•
Policy reforms in Latin America have led to:
o the depreciation of exchange rates
o dismantling of tariff and non-tariff trade barriers
o value-added tax and other revenue sources to replace taxes on
foreign trade
o incentives and other policies to attract foreign investment
Latin American economy remains in urgent need of modernization. This
effort must be driven by the private sector because the public sector is in the
process of privatizing its enterprises. Investment in the private sector is
aimed at getting government contracts, and bureaucratic regulation often
retards entrepreneurial investment. However, with the development of a
new, privatized business environment, local and foreign direct investment
Chapter 3-9
CIPS The Americas
would be expected to flow in to take advantage of the opportunities. To
achieve this, more reforms need to be made. They include:

financial reforms
- encouragement of investments with the highest expected return
- relaxation of exchange controls and other financial policies to
encourage the return of flight capital

labor reforms
- elimination of wage controls
- movement of workers to sectors where they can be the most
productive

regulatory reforms
- elimination of bureaucratic and legal impediments to
entrepreneurship

central bank reforms
- establishment of an independent monetary authority
- elimination of forced subsidizing of government deficits, artificially
low exchange rates, and credit to politically influential groups

administrative reforms
- reduction of government size
- decentralization of government functions

judicial and legal reforms
- establishment of an independent judiciary
- enforceable tax laws
- environmental legislation

education reforms
- emphasis on expanding secondary and vocational education,
extension of education to women
- refocusing of higher education on science and technology
Chapter 3-10
CIPS The Americas
The USA
•
The USA has the strongest economy in the world with a per
capita GDP of $40,100.
o This figure is derived by dividing the GDP by the population
of the country.
•
In the USA’s market-oriented economy, individuals and
companies make most of the decisions.
•
USA firms enjoy more flexibility than their Western European
or Japanese counterparts in terms of expanding, laying off
workers or developing new products.
•
USA firms face higher barriers to enter foreign markets than do
foreign firms entering the USA market.
•
2004 foreign direct investment position in USA real estate was
$1.709 trillion dollars.
o Real estate FDI was $37.9 billion
o Japan, at 14%, has had the highest investment share over
the last 10 years
o Latin American investment is now at 12%.
•
FDI stimulates the USA economy.
o Helps grow USA businesses
o Boosts the stock market
o Lowers interest rates
o Increases home and stock prices
o Boosts consumer confidence
o Stimulates spending
•
FDI impact on USA real estate market.
o NAR estimates the absence of foreign capital would
result in:

Long term interest rates being 6% higher

This rise in interest would decrease existing home
sales

Unit sales and prices would be 20-25% lower
o Commercial real estate performance

Fundamentals for all sectors improved in 2004
Chapter 3-11
CIPS The Americas

Low interest rates beneficial to 50% transaction
increase in 2004 according to Real Capital
Analytics

Commercial property prices roughly 15% higher
than 2 years ago

Highest price increases of nearly 30% occurring
on industrial property transactions

Commercial real estate accounts for
approximately 5% of the annual GDP.
•
USA maintains a negative net international position, which
means foreign owners own more USA assets than USA owners
own foreign assets.
•
Reasons for foreign capital inflow:
o USA borrowing foreign capital to help fund spending
o Foreign investors have strong appetite for USA assets
o Global savings glut
o USA is the safest place to park their money
o Oil-exporting countries have used the 2005 run-up in oil
prices to invest in the USA
•
The USA is near the forefront in technological advancement.
•
The abundance of technology, however, has created a two-tier
labor market in which those workers who lack education and/or
professional skills fail to get pay raises and health insurance.
•
Since 1975, all gains in household income have been distributed
among the top 20% of households in the USA.
•
The USA economy continues to experience increases in output,
lower inflation rates, and a drop in the unemployment level to
5.5% in 2004.
•
Low inflation and low unemployment expected to continue.
•
Long-term problems could occur due to:
o inadequate investment in infrastructure
o rising medical costs of an aging population
o significant trade deficits
o national debt exceeding 65% of GDP
o stagnation of lower economic group family income
Chapter 3-12
CIPS The Americas
Real Estate in the Americas
•
Mexico
o hospitality-related properties
o restructured companies
o manufacturing facilities
o hotel operating companies
•
Brazil
o attractive investment target
o immense privatization effort
o large capital expenditures
o economy expected to continue recovering and growing
•
Chile
o investment opportunities more restricted
o coastline attractive to investors
o vacation homes and/or resort properties
•
Argentina
o opportunities in mid-to high-end single-family housing
•
USA
o still considered safe haven for investments
The Americas offer a large range of opportunity for investment as travel,
trade and communication become easier these opportunities are expected to
continue growing.
Economic Indicators
Trends are often useful in forecasting changes in an investment climate.
The most up-to-date information is usually available through the real estate
and business professionals in your personal network, particularly those who
are already familiar with a market you are considering. Excellent
information is also available in specialized reports and over the internet.
Chapter 3-13
CIPS The Americas
National Statistics
The following tables make broad comparisons of economies in the
Americas for 2002 and the more recent 2004 or 2005 data. These numbers
are always changing and only provide a general overview of the entire
market.
Selected Indicators
[2002 figures on top and 2004/2005 figures on bottom in bold]
Population GDP (in US$ GDP/capita
(in millions) billions)
(US$)
% GDP
Growth
Inflation
(%)
Unemployment (%)
Argentina
37.8
39.5
453
483.5
12,000
12,400
-4.6
8.3
4
6.1
25
14.8
Bahamas
0.3
0.3
5
5.29
16,800
17,700
3.5
3.0
1.5
1.2
6.9
10.2
Bolivia
8.4
8.8
21.4
22.3
2,600
2,600
0
3.7
2
4.9
7.6
9.2
Brazil
176
186
1,340
1,492
7,400
8,100
1.9
5.1
7.7
7.6
6.4
11.5
Canada
31.9
32.8
875
1,023
27,700
31,500
1.9
2.4
2.8
1.9
7.2
7.0
Chile
15.5
15.9
153
169.1
10,000
10,700
3.1
5.8
3.5
2.4
10.1
8.5
Colombia
41
42.9
255
281.1
6,300
6,600
1.5
3.6
7.6
5.9
17
13.6
Costa Rica
3.8
4.01
31.9
37.9
8,500
9,600
0.3
3.9
12.1
11.5
5.2
6.6
Ecuador
13.4
13.3
39.6
49.5
3,000
3,700
4.3
5.8
22
2
14
11.1
Guatemala
13.3
14.6
48.3
59.4
3,700
4,200
2.5
2.6
7.6
7.2
7.5
7.5
Mexico
103.4
106.2
920
1,006
9,000
9,600
-0.3
4.1
6.5
5.4
3
3.2
Paraguay
5.9
6.3
26.2
29.9
4,600
4,800
0
2.8
7.2
5.1
17.8
15.1
Peru
28
27.9
132
155.3
4,800
5,600
-0.3
4.5
1.5
3.8
9
9.6
USA
280
295.7
10,082
11,667,515
36,300
40,100
0.3
4.4
2.8
2.5
5
5.5
Venezuela
24.3
25.3
146.2
145.2
6,100
5,800
2.7
16.8
12.3
22.4
14.1
17.1
Sources: CIA World Factbook 2002 and 2005
Chapter 3-14
CIPS The Americas
Indicator Comparisons
Population
1. USA
2. Brazil
3. Mexico
4. Colombia
GDP
GDP Per Capita
1. USA
2. Brazil
3. Mexico
4. Canada
GDP Growth
1. Ecuador
2. Bahamas
3. Chile
4. Venezuela
1. USA
2. Canada
3. Bahamas
4. Chile
Inflation
1. Ecuador
2. Venezuela
3. Costa Rica
4. Brazil
Unemployment
1. Argentina
2. Paraguay
3. Colombia
4. Venezuela
Population
•
Fundamental challenge to the economies of the Americas
•
Rapidly growing population strains an economy
•
Economy may not provide enough jobs
•
Decline in GDP
•
Decrease in living standards
•
Increased population below the poverty line
The chart below shows the percentage of population below the poverty line
in select countries of the Americas.
Population Below the Poverty Line
Argentina
44.3% Bahamas
NA
Canada
15.9% Chile
Ecuador
45%
Peru
54%
Bolivia
64%
Brazil
22%
20.6% Colombia
55%
Costa
Rica
18%
Guatemala
75%
Mexico
40%
Paraguay
36%
USA
12%
Venezuela
47%
Chapter 3-15
CIPS The Americas
Productivity Trends: GDP, Balance of Trade, and
Unemployment
•
Productivity trends provide a good picture of a national economy.
o The USA currently maintains the largest GDP in the
Americas, coupled with a fairly low unemployment rate,
which makes it the leader in productivity in the Americas.
o Brazil currently is the second-largest economy, making it the
economic giant of Latin America.
o Canada has exchanged places with Mexico making them the
3rd and 4th largest economies respectively.
o These four economies now exceed one trillion dollars each
per year.
•
In terms of per capita productivity, the USA and Canada are the
most productive countries in the region.
o The Bahamas, with tourism and financial service industries,
is third.
o Argentina replaced Chile in 4th place.
•
Unemployment in the Americas appears to be a manageable issue.
•
In the modern global economy, per capita output of less than $5,000
indicates there are still many people who are engaged in subsistence
agriculture.
o Latin American countries in this category include:
Chapter 3-16

Bolivia

Ecuador

Guatemala

Paraguay
CIPS The Americas
Key Points
•
Renewed efforts at economic integration throughout the region
promise to enhance growth and increase the attraction of foreign
direct investment in real estate.
•
The flow of capital in the Americas tends to be restricted to
neighboring sub regions. It would be more beneficial if capital
flowed freely throughout the region.
•
Offshore banking and tax havens continue to play a role in
international real estate business.
•
Efforts are underway throughout the region to liberalize trade,
privatize business, achieve growth, and conserve the environment
while encouraging foreign investment.
•
National trends and statistics can provide a good overview of the
health of an economy and, in turn, preview the opportunity for
investment.
Discussion Question
How do you think the movement toward intra-hemispheric economic
cooperation in the Americas to affect interest in real estate in the region?
Chapter 3-17
CIPS The Americas
Chapter 3-18
CIPS The Americas
Chapter 4
How to Look at a Country
Chapter 4
CIPS The Americas
Chapter 4
CIPS The Americas
Chapter 4: How to Look at a Country
Overview
In Chapter 4 we will discuss the interpretation of important market data and
trends within a given market. This process allows real estate professionals
to assess the potential for real estate investment and brokerage activity
within a specific market area.
Objectives
•
Identify characteristics of a country that shape its potential for
investment.
o Social
o Economic
o Political
•
Analyze a sample country.
Application
Real estate investment trends and brokerage activity, particularly in the
commercial arena, follow the ups and downs of an economy as a whole.
To assess the potential of a real estate market, professionals must
understand the country's economy and culture.
Chapter 4-1
CIPS The Americas
International Market Knowledge
Real estate markets vary widely in different areas of the same city, state or
country. Successful real estate professionals never assume that what is true
of their own market is true of markets abroad. They are careful not assume
that citizens of other countries consider real estate in the same ways.
Just as domestic real estate professionals must know their markets,
international real estate professionals must know the markets within their
chosen specialty. For example, in your hometown you know what is
happening in the real estate market and you understand the effects of related
events, such as:
•
construction of a new factory
•
government funding for home ownership programs
•
impacts of development decisions made many years ago
•
characteristics that make your market unique
Your knowledge of what is going on in your marketplace enables you to
add value to the services and recommendations you provide for your clients.
In an international transaction, the more you understand the marketplace of
your investor, the more value you can provide.
A real estate professional in Florida (USA) should understand the market in
Brazil, even if a Brazilian buyer simply wants a vacation condo in Florida.
Why?
Chapter 4-2
•
This knowledge will increase your chances of getting the listing
or buyer.
•
International transactions often lead to long-term business
relationships.
•
International transactions can be an exciting specialty, with
opportunities for personal growth through travel and exposure to
different cultures.
CIPS The Americas
Comprehensive knowledge of a country is useful to:
•
Advise outbound investors
o
•
Advise outbound investors
o
•
The professional must identify market opportunities for businesses
operating abroad in terms of market trends, site selection,
infrastructures, facilities costs, regulatory channels and cultural
barriers.
Work with inbound foreign investors and users
o
•
The professional must guide and advise capital investors about
local economic conditions, practices, norms, opportunities,
returns, market projections, alternative levels of risk and potential
pitfalls.
The professional must meet the needs and requirements of
foreign investors in such a way that cultural differences do not
impede a satisfactory relationship.
Network effectively
o
The real estate professional may need to seek information, advice
or assistance from professionals in other countries. The more he
or she knows about a market, the better the evaluation and
selection of these people will be.
To have a good understanding of a market, a real estate professional should
also be aware of:
•
sources of capital
•
government structure and attitudes
•
the economy
•
market landmarks
•
local culture
Chapter 4-3
CIPS The Americas
The Country Assessment Model
It is impossible to know all there is to know about a country. However, a
real estate professional should have a working familiarity with certain
overall aspects of a market. These characteristics are summarized below in
the Country Assessment Model. This model provides information on how to
actually interpret the market data.
Applying this model to any market-specific data you collect, such as the
country profiles provided in Chapter 6, should help determine how
attractive a given area is as a target for real estate investment.
It is up to the real estate professional to decide how much detail to seek and
how much time to spend pursuing it. Following are the factors for
consideration and what they may mean in terms of a particular market. The
most comprehensive country data is available by accessing the CIA World
Factbook, through your internet server of choice. Other sites including
www.Realtor.org/international and www.WorldProperties.com provide
more in depth information regarding real estate data.
Geography
Factors to consider
• Accessibility to other markets and countries
•
Intra market accessibility
•
Unique features
•
Natural resource market potential; mining, agriculture, forestry,
fisheries
•
Potential for intensified use of natural resources to enhance the
existing economy; dams, irrigation canals and building materials.
What the data can mean
• The area can provide a relative measure of potential market size
when compared to other known markets.
Chapter 4-4
•
The capital city is typically the major market in a country, and is
usually the one for which real estate data is reported.
•
Import/export access and costs reveal a great deal about the
accessibility of a market, as can the existence of convenient
trading partners.
•
Ease of infrastructure development provides a good look at intra
market accessibility.
CIPS The Americas
•
Ease and degree of social and economic interaction provides
some insight into market accessibility from internal and external
markets.
•
Topographical influences on development can reveal which are
the market’s national resources.
Favorable characteristics
• Easily accessible from other markets and countries
•
Unique natural resources
People
Factors to consider
• history
•
demographic aspects
•
population growth rate
•
consumption-to-savings ratio
•
per capita income trend
•
education levels
• Absolute size corresponds directly to total demand for real
estate, particularly for residential properties.
•
Population growth rates determine increases or decreases in
housing and retail demand.
•
Rates of population growth can also help determine good vs. bad
growth in terms of the overall economy.
o 1-3% is healthy
o more than 3% is considered too rapid to sustain for any
length of time
•
Population density can influence the makeup of an economy and
the types of real estate properties that service the economy.
o higher density means higher prices for real estate.
Chapter 4-5
CIPS The Americas
• stable rate of population growth
•
reasonable consumption-to-savings ratio
•
increasing per capita income
•
high literacy and education rates
Government
Factors to consider
• type and age of present form of government
•
general economic philosophy and policy
•
influence of business on policy and law
•
trade restrictions
•
capital inflow/outflow restrictions
•
wage and price controls
•
asset ownership by foreigners
•
monetary policy
•
fiscal policy/budget ratio to GDP
•
tax laws and rates for citizens and foreigners
•
trade agreements and alliances
• The varying powers, attitudes, structures and relative stability of
a government can determine the success or failure of the
economy.
Chapter 4-6
•
Democracy, open markets, structural stability, tax incentives and
minimalist regulation are positive characteristics.
•
Membership in agreements and alliances can indicate a
country’s approach to international trade and foreign investment.
CIPS The Americas
•
laws that preserve free markets through minimal restriction of
foreign-owned assets
•
minimal legal restrictions on ownership, capital flow, wages and
prices
•
anti-inflationary monetary policies
•
conservative fiscal policies and balanced budgets
•
reasonable tax laws; favorable rates on income and capital gains,
imports/exports and corporations for domestic and foreign
parties
•
positive promotion of trade agreements and alliances
•
history of stability
Economy
Factors to consider
• GDP trends
•
trade balance and current account trends
•
inflation and unemployment rate trends
•
capacity of business infrastructure, communication systems,
corporate structures, distribution systems
•
survey of base industries, level of development, potential of
untapped industries
•
base product competitive standing
•
availability, costs and mobility of labor and management supply
•
historical periods of depressions or hyper-inflation
•
currency exchange rate trends
•
structure and regulation of banking
•
personal savings rate
•
status of equity and money exchange markets
Chapter 4-7
CIPS The Americas
• Inflation rates measure the loss or gain of consumer purchasing
power in a market.
o Higher inflation rates increase costs of products and services
o Wages must keep pace with inflationary trends or purchasing
power and standard of living declines
•
Size of the labor force can be attractive to foreign companies
needing to hire local labor.
•
Unemployment is an indication of an economy's actual vs. its
potential output.
•
Exchange rates indicate a country's level of economic
performance as compared to that of other countries in terms of
balance of trade, inflation, per capita and GDP
•
GDP is a measure of a country’s economic magnitude.
o GDP per capita measures the economic output per unit of
population
o GDP growth measures the trends in overall output.
•
Resources, products and industries of an economy convey its
level of advancement.
o More advanced economies specialize in manufacturing,
technology, financial services and communications.
o Less advanced economies are absorbed by agriculture,
export of natural resources, and labor-intensive industries.
•
Exports reveal the economy's strengths and base industries.
•
Imports reveal the country's shortcomings, needs and wants.
•
Trading partners reveal the country's economic alliances and
dependencies.
•
Trade balances compare net difference between total imports and
total exports.
o Positive trade balance means the production of exports has
outpaced the cost of imports.
o Negative trade balance indicates consumption has exceeded
production.
Chapter 4-8
CIPS The Americas
• internationally traded currency
•
stable banking system
•
controls on liquidity and/or the money supply
•
improving exchange rates
•
growing GDP
•
positive trade balance
•
history of stable inflation rates
•
low unemployment
•
stable, competitive base products and services
•
availability of adequate labor and management
•
technological advancement
•
sophisticated, mature business infrastructure, communication
systems, corporate structures and distribution systems
Infrastructure
Factors to consider
• status of transportation
•
power, water and sewer systems
•
communications, telephones, mail, internet
•
technological sophistication
•
status of residential neighborhoods, proximity to commercial,
medical, religious and educational facilities
•
status of educational institutions and medical facilities
• Infrastructure is essential in sustaining economic growth.
Without adequate infrastructure systems, a country cannot
expand or prosper.
• water, power and sewer systems operating below capacity
Chapter 4-9
CIPS The Americas
Real Estate
Factors to consider
Property issues
• land use regulations
•
sophistication of real estate business
•
status of support: title, finance, property management,
construction, insurance, engineering, architectural, appraisal,
brokerage and professional organizations
•
ownership laws
•
landlord-tenant relations and leasing practices
•
availability of mortgage financing
•
disclosure requirements
Trends
• investment return
•
types of properties available
•
absorption and vacancy rates
•
capitalization rates
• Acquisition costs vary from country to country.
Chapter 4-10
•
Notary fees, commissions, stamp duties, land registration fees,
transfer taxes, acquisition and value-added taxes determine the
cost of acquiring a property in a particular market.
•
The commission rate indicates how much cooperating brokers
expect to earn from a transaction.
•
Rental rates provide a picture of a market's occupancy costs by
type of property.
•
Patterns in leasing rates indicate local supply and demand
conditions.
•
Size of the real estate market can determine the volume of
transactions, the sophistication of the market, and the potential
commission/fee income to expect in the market.
•
Vacancy rates quantify the difference between the market's
supply and corresponding demand for properties.
CIPS The Americas
o Increasing rents and decreasing vacancy rates reveal a
landlord's market, one of undersupply.
•
Lease terms, like acquisition costs, provide general local data for
the purposes of familiarization and comparison. By quantifying
other occupancy costs, this information also enables reasonable
cost comparisons with other markets.
•
Yields reveal a general relationship between property sale prices
and net income, assuming a property is fully rented. As demand
for properties goes up, yields begin to fall.
• intelligent land use regulations
•
adequate number of support organizations: title, finance,
property management, construction, insurance, engineering,
architectural, appraisal, and brokerage organizations
•
laws favoring private, unrestricted ownership practices
•
reasonable landlord-tenant relations
•
history of attractive investment returns
•
availability of high-quality properties
•
positive absorption rate
•
competitive capitalization rates
•
high occupancy rates
Cultural Issues
Factors to consider
• effect of religious and cultural norms on trade with other
countries
•
cultural attitudes toward business, industry, work, competition,
world events, and other nationalities and cultures
• A country's ethnicities, languages, religions, arts and history
create a country's unique identity. Understanding a nation's
identity facilitates working with its people.
Chapter 4-11
CIPS The Americas
• favorable cultural attitudes toward business, industry and trade
Chapter 4-12
•
sophisticated views of world events, other nationalities and
cultures
•
religious and cultural norms that do not preclude open trade with
other countries
•
adequate educational institutions and medical facilities
CIPS The Americas
Sample Analysis of a Country Profile:
Brazil
The following analysis applies the country assessment model to selected
data about Brazil. Helpful information can be accessed through various
outlets including the CIPS website at www.Realtor.org/international,
www.WorldProperties.com, the CIA World Factbook and the country
profiles database at Denver University, burns.dcb.du.edu. For the purposes
of this exercise, the sample analysis uses information provided by all of
these resources.
It is particularly important to use information as up-to-date as possible. If
you have detailed knowledge about a particular country and would like to
assist with the country profiles, please contact NAR at
[email protected].
Country-specific information can also be accessed through the U.S. State
Department, which receives its information from country governments.
These profiles can be accessed at www.gov/www/background_notes.
This example illustrates what an international real estate professional can
learn from various information sources about a targeted market or country.
Keep in mind that you can expand or modify the model and its
interpretations to suit your specific objectives.
Chapter 4-13
CIPS The Americas
Assessment Model: Brazil
Geography
1. 2000/1 data is
in parenthesis.
Location
Eastern South America
bordering the Atlantic Ocean
Area
Total area 8,511,965 sq. km.
Land area: 8,4456,510 sq..km.
Slightly smaller than USA.
2. 2004/5 data in
bold print and
underlined.
Total: 14,691 km.
Boundaries
Border countries: Argentina
1,224 km; Bolivia 3,400 km;
Colombia 1,643 km; French
Guinea 673 km; Guyana 1,119
km; Paraguay 1,290 km; Peru
1,560 km; Surinam 597 km;
Uruguay 985 km; Venezuela
2,200 km.
7,491 km.
Coastine
Climate
Mostly tropical, temperate in
south. Brazil's climate varies little
within the Amazon Basin, with
annual average temperatures of
about 79° F (26° C). Most locations
in the basin receive between 80 and
120 inches (2,000 and 3,000 mm)
of rainfall annually, with some
locations averaging as much as 200
inches (5,000 mm). Most of the rest
of the country has adequate
precipitation with the exception of
the semiarid São Francisco Basin in
the northeast, which averages only
25 inches (600 mm) annually (and
often receives less than 10 inches
[250 mm]). The southeastern
coastal plain has a hot, moist
climate similar to that of the
Amazon Basin.
Chapter 4-14
CIPS The Americas
Natural
Resources
Bauxite, gold, iron ore,
manganese, nickel, phosphates,
platinum, tin, uranium,
petroleum, hydropower, timber
Land Use
Irrigated land: (28,000), 26,560
sq.km
Arable land: (5.00%), 6.9%
Other land use: 92.5%
Environmental
Issues
Deforestation in Amazon
Basin. Air and water pollution
in Tio de Janeiro, Sao Paulo,
and other large cites.
Land and wetland degradation
Water pollution
Severe oil spills
[President Cardoso in September
1999 signed into force an
environmental crime bill which
for the first time defines pollution
and deforestation as crimes
punishable by stiff fines and jail
sentences]
Geographic
Notes
Largest country in South
America; shares common
boundaries with every South
American country except Chile
and Ecuador.
Population: (156) 186 million
People
History
Most populous country in Latin
America and ranks 6th in the
world.
Most people live in the southcentral area.
1. 2000/1 data is in
parenthesis.
2. 2004/5 data in
bold print and
underlined
Rapid urban growth. In 1991,
urban sector = 75% of total
population.
Growth has aided economic
development but created
serious social and political
problems.
Major
Portuguese: began colonizing
in the 16th century.
Chapter 4-15
CIPS The Americas
Population
Groups
Indigenous Indians of Tupi and
Guarani language stock are
now less than 1% of
population.
Africans brought to Brazil as
slaves.
European and Asian immigrant
groups have settled in Brazil
since the mid-19th century.
Immigration
Over 5,000,000 Europeans
from 1875-1960.
Italy, Germany, Spain, Japan,
Poland, Middle East.
The largest Japanese
community outside Japan is in
Sao Paulo.
Language
Research
Only Portuguese-speaking
nation in the Americas.
Some recent archeological
research suggests that Brazil
may have been inhabited for
30,000 to 40,000 years but
most archeologists agree on
dates between 10,000 and
20,000 years.
(176,029,560), 186,112,794
Demographics
Population
parenthesis.
Population Growth: (0.87%),
1.06%
2. 2004/5 data in
bold print and
underlined
Life Expectancy Total
Population: (63 years), 71.69
Ethnic
Divisions
White: includes Portuguese,
German, Italian, Spanish,
Polish (55%), 53.7%
Mixes white and black (38%),
38.3%
Black: (6%), 6.2%
Others: (1%), .9%
Roman Catholic (80%), 73.6%
Religions
Chapter 4-16
CIPS The Americas
Protestant 15.4%
Languages
Portuguese, Spanish, English,
French
parenthesis.
(83.30%), 86.4%
2. 2004/5 data in bold
print and underlined
Literacy
(79), 89 million
Labor Force
Services (53%), 66%
Agriculture (23%), 20%
Industry (24%), 14%
(6.4%), 11.5%
Unemployment
Rate
22%
Population
Below Poverty
Line
$8,100
Per Capita
GDP
Interpretation: Geography, History and Demographics
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
Chapter 4-17
CIPS The Americas
Federative Republic
Government
Type
Legal System
Branches of Govt.
Elections
Economy Overview
Capital: Brasilia
Independence Day:
September 7, 1822
Constitution: 5 October
1988
Based on Roman codes.
Has not accepted
compulsory ICJ
jurisdiction.
Executive: Chief of State
and President are same.
Vice-President, Cabinet
(appointed by President).
President and Vice
President elected on the
same ticket by popular
vote for four year terms.
See below
Overview: Possessing large and well-developed agricultural, mining,
manufacturing, and service sectors, Brazil's economy outweighs that of all
other South American countries and is expanding its presence in world
markets. From 2001-03 real wages fell and Brazil's economy grew, on
average, only 2.2% per year, as the country absorbed a series of domestic
and international economic shocks. That Brazil absorbed these shocks
without financial collapse is a tribute to the resiliency of the Brazilian
economy and the economic program put in place by former President
Cardoso and strengthened by President Lula da Silva. In 2004, Brazil
enjoyed more robust growth that yielded increases in employment and real
wages. The three pillars of the economic program are a floating exchange
rate, an inflation-targeting regime, and tight fiscal policy, all reinforced by a
series of IMF programs. The currency depreciated sharply in 2001 and
2002, which contributed to a dramatic current account adjustment: in 2003
and 2004, Brazil ran record trade surpluses and recorded its first current
account surpluses since 1992. Productivity gains - particularly in agriculture
- also contributed to the surge in exports, and Brazil in 2004 surpassed the
previous year's record export level and again posted a current account
surplus. While economic management has been good, there remain
important economic vulnerabilities. The most significant are debt-related:
the government's largely domestic debt increased steadily from 1994 to
2003 - straining government finances - before falling as a percentage of
GDP in 2004, while Brazil's foreign debt (a mix of private and public debt)
is large in relation to Brazil's small (but growing) export base. Another
challenge is maintaining economic growth over a period of time to generate
employment and make the government debt burden more manageable.
Chapter 4-18
CIPS The Americas
Economy
National Product
GDP : (1.34 trillion),
1.492 trillion
(1.9%), 5.1%
Real Growth Rate
($7,400), $8,100
parenthesis.
print and underlined
Per Capita GDP
(7.7%), 7.6%
Inflation Rate
(6.4%), 11.5%
Unemployment Rate
Exports
($57.8 billion),
$95 billion
($55.8), $61 billion
Imports
Export Commodities
Export Partners
Import Commodities
Import Partners
External Debt
Iron ore, soybeans,
footwear, coffee, autos,
transportation equipment
US (24.4%) 20.8%,
Argentina (11.2%)
7.5%,
Germany (8.7%) 8.1%,
Netherlands 6.1%,
China 5.6%
Machinery, electrical
and transport
equipment, chemical
products, oil,
electricity.
US(23%) 18.3%,
Argentina (12%) 8.9%,
Germany (10%) 8.1%,
Japan (5%) 4.6%,
China 5.9%,
Nigeria 5.6%
($251) billion,
$219.8 billion
(1%), 6%
Industrial Production
Growth Rate
Industries
Textiles, shoes,
chemicals, cement,
Chapter 4-19
CIPS The Americas
lumber, iron ore, tin,
steel, aircraft, motor
vehicles and parts,
machinery and equipment
Agriculture
parenthesis.
Infrastructure
Railroads
Coffee, soybeans, wheat,
rice, corn, sugarcane,
cocoa, citrus and beef
Broad gauge: (5,679)
4907 km
1.600-m guage (1,199),
908 km
Narrow gauge: (24,666),
23,915 km electrified
1.000-m gauge: (930),
581 km electrified
Dual gauge: 336 km
1.000-m and 1.600-m
gauges (three rails)
Standard gauge: 194 km
1.440-m gauge
Highways
Paved: (1.98), 1.72
million km
Unpaved: (184,140),
94,871 km
50,000 km.
Inland Waterways
Pipelines
crude oil (2,980), 5,212
km;
petroleum products
(4,762) 4755 km;
natural gas (4,246)
10,739 km
9 Active ports
Ports
(3,365), 4136
Airports
Telephone System
Land lines: (14,426,673)
38,81
Cellular and mobile lines:
46.37
Chapter 4-20
CIPS The Americas
AM: (1,223), 1365
Radio Stations
FM: (0), 296
Shortwave: (151), 161
(112), 138
Television Stations
Brazil has the world’s
fourth largest television
broadcasting system.
14.3 million
Internet Users
Interpretation: Government, Economy and Infrastructure
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
Chapter 4-21
CIPS The Americas
Real Estate
Property Issues
Acquisition
Purchase and sale
regulated by 2 laws: The
Real Estate Agent Law
and the Consumer
Defense Code.
Brazilian legislation is
strong on consumer
rights.
Commissions paid by
seller or landlord at
closing.
Commission rates
decoded by Real Estate
Agents Regional
Councils.
Each state has a transfer
tax of .5% to 4.0% levied
on the purchaser.
Property Ownership
No important restrictions
for foreign real estate
purchasers.
Property registration done
by private notary publics.
All registries under the
control of a State Judge
Registry system very
developed and safe.
All information is public.
Auctions popular.
Property Marketing
MLSs are new with many
in development stages.
No national system.
Types of Listings
Open and Exclusive
listings are available.
.
Chapter 4-22
CIPS The Americas
Trade Association
License
Requirements
Name: Sindicato de Emprasas de
Compras, Venda, Locacao e
Administracao de Inoveis
Residenciais e Comerciais de San
Paulo (SECOVI-SP) Address: Av.
Brigadeiro Luiz Antonio, 2344 - 9th
Andar. CEP 01402-900 Sao PauloSP. Brazil. Phone: (5511) 285-0122
Fax: (5511) 284-3188 E-mail:
[email protected] Internet:
http://www.secovi.sp.com.br
Founded in 1946, SECOVI is a nongovernmental association of real
estate companies, not individual real
estate professionals and is the most
influential real estate trade
association in Brazil. SECOVI has a
Bilateral Cooperation agreement
with the National Association of
Realtors.
Enroll with the Real Estate Agents
Regional Councils.
Successfully complete the Real
Estate Transactions Technician High
School course.
No further education or license
renewal requirements.
Annual payment to Regional
Council required.
Rights and
Interests in Land
including Taxes
Rural taxes established by the
Federation.
Urban taxes set by municipalities.
Eminent domain, escheat and police
powers determined by municipalities
under appropriate Constitutional
law.
Severalty
Forms of
Ownership
Property held by married couples
considered community property
Partnerships must be registered with
Ministry of Industry, Commerce and
Tourism
Limited liability partnerships
Chapter 4-23
CIPS The Americas
Transfer of Title
Deeds signed by both parties, notary
and two witnesses. Must be
recorded or registered in public
registry to be valid.
Recordation also protects against
claims of third parties.
Upon death, property is divided
equally among married couples with
transfer requirements remaining the
same.
Contracts
Require two willing and able
participants.
Third party may be involved to
determine equitable price.
Installment sales available.
Prepared by an individual registered
and notarized with power of attorney
distinction.
Typically 30 years.
Mortgages
Validity based being recorded on
books of the notary who is charged
with seeing that all taxes have been
paid.
Must be inscribed in registry of
place where mortgage property is
located.
New mortgages may replace old.
Property can be foreclosed.
Lenders often revert to higher rates
of interest and penalty fees rather
than foreclosure.
Lenders must attempt to sell
property in default and apply
proceeds to remaining mortgage
amount.
Mortgages from government banks
include chattel, commercial, rural
credit and industrial credit loans.
Chapter 4-24
CIPS The Americas
Public Zoning,
Subdivision
Regulations, Private
Covenants and
Private Deed
Restrictions
Determined by
municipalities established
under Federal
constitution law.
Chapter 4-25
CIPS The Americas
Cultural Issues
Personal
Appearance
Wear European fashions
especially Italian and
French.
Very fashion conscious
Shoes are well kept and
polished.
Manicures and pedicures
are popular
Rural regions show more
traditional clothing.
Handshakes common
Greetings
Good friends often
embrace.
Women kiss each other
on alternating cheeks
Expressions
Tudo bem? (Is everything
fine?)
Como vai? (How are
you?)
Oi (Hi)
Tcháu (Good-bye)
Até logo (See you soon)
Gestures
USA sign of OK with
thumb and index finger
forming a circle is an
offensive gesture.
Thumbs-up shows
approval.
To beckon, all fingers of
the hand wave with the
palm facing down.
Whistling at someone is
considered rude.
Using a toothpick in
public is rude unless it is
shielded from view with
the other hand.
Brazilians enjoy visiting.
Visiting
Tropical climate allows
for much time outdoors.
Love to chat late into the
Chapter 4-26
CIPS The Americas
evening.
Guests usually arrive
several minutes late.
Candy or wine are nice
hostess gifts.
One is expected to stay at
least two hours.
Avoid controversial
subjects like politics and
religion.
Rude to ask personal
questions about age and
income.
Eating
Brazilians eat in the
continental style.
They refrain from
touching food while
eating.
Mouth is wiped each time
before drinking.
After dinner conversation
includes a cup of strong
cafezinho (black coffee).
In a restaurant call waiter
by holding up the index
finger or softly saying
garçon.
Check is requested with A
conta, por favor.
Tip usually included in
bill. If not, 10-15% is
customary.
Chapter 4-27
CIPS The Americas
Real Estate Property and Cultural Issues Interpretation
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Chapter 4-28
CIPS The Americas
Working With an Inbound Residential
Investor
A banker with whom you have worked previously, refers a foreign client to
you. The client is from:
Group A:
Quebec, Canada
Group B:
Caracas, Venezuela
Group C:
Sao Paolo, Brazil
Group D:
Santiago, Chile
The client wishes to purchase a residence in the USA and is willing to
consider your market. The client’s salary, financial resources and price
range for a home are not known.
Instructions
1. Using the information in chapters 4 and 5, prepare a five-minute
presentation that would be appropriate for a meeting with the client.
Keep in mind that the client is considering you as a potential agent and
is interested in the USA and your market to find a home, but there may
also be other client objectives for investing in your market. Topics of
the presentation may include:
•
significant cultural or social issues that should be anticipated
•
possible client investment objectives and a plan to learn this
information
•
attributes of the selected market that apply to the client
•
the cost, in both currencies, of typical single-family homes in
the market
•
information about whether the currency trend is favorable at this
time for the client to purchase in the USA
•
how much of the purchasing process and legal aspects of a USA
transaction might be unfamiliar to the client
•
the most important preparations that must be made to get the
client’s business
2. As a group, select a local market to represent. You might want to
consider selecting a market that is the most familiar to the group as a
whole.
3. Select a spokesperson(s) to give your presentation, or use role play. It is
important that all members of the group be prepared to answer
Chapter 4-29
CIPS The Americas
questions. Remember, you are teaching the class about working with a
client from a foreign country, so try to be thorough and accurate
4. You have 25 minutes to prepare and may use the following worksheet to
organize your presentation.
Chapter 4-30
CIPS The Americas
Worksheet
Cultural and social dimensions:
Client qualification:
Market features and benefits:
Cost of residence (both currencies):
Currency trend recommendations:
Potential client educational needs for purchase process:
Key elements for getting client’s business:
Other considerations:
Chapter 4-31
CIPS The Americas
Working With an Outbound Commercial
Investor
Scenario
The president of a USA manufacturing business has informed you that his
company wants to establish operations in the Central, South American or
Caribbean regions. He has asked you to conduct market assessments for
these areas, and would like to know your recommendations.
Instructions
1. As a group, select a market and industry for the hypothetical client.
2. Using information from this course, prepare a five to ten minute
presentation that covers the following:
•
reasons why the country is the best choice
•
the cost to buy or lease a 10,000 square foot office/warehouse
facility
•
how to find a site
•
available financial resources
•
acquisition process
•
forms of ownership and taxation
•
political environment
•
government attitude and regulations regarding foreign
investment in real estate
•
infrastructure
•
availability and costs of labor
•
quality of life
•
social and cultural issues
3. Select a spokesperson(s) to give your presentation, or use role play. It is
important that all members of the group be prepared to answer
questions. Remember that you are teaching the class about working
with a client from a foreign country, so try to be thorough and accurate
4. You have 25 minutes to prepare and may use the following worksheet to
organize
Chapter 4-32
CIPS The Americas
Worksheet
Location:
Evaluation of targets' ability to meet client's concerns:
Government/taxation/ownership:
Acquisition costs/other costs/financing:
Labor availability/costs:
Infrastructure/quality of life issues:
Other considerations:
Chapter 4-33
CIPS The Americas
Key Point Review
•
It is important to know as much as possible about a country to
understand its potential for real estate investment and provide
meaningful information for potential investors.
•
The Country Assessment Model is a valuable tool for evaluating
information on markets where you conduct international
business.
Discussion Questions
1. What economic trends are present in a country whose currency
exchange rate falls against that of its largest importer?
2. How would you use the country assessment model to assist you in a
transaction in which a foreign national is buying in your home market?
Chapter 4-34
CIPS The Americas
Chapter 5
Working in the America’s
Mexico
Chapter 5
CIPS The Americas
Chapter 5
CIPS The Americas
Chapter 5: Working in the Americas Mexico
Overview
This chapter presents in more detail some of the cultural, business and real
estate insights a professional needs to work with Mexican clients. It is
designed to serve as an illustration of the kind of information one should
uncover and develop when working with a client from a foreign country.
Objectives
•
Assess real estate markets for activity and opportunities.
•
Integrate country-specific cultural and business knowledge.
•
Incorporate crucial aspects of cultivating relationships.
•
Review key elements of a transaction.
Application
To conduct an international real estate practice with foreign clients, one
must have a general understanding of the market and of specific cultural
and business practices in a country. An examination of Mexico, a leading
economic power and active international real estate participant, provides
insight into doing business in the Americas.
Chapter 5-1
CIPS The Americas
Real Estate Opportunities
The “State of Mexico’s Housing 2004,” published by the Joint Center for
Housing Studies of Harvard University, provides us with these facts:
•
Mexico’s housing stock consists of approximately 24 million units
•
Estimated value exceeds 1.1 trillion pesos, about 110 billion USD.
•
87% of housing units have no mortgage
•
Significant store of untapped home equity
o potential land ownership issues
•
Vast majority of units in the lowest price ranges
•
Approximately 300,000 new units per year are self-built
•
Approximately 13% of households rent
•
Financing opportunities are limited, down payments are high
Foreign investment in Mexican real estate has continued to increase over
the years. Three primary reasons are:
n Improvement in the Mexican economy.
o Mexico's inflation rate is at manageable levels
o Peso value remains relatively constant
o Economy has experienced GDP growth, a rise in the stock market
and privatization
o
Liberalization of investment and ownership laws.
o Presidential decree of 1990 makes it easier for foreigners to own
and use Mexican real estate
o Foreign Investment Law of 1993 allows foreign nationals to own
agricultural land in Mexico
p
Chapter 5-2
The North American Free Trade Agreement (NAFTA).
o
NAFTA harmonizes trade regulations and encourages
foreign investment
o
Establishes businesses in Mexico
o
Increased demand for residential property by foreign owners and
investors
CIPS The Americas
International Brokerage Opportunities
Commercial Properties { XE "Mexican real estate
properties:commercial" }

Mexico welcomes incoming capital

Multiple opportunities for foreign real estate investment

Little or no speculative commercial or industrial development
o Industrial development is undertaken by owner/users who
carry out single projects for specific purposes
o Building sales are very rare. Shopping centers are built,
owned and occupied by anchor stores.
o Limited mortgage money results in retail and office
development being financed by selling condominium shares

High-rise office markets are concentrated in Mexico City,
Guadalajara and Monterray

Buildings are constructed for a special purpose by the user and
occupied indefinitely
Residential Properties{ XE "Mexican real estate properties:residential" }
•
Residential development is more speculative
•
Self-financing or government-subsidized real estate companies
(inmobiliarias) and subdividers (fraccionadoras) concentrating
on low-cost housing development in urban centers and in
industrial areas (maquiladoras)
•
As population increases, Mexico has a housing shortage
•
Cities with greatest growth in past 10 years include:
o Baja California, Baja California Sur, Ciapas, Quintana
Roo, Tabasco, Tlaxaca and Yucatan
•
These cities have greatest need for new housing
Vacation Ownership Properties{ XE "Mexican real estate
properties:vacation ownership" }
•
Timeshare condos, apartments and resort clubs, have been
growing rapidly due to increasing purchases by Mexican,
Canadian and USA buyers.
Chapter 5-3
CIPS The Americas
•
Revision of the foreign ownership law in 1993, which opened
ownership of Mexican companies to foreign nationals, is
credited for the increase.
•
Higher developer credibility and government regulation of
timeshares have also created more demand.
•
VO properties can be very profitable due to potential year-round
occupancy and high cash flows.
•
The leading areas for these properties are:
o Cancun
o Los Cabos
o Puerta Vallarta
o Ixtapa
o Acapulco
o Manzanillo
o Mazalan
Fideicomisos{ XE "fideicomisimos" }
The Mexican Constitution of 1917 originally stated that only native or
naturalized Mexicans could acquire direct ownership of land in Mexico.
This right was granted to aliens if they bound themselves to be considered
Mexican with respect to property ownership, and relinquished any claims to
protection of ownership by their own governments.
A restricted zone, 100 kilometers wide along all borders and 50 kilometers
wide along all coasts, was established in which no foreigner could acquire
ownership.
Unfortunately for foreign investors, the restricted zones were exactly the
areas that were of greatest interest – the coasts for tourist facilities, and the
borders for industrial facilities.
In 1972, the Mexican government established a bank trust, the fideicomiso,
to encourage foreign investment and allow foreigners to hold rights to real
estate in these zones.
The trusts are set up in which an authorized institution such as a Mexican
bank, would hold title to the restricted real estate in a deed of trust given by
Chapter 5-4
CIPS The Americas
the original Mexican owner of the land. The foreign individual or
corporation would be the beneficiary of the trust and entitled to use, lease,
sell, modify or live on the property for an irrevocable period of 50 years.
Original Mexican
landowner issues
deed of trust to an
authorized institution
1. Mexican Bank or
other authorized
institution holds title to
restricted real estate in
the deed of trust.
2. Beneficiary of the
trust is a foreign
individual or
corporation
3. Beneficiary may
use, lease, sell, modify
or live on the property
for an irrevocable
period of 50 years
As the trust was originally set up, at the end of the 50-year period the
property was sold to a qualified buyer and the proceeds went to the
beneficiary, the foreign non-owner. However, the beneficiary could be the
last in a string of individuals in which the first beneficiary acquired the
rights to develop the property, then sold his or her beneficial interest to
other parties. Regardless, the final beneficiary was almost always a
foreigner, since Mexicans would normally buy direct ownership instead.
A recent regulatory change has liberalized the trust. The trust can be
renewed indefinitely, provided all real estate taxes have been paid.
Agricultural Land{ XE "Mexican real estate properties:agricultural" }
•
In 1993, the Foreign Investment Law was modified to allow foreign
nationals, or companies 100 percent owned by foreign nationals, to
own agricultural land in Mexico.
•
This initiative has begun to alter Mexico's agricultural system which
is dominated by small farms, to a system of larger, more efficient
operations through foreign agricultural firms.
•
Mexican authorities expect foreign interests to first lease the land,
then enter into joint ventures or buy the land outright.
Chapter 5-5
CIPS The Americas
Maquilas (or Maquiladoras) and Other Industrial
Properties { XE "maquiladoras" \t "See Mexican real estate properties" }{ XE
"Mexican real estate properties:maquiladoras" }
•
Maquiladoras are factories owned by foreign companies that
employ Mexican labor to assemble products to be sold in the foreign
market.
•
Most of these sites have been built along the California and Texas
borders, such as Tijuana and Ciudad Juarez
•
Mexican government offers incentives to job-creating industries that
are located away from the congested cities of Mexico City,
Guadalajara and Monterray.
•
It is not easy to lease industrial space to quality tenants in the
established maquiladora cities because there is little vacancy.
•
Support industries tend to follow the maquilas, and create the need
for other types of commercial and industrial space.
•
A second wave of maquiladora operations is developing in the
Yucatan
•
Tijuana has also become an industrial center, particularly in
electronic equipment, textiles and processed foods.
•
The foreign manufacturing sector in Mexico has been growing at a
rate of 18%/year for the last 10 years.
•
Asian firms are particularly attracted to Mexico because of its costeffectiveness in gaining access to USA markets.
•
Future maquiladora activity is anticipated in Mexicali, Matamoros,
Nogales, Nuevo Laredo and Piedras Negras.
•
One of the fastest-growing maquila industries in recent years has
been the "agromaquila," in which a foreign food grower or processor
imports the seeds into Mexico, then exports the grown or processed
products.
Hotel and Resort Properties{ XE "Mexican real estate
properties:hotels and resorts" }
Chapter 5-6
•
Foreign hotel developers and operators have been expanding
operations in Mexico.
•
Most popular sites are Los Cabos and Acapulco.
•
In Mexico City conversions and rehabings by foreign firms, as well
as development of new, moderate-priced lodging, are underway.
•
USA investors prefer to buy existing properties
CIPS The Americas
•
European investors prefer to build.
•
80% of existing hotel properties are not international franchises.
•
The government has granted concession to foreign developers to
build 15 complexes around the country, including golf courses,
marinas and other resort amenities.
•
Golf courses have great potential in Mexico.
•
In Los Cabos there are currently 10 signature golf courses, which
makes it the golfing capital of Mexico.
•
The marina market also shows strong potential. Marinas have been
built in or near Los Cabos, Lorretto, Mazatlan, Puerto Vallarta and
Cancun, but other opportunities exist throughout the country.
Chapter 5-7
CIPS The Americas
Beyond the Basics
Imagine yourself in one of the following situations:
1. A Mexican investor comes to you for help acquiring a property in
your domestic market. As part of his investment planning, he wants
to know how the property might be marketed in the future to
domestic or Mexican buyers.
2. A client asks for your assistance disposing of a property he controls
in Mexico. The property could be marketed to either foreign or
Mexican buyers.
3. A Mexican resident who lives in your market wants to take
advantage of the economic rebirth of his country. He would also
like to repatriate some of his flight capital by buying Mexican real
estate. He asks if you can help with the transaction.
4. A client is thinking of retiring in Mexico. He wants you to help him
find a suitable home.
Beyond a competence in domestic real estate practice and a general
understanding of Mexico, what specific things does a real estate
professional need to know in order to succeed in these situations?
Chapter 5-8
•
the potential client's needs, timing, reasons, expectations,
resources, and decision-making processes
•
how to cultivate the relationship while finding and showing
properties, or while finding tenants or buyers
•
what the client needs explained about the differences between
the domestic and Mexican transaction processes
•
how to overcome language and cultural obstacles
•
tax implications and investment parameters for any investment
alternatives
•
special forms or requirements that apply to a transaction
involving a foreign buyer or seller
•
relevant national, regional, state, county and local market
information to help the client evaluate a property in your market
•
relevant domestic, Mexican, regional and local market
information to help the client evaluate properties in the foreign
market
CIPS The Americas
•
how to present features and benefits in a way Mexican clients
recognize
•
the relative positions of the domestic and Mexican economies
which could affect the timing of the transaction
•
type of agreement, if any, to have with the client
•
how to market the property in Mexico as well as domestically
•
how to find a Mexican property or buyer
•
whether to work with, and how to find a broker in Mexico
•
how to get paid
•
how financing might be arranged
In order to obtain the above information, a real estate professional must
skilled in three general areas. They are:
•
networking and relationships
•
technical aspects of a transaction
•
selling and marketing
Chapter 5-9
CIPS The Americas
Networking and Relationships
{ XE "Mexico:networking and
relationships" }
•
Develop client contacts and relationships first.
•
In international business nothing will happen without establishing a
good personal relationship with the client.
•
In the scenarios at the beginning of the section the client approaches
the real estate professional. The client chooses the professional due
to a chain of referrals, recommendations and previous contacts.
•
A real estate professional must know where to go to acquire the
necessary information and/or services.
•
The interlocking circles of friends and relatives, with much trading
of favors among them, is a constant feature of the culture.
•
Power within the culture is often measured by the size and quality of
this network.
•
Do not attempt to sidestep these social networks.
•
Some mistakenly assume they have an advantage because they know
an influential person in the government.
•
That person may be a competitor’s or client’s contact.
•
Speaking the language or having a friend or partner who speaks
Spanish is helpful.
•
Contacts are important but insufficient by themselves.
•
Agent should be introduced through proper channels of introduction.
o U.S. Commerce Department’s Foreign Commercial Service
is one example
o May also be helpful checking background and credit of
potential clients
Who You Need to Meet
•
Potential clients:
o corporate investors, individuals such as domestic residents
seeking vacation property in Mexico, employees of a
Mexican company in your country who need housing, and
private investors.
Chapter 5-10
CIPS The Americas
•
Colleagues:
o Mexican brokers, professional agents and representatives.
•
Owners and sellers:
o corporate and individual; domestic and Mexican.
•
Connections to the above:
o
bankers, lawyers, notaries, lenders, developers,
import/exporters, business leaders, government officials, or
foreign students in your area with families in Mexico.
Where to Find Them
•
Apply for membership in the World Trade Organization of the city
where you want to do business. It may belong to the international
World Trade Association in New York (USA), which offers various
avenues of interchange for its members.
•
Travel to Mexico and personally investigate the potential contacts.
Check the credentials of anyone you are considering to represent
you or set up contacts for you – remember that the reputation of
your firm is at stake.
•
Attend trade fairs and international congresses in Mexico and in
your country.
•
Contact the Mexican Chambers of Commerce. They can provide
solid information but don't expect government agencies or chambers
of commerce to be proactive in helping you.
•
Contact the American Chamber of Commerce in Mexico; it can be
an excellent resource.
•
Visit Mexican peers in your business.
•
Ask family members and friends, and those you meet through
contacts, for other contacts.
•
Find ways to meet public officials in the area where you want to do
business.
•
Contact, visit, and perhaps join industrial, trade, and employers'
associations.
•
Attend courses, lectures, seminars, and meet other attendees.
•
Ask your clients for references and referrals.
•
Refer to the Mexican real estate association in the area of interest to
locate brokers.
Chapter 5-11
CIPS The Americas
Cultural and Business Differences
To establish relationships in any culture, it is imperative to have a good
understanding of the culture in a targeted market. Following are some
characteristics of the Mexican culture.
General Attitudes
Mexicans generally feel that people are more important than time
and schedules. It is common for people to stop whatever they are
doing, even if it makes them late for something else, to talk with a
friend or visitor. Schedules and punctuality are not business
standards.
Two- and three-hour lunches are also common, during which
important business contacts are made. Such meetings are mostly
social in nature while actual business, if it occurs at all, is confined
to the last few minutes.
Important Business Note
Mexicans are proud of their country and identify with their Spanish
and Indian heritage. Because they are citizens of North America,
they consider themselves Americans. In addition, Mexico is
actually the “United States of Mexico,” so Mexicans appreciate it
when foreigners do not use the term “the United States” to refer
specifically to the USA. Use the term “Mexico” to refer to the
United States of Mexico, and “USA” to refer to the United States of
America.
Mexico celebrates many general public and religious holidays.
Every town, village and city has a local holiday to celebrate the local
patron saint.
The literacy rate is about 88% and is on the rise. Education is
compulsory up to the age of 14. There are numerous vocational and
specialty schools, as well as secondary, teacher training, and college
preparatory schools. The National University of Mexico is
prestigious and has high academic standards for admission.
Communications are well-developed and modern, although rural
locations may lack telephones. Fax machines and e-mail accounts
are in use in many businesses.
Language
Many business people in Mexico know some English. While it is not
required to know Spanish to conduct business and develop
relationships, business contacts, potential partners, bankers,
Chapter 5-12
CIPS The Americas
government officials and clients may be reluctant to work with
someone who refuses to make the effort to learn the language at all.
If you must use English, it is important your English be understood.
Avoid: jargon, slang, fast-talking, careless pronunciation, ambiguity,
and jokes that may only make sense in your home culture.
Importance of Family
Family unity is important, and family responsibilities often take
precedence over any others. The father is the family leader,
although the mother typically runs the household.
Access to Information
As in most of Latin America, there is not a standard source for
providing useful and specific market information. Governments and
chambers of commerce do not collect and maintain real estate data.
Developers and brokers who have such information tend to guard it
zealously. If you need market data, you will probably have to
commission a research firm to do a market study.
Mordidas{ XE "mordida" }
A mordida is a bribe, kickback or payoff. Though it may be
tempting to try to expedite matters by offering some such
arrangement to an official, an agent or an employee, keep in mind
that:

If revealed, it may be punishable under certain countries’
criminal law.

It can be very expensive.

Its effects may not last.

It undermines integrity and reputation, yours and the recipient’s.

It can hinder internal accounting controls.

By offering it to the wrong person or in the wrong way, you may
damage or destroy the very relationship you intended to
enhance.
Chapter 5-13
CIPS The Americas
Elements of a Transaction
The following practices, rules and regulations are important to know before
facilitating a transaction in Mexico.
Brokerage Practices{ XE "Mexico:brokerage practices" }
Mexican real estate brokers must register with the government, but they are
not licensed or directly controlled. Governmental licensing is in process,
however. Details are incomplete as of this writing.
The professional Mexican real estate association is listed below. If you
contact AMPI, be prepared to speak and/or write in Spanish:
Asociacion Mexicana de Profesionales Inmobiliarios AC (AMPI)
Rio Rhin #52
Col. Cuautemoc, C.P.
06500 Mexico, D.F. MEXICO
(tel) 52.5 566.4260
(fax) 52.5.566.4323
Internet: www.ampi.com.mx
You will find additional information on worldproperties.com.
Contracts and Notaries
Like much of Europe, Asia, Africa, South and Central America, Mexico
uses a legal system derived from Roman law. Roman law, also known as
civil law, differs from the common law system in many significant ways.
Differences that may affect real estate transactions include:
•
what constitutes a contract
•
price/value equity, and how value is determined
•
what is meant by good faith and breach of contract
•
fraud, deceit, undue influence and coercion
•
the ability to cancel sales contracts
•
avenues for legal remedies
In civil law countries, such as Mexico, it is the notary, notario, who
provides legal advice and performs all of the legal and registration services
associated with a real estate transaction.
•
Chapter 5-14
Notaries in Mexico are accredited attorneys, who are specially
trained in contract law and are acting as agents of the government.
CIPS The Americas
•
They conduct title searches, write the legal documentation for the
transaction, and register the deed with the Public Registry of
Property.
o This is necessary to protect the buyer against intervening
third-party claims, and explain the legal consequences of the
real estate transaction.
•
In setting up a trust for ownership, fideicomiso, of Mexican
property, it is required that a notary draw up the property deed.
•
Many notaries, especially in resort areas, speak English. Some can
also conduct business in French.
•
Legal documents in Mexico are generally straightforward and do not
utilize a great deal of legal jargon.
o Sales contracts have few contingencies, require large
security deposits, and prescribe strong penalties.
o Protective covenants are limited.
o Leases tend to favor the rights of tenants over those of
landlords.
o Zoning and permitting restrictions are relatively strict.
•
Due to overlapping roles of government departments in the approval
process, it is important to contact the right officials.
•
Regulations for maquiladoras have been liberalized in recent years.
•
Nearly all necessary permits can be obtained from the Secretariat of
Commerce and Industrial Development (SECOFI).
•
After an initial two-year license, approval is granted for an indefinite
period.
Timeshare Regulations{ XE "Mexico:timeshare regulations" }
•
The Ministry of Tourism's regulations apply to all operators of
timeshare projects, whether Mexican or foreign.
•
All projects must be registered with the National Tourism Register.
•
Before granting the registration, the Ministry inspects the project to
verify the application data and assign a tourism rating.
•
Other regulations require certain specifications in the ownership
structure of the timeshare, and establish the channels for handling
timeshare buyer's complaints.
•
The Ministry has the authority to close down a project for noncompliance.
Chapter 5-15
CIPS The Americas
Modern Foreign Ownership Limitations{ XE
"Mexico:foreign ownership limitations" }
A 1993 revision to Mexico's investment laws has relaxed restrictions on
foreign investment and ownership and encouraged renewed interest in
investments in real estate on the part of foreign corporations and
individuals.
Investment in Mexico can be divided into three basic categories:
n activities forbidden to non-Mexicans
o activities in which non-Mexicans may hold a minority interest
p activities in which non-Mexicans may hold a majority interest
Forbidden Activities
Non-Mexicans may not invest in or own:
•
primary oil and natural gas industries
•
uranium and nuclear industries
•
coinage
•
electric utilities
•
railroads, road and maritime transportation
•
telegraph
•
radio and television transmission
•
banking and credit institutions
•
forestry
•
port administration
•
notaries and customs agencies
Minority Ownership Activities
Non-Mexicans may hold a minority interest, ranging from 34-49%, in such
activities as:
•
extraction:
o mining and use of minerals including iron, metals, rocks and
gypsum
Chapter 5-16
•
fisheries
•
explosives, fireworks and firearms
•
port services
•
rental agencies
CIPS The Americas
•
telephone and telecommunications (except as above)
Majority Ownership Activities
Non-Mexicans may hold up to 100% ownership of :
•
agriculture, livestock and game
•
newspapers and magazines
•
carbon derivatives
•
building construction and installation
•
high seas maritime transportation
•
tourist boat rental
•
administration of bus stations and airports
•
administration of roads and bridges
•
management, operating and investment services
•
private sector educational services
•
legal, accounting and auditing services
•
financial insurance and bond institutions
Unrestricted Activities
Activities that are not subject to restrictions on foreign ownership
constitute over two-thirds of Mexico's GDP.
•
Foreign investors may own unrestricted businesses after
obtaining approval from Mexico's National Foreign Investment
Commission (FIC).
•
Approval is automatic if the investment:
o is not more than US $100 million.
o is financed outside Mexico.
o is an industrial project and is not located in Mexico City,
Guadalajara or Monterrey
o will produce an inflow of foreign exchange that is equal to
its outflow within three years.
o will create permanent jobs and include employee-upgrading
programs.
o meets environmental and technological standards.
Chapter 5-17
CIPS The Americas
If the project does not meet all of these criteria, the FIC must grant a
specific approval. Under the new rules, the government must reply to a
request for approval within 45 days, or the approval becomes automatic.
Chapter 5-18
CIPS The Americas
Taxation{ XE "Mexico:taxation" }
•
Non-residents of Mexico pay a sales tax of 20% of the sales price in
a real estate transaction.
•
The tax rate on corporate income in Mexico is 35%, with reductions
depending on the type of industry.
•
A withholding tax of 35% applies to interest, but not to dividends
remitted abroad if they are distributed from previously taxed profits.
•
Royalties are subject to a withholding tax of 40%. Transfer
payments may be made at the prevailing free-market exchange rate.
•
Asset values may be increased to reflect the effect of inflation. On
disposition of the asset, the inflation-adjusted cost may be deducted
from taxable income.
•
A one-time deduction is immediately available for newly-purchased
assets.
•
The amount of the deduction is set by law, and is 40% lower if the
asset investment is in one of the industrial cities – Mexico City,
Guadalajara, Monterrey.
•
Ten percent of pre-tax income must be allocated to an employee
profit-sharing plan, and an obligatory yearly bonus of at least 15
days' pay must be given to employees. Other regulations cover
required payment of employee vacation time.
Value-added Tax
•
Known as: Impuesto al Valor Agregado or IVA
•
Applies to a variety of transactions including the sale of timeshares
in vacation properties
•
The amount of the tax is 15% on the transaction of all goods and
services, including real estate commissions
•
In the state of Baja California, a free trade zone, the tax is only 10%
Financing{ XE "Mexico:financing" }
In the past, the difficulty of foreclosure has discouraged foreign lenders
from making real estate loans in Mexico. Through the terms and conditions
developed under NAFTA, as well as other reforms, the Mexican
government can no longer discriminate against foreigners in terms of
property ownership.
Mexican property is now a major target for many North Americans and
Canadians who have been priced out of the USA and Canadian resort
Chapter 5-19
CIPS The Americas
markets. It is now possible to secure loans from USA entities to buy
Mexican real estate. Other companies are offering title insurance on
property located in Mexico. These factors have added further buying
stimulus for non-Mexican purchasers. It is estimated that approximately
500,000 Americans now own property in Mexico.
Costs to close a loan:
•
$500 to establish a Mexican bank trust
•
2% +/- mandatory real estate transfer tax
•
1-3% for government-appointed “notario publico”
•
bank appraisal fee
Financing through USA lenders:
•
charge slightly higher rates for Mexican purchases than in USA
o added risks
o extra legal precautions necessary
•
foreclosure becoming easier so financing is worth the risk
Financing through developers or sellers:
•
require 30% or more down payment
•
charge 7% interest or more on balance
•
generally 5-10 year loans
•
good news is if you have 30% down, you qualify
In-country financing
•
high inflation rates mean high interest rates
•
low loan-to-value ratios
•
short terms
o 5-10 years
Foreclosures
•
Lenders who foreclose on a mortgage secured by property held in a
fideicomiso can now establish a new 30-year trust with fewer
restrictions in setting it up.
•
Must pay a transfer tax of 2%
•
If lender takes title and resells the property, another 2% transfer tax
must be paid
One way some foreign investors and lenders have avoided these obstacles is
to form a 100% Mexican-owned corporation as the beneficiary of a
fideicomiso, then form a foreign corporation that owns the stock of the
Chapter 5-20
CIPS The Americas
Mexican corporation as its sole asset. It then uses the shares as security for
a foreign loan to develop the property in Mexico. This effectively transfers
any foreclosure proceedings to the law and country where the foreign
corporation is set up.
Another way foreign financiers avoid Mexican obstacles is to use assets
other than the Mexican property as security, such as USA real estate, which
can be foreclosed easily in case of default.
Mexico lacks pension, life insurance, and other long-term institutional
funds. Foreigners who want to invest in or develop Mexican real estate
must have the confidence to convert their currencies to pesos on a long-term
basis.
Leases{ XE "Mexico:leases" }
•
Commercial leases
o net leases in which the landlord pays property taxes and
some common area maintenance while the tenant pays for
improvements, utilities, services and other taxes
o leases are one to three year periods
o limited options and indexed rents
•
Residential
o minimum of one year
o extendable to three
o payments must be made in local currency
o rent can be increased annually
o increases limited to 85% of the increase in the minimum
wage.
Chapter 5-21
CIPS The Americas
Marketing and Selling Practices
{ XE "Mexico:marketing
and selling" }
Listing Guidelines
Reliable and effective representation in a foreign country is indispensable in
facilitating international transactions. In Mexico, agents will often ask for
an exclusive representation arrangement. This can cause problems if you
do not know the person well because:
•
Mexico is a big country. The agent may not be able to provide
adequate coverage of the markets in which you are interested.
•
The agent may not be as active or effective as you wish, but the
Mexican commercial code can make it expensive for a foreign real
estate professional to buy out of an exclusive contract.
•
The agent may be unqualified, or may employ incompetent sales and
marketing personnel who cannot, or will not, do what you want.
If you can not avoid an exclusive arrangement, try to restrict it in terms of
timeframe, geographic area, or activity. And be sure to make it contingent
on achievement of performance standards.
If you are interested in development, you are well-advised to:
•
establish a joint venture with strong, experienced, well-connected
Mexicans.
•
use top legal and professional consultants.
•
surround yourself with capable people who speak Spanish.
Local brokers tend to be protective of information, clients and listings.
They may provide introductions and limited services to other brokers.
Commissions on rentals may be based on one month's rent, rather than a
standard fee or percentage. Reliable appraisals are hard to find and may be
done by brokers or banks.
Chapter 5-22
CIPS The Americas
Marketing Properties in Mexico
•
Sales presentations in Mexico are low-key and leisurely.
•
Resort properties are often marketed exclusively on-site.
•
Marketing programs used for resort properties include:
o information booths in town centers
o presentations and other marketing activities for hotel guests
o referrals by restaurant hostesses
Negotiating and Closing Transactions
•
Negotiating process
o
a request for proposal
o
then direct negotiations between buyer and seller
o
when agreement on price is reached, the buyer pays from 1050% of the purchase price upon execution of the documents
o
balance due at closing
o
notary handles the money
Chapter 5-23
CIPS The Americas
Key Point Review
•
Learn as much as you can about the culture and business practices,
particularly in real estate, before facilitating an international
transaction.
•
Take the time to establish a network of good personal and
professional relationships in a foreign country; relationships are the
key to the transaction.
•
As in domestic practice, be sure you are working with capable and
trustworthy foreign partners.
•
Expect things to move differently than you are accustomed to in
your own country.
Discussion Question
What do you consider the most important issues to learn about when you
are practicing real estate in a foreign country? Why?
Chapter 5-24
CIPS The Americas
Central America
Chapter 6
CIPS The Americas
Chapter 6
CIPS The Americas
Chapter 6: Country Profiles
Overview
This lesson provides country profiles for selected countries in the Americas
region. These profiles These profiles (selected from
www.realtor.org/international and the International Consortium of Real
Estate Associations website: www.worldproperties.com) provide
information on topics such as culture, demographics, economic conditions,
real estate market activity, and real estate trends and practices.
Objective
Use the country profiles to gain insight into the cultural and business
perspective of an international investor in the Americas.
Application
The international real estate professional should understand the complexity
and diversity of a country in order to work with properties or clients there.
In particular, a professional should have a basic understanding of a country
in which he or she would like to practice.
.
Chapter 6-1
CIPS The Americas
Overview
History, geography and culture define real estate in the Americas. As a
result, there are a wide variety of market conditions and business practices
throughout the region.
Unfortunately, it may be difficult to acquire a thorough picture of a foreign
market. As more and more information becomes available through the
Internet and other publications, time-sensitive material will be more easily
accessible. And, with time, as the markets in the region become more
connected and move to attract international investment, these gaps should
disappear.
The following country profiles are only sketches, but if they are examined
according to the country assessment model, they can provide a good
foundation for your research.
Chapter Exercise
1) What role does the country play – culturally and economically – in
the region and in the world?
2) What are the strengths of the people and the economy?
3) What cultural characteristics are important to know when doing
business in the country?
4) What differences might you expect to encounter in a transaction
with a buyer or seller from the country?
5) What is the condition of the real estate market – and where is the
potential for investment?
Chapter 6-2
CIPS The Americas
Argentina Country Report
Market Situation
The Argentine economy will likely be shaped for years to come by the
economic reforms that have taken place under the administration of Carlos
Menem in the decade 1989-99. The two major reforms were the 1991
Convertibility Law, which resolved the country's hyperinflation nightmare,
and the opening of the economy to unrestricted foreign investment that has
brought into Argentina desperately needed foreign capital for economic
development. The Convertibility Law has given Argentina a stable domestic
currency by requiring the central bank to keep a U.S. dollar in its reserves
for every Argentine peso that is introduced into circulation. The attraction
of Argentina's contained-inflation free-market environment is shown in the
US$47 billion of foreign-originating investments that were made in the
country from 1989-1996.1
The Mexican crisis of 1994-95 hurt Argentina as it did all of Latin America,
but in bouncing back so quickly, Argentina gained further credibility as a
national economy. This also weakened the traditional assumption that all
Latin American economies fall together, each one as hard as the first. A
greater blow to the Argentina has come from the recession in Brazil in
1999, sparked off by Brazil's own currency crisis in the early months of that
year. The Argentine economy is deeply intertwined with the Brazilian
economy - a natural situation since Brazil has the largest economy in South
America that is also the 8th largest economy in the world. 1999 will be
recorded as a recessionary year in all of South America, and the Argentine
economy is expected to contract as much as 3%. Yet U.S. investment in
Argentina continues as it has for the last decade. By 1998 total U.S. direct
investment in Argentina had reached US$18 billion and, despite the
recession, 1999 U.S. direct investment was predicted to total US$2 billion.2
During the 1980s, economy instability created what could now be termed a
"just-in-time" construction environment. Buildings were constructed as
quickly as possible and were sold on a cash basis. Unsurprisingly, a cashbased real estate market placed significant limits on the extent of overall
construction. A rental market simply could not be developed and sustained.
When inflation is in the four figures, as it was in Argentina in the 1980s,
there is no plausible way to create a long-term lease. Another impact of a
cash-based economy is that occupiers purchase as little space as they can.
Commercial real estate in the best markets functions with the idea that a
majority of buildings will have multiple tenants. The result in Argentina
was that office space was sold within a condominium format, floor by floor.
This ownership situation still exists today, with many high rise office
buildings having several owners, each the owner of one or more floors.3
Chapter 6-3
CIPS The Americas
This situation complicates the current office rental market, since tenants
find themselves in the position of having to negotiate with several landlords
to lease the space they require in a single building. The purchase of
commercial office buildings can likewise put the buyer at a negotiating
table with as many sellers as one for every floor.
Foundations of new growth - Revitalizing Buenos Aires
Overall, though, real property markets in Argentina have benefited from the
economic reforms and development of the 1990s. For example, significant
urban development projects have been undertaken and are still underway in
Buenos Aires. The scale of the projects underway is well illustrated by one
city project to create parklands all along the river coast of the city. It is a
project that involves 40 kilometers (25 miles) of riverfront and an
investment of US$1.2 billion. There are two other major redevelopment
projects underway in Buenos Aires.
1.
The Retiro Project.
This project has been aptly named after the decayed central railway station
in Buenos Aires. The plan involves 185 acres (750,000 square meters) of
old, rusting railway tracks. They are to be the site for a development that
will blend parks, shopping centers, high-rise apartments and hotels. The
project involves US$1 billion in capitalization that will also renovate the
transportation infrastructure of this central section of the city. An
underground network of trains, subways, buses and taxis will be built from
the funds generated from privatizing the above ground land.
2.
The Puerto Madero Project.
This project is meant to revitalize a waterfront (old port) area nearby to the
Retiro project. It is further along in development. The second stage will use
420 acres (1.7 square kilometers) of waterfront to connect the city with the
estuary of its major river, the Rio de la Plata. In progress already are
convention centers, a 14,000 seat sports stadium, and a new 5-star hotel.
Major international investors are involved in the project, such as Citibank
and George Soros. The projected completion date is 2005, and total
capitalization is US$1.9 billion. Besides its commercial developments, the
enormous site is projected to have major residential components housing
10,000 people, as well as newly created lakes and boulevards.4
Foundations of new growth - Securitization
Until 1995, Argentina did not have any laws or regulations on
securitization. The ability of banks to collect mortgage loans together and
sell them as a security is an invaluable way for them to access new capital,
and therefore be able to expand further the number of loans that can be
made. In the United States, over 50% of residential real estate loans have
been securitized for many years now, and the advent of mortgage-backed
securities for commercial real estate (CMBS) has provided essential
Chapter 6-4
CIPS The Americas
replacement capital since the decline of the thrift banking industry. The
Trust Law in Argentina was specifically passed with the purpose and
understanding that securitization would expand the amount of financing
available to the housing sector.
The lack of an effective and efficient method for foreclosure on mortgages
was the major barrier to the creation of residential mortgage-backed
securities in Argentina. These securities are based on the income from the
assemblage of loans that make up the particular pool of residential housing
loans that have been brought together to form a specific mortgage-backed
security. The "security" of each particular loan is based on the loan's
ultimate line of defense: seizure of the home for which the loan was made
to make up for the borrower's default on the loan. Essentially, the lenders
from whom the pool of loans are brought together to constitute a mortgagebacked security must be able to guarantee a timely repossession of the
security for their loans, i.e. individual homes, for the larger system of the
mortgage-backed security to attract the interest and confidence of securities
investors.
This is where the weak point in Argentine law was previously to be found.
In Argentina, there is no way for a lender to foreclose on a defaulted
mortgage and take possession of the property without recourse to the
judiciary. The Trust Law (1995) seeks to change this by allowing the parties
to a loan to agree to an out-of-court foreclosure proceeding in the original
loan contract. This has thus created a more timely, extra-judicial foreclosure
procedure for real estate loans in Argentina. The foreclosure procedure set
out in the Trust Law restricts the measures a defaulting borrower can take
against foreclosure, and even allows for the police to step in and force
eviction. By securing a timely repossession process in the case of loan
defaults, the Trust Law created the confidence in the loan market necessary
for the aggregation of loans into securities. This was the law's specific
intention, and the result has been an expansion of the overall capital
available for Argentine banks to loan, and therefore an expanded consumer
mortgage market, the necessary underpinning of an increase in overall
homeownership.5
Political Environment
Throughout Latin America, there is growing fatigue among the electorate
for the social and economic strains that have accompanied the liberalizing
market reforms of the 1990s. This is not particular to the region. A similar
disenchantment with conservative free-market economic reforms has ended
years or even decades of rule by conservative parties in Western Europe.
There has been much talk since the return of left-leaning parties in most of
the European Union countries of finding a "third way" between
protectionism and state organized economic activity, and the privatization
of state-run industries and lowering of trade barriers. The professed goal has
Chapter 6-5
CIPS The Americas
been to "soften" the effects of a global economy while strengthening the
country's ability to compete within it. Politically, no defined program has
emerged from the European experience, except for the hope of balancing
the frustration of an electorate that is not unaware of increasing inequalities
in the distribution of income, with the desire of multinational business and
capital markets for further economic reforms. The only constant is the
stagnancy of most European economies, and the persistence of high
unemployment.
Now Latin American politics is currently colored by talk of finding a "third
way" between, of course, economic reform and social unrest. As in Europe,
most of Latin America does not want to give up the gains from free-market
reforms, but at the same time a very real need exists to stabilize now
stagnant economies, and burgeoning social tensions. The situation is more
delicate in Latin America because of the greater economic instability there,
and the newness of its democratic institutions (to the extent they exist).
Carlos Menem, the President who presided over Argentina's great period of
economic reform, was constitutionally barred from running for the office
again in 1999. In fact, his party the Peronists, lost the 1999 presidential
elections, but remain in control of the Senate and the province of Buenos
Aires, the wealthiest region in the country. The new President, Fernando de
la Rua, of the center-left Alliance party, is part of the new political rhetoric
of the "third way."
De la Rua is so far dedicated to maintaining the economic reforms in place,
and to further strengthening the Argentine economy. This is quite
understandable in a country where GDP is shrinking during a shaky and
unconcluded recessionary cycle. It also highlights the bald political reality
that he cannot rule the country without the cooperation of the opposition
Peronists. So far, then, the signs are of a cooperative government, with
President de la Rua perhaps developing into the kind of austere caretaker
role that Romano Prodi played in Italy during its recent crises. Former
President Carlos Menem, still the head of the opposition Peronists, is also
not adverse to cooperating with the Alliance party and De la Rua. To do
otherwise could strengthen his enemies in his own party, and reduce the
chances for the success of his ambition to win back the presidency in the
next elections. The impact of these political developments on the general
and real estate economy is still unclear and could change rapidly. To the
extent that the Argentine economy can be strengthened and social peace
maintained (along with democratic institutions), Argentina has the
opportunity to be the model for the "third way" of Latin America.6
Real Estate Practices
Chapter 6-6
CIPS The Americas
Commissions
Commissions of residential sales are generally 6%, with 3% paid by the
buyer, and 3% paid by the seller. Commercial sales commissions are 10%,
again split equally between the buyer and seller.
Licensing
The national, provincial, and municipal governments legally require the
licensing of real estate practitioners. To obtain a real estate license in
Argentina, a qualification exam must be passed, and some provinces also
require a three-year college course. However, continuing education is not
currently required for the maintenance of a practitioner's license.
It appears that real estate agents represent both the buyer and seller in
Argentina, i.e. has a dual agency relationship. This may add an unfamiliar
tone to an Argentine real estate transaction for many Americans. In the
United States, there are many possible types of brokerage relationships
between real estate practitioners and consumers. The law of each individual
state governs these relationships, but very generally, the practitioner must
make clear whom they represent in the transaction, and usually, they
represent only one side's interests, within the bounds of the law.
Sales
The sale of property is regulated legally according to the civil law model
that has developed in Argentina. This can be very different from the
common law practices used in most English-speaking countries. For
example, in a civil law country the sales terms are customarily agreed, then
the sales document is signed by the buyer and seller and the notary public,
and finally the purchase price is exchanged between the two parties. In
other words, agreement and transfer of title must technically occur before
the exchange of funds. It is in fact illegal in Argentina to set the condition
that the exchange of title not take place until the price for the property
involved has been paid. The seller may also not set the condition that the
property may be reclaimed through the return of the price of purchase.
Some restrictions against conditional sales of property in Argentina are in
accord with U.S. practice. The fact that a property cannot be sold under the
terms that the sales agreement becomes invalid if the seller can find a better
price is a practice familiar in the U.S., but in England, this practice is a legal
and widely-used practice (as well as widely-hated) called gazumping. It is
not that conditions of sale cannot be made between parties in Argentina, it
is just that they must be separate from the exchange of purchase price. It is
perfectly legal for the sales agreement to stipulate that the buyer cannot
resell the property to a specific party. However, it is illegal to stipulate that
the buyer cannot resell in general. This would be an illegal condition of sale
because it too concretely binds a condition of sale to the exchange of
purchase price. The use of a lawyer familiar with the particular local legal
practices of sale and transfer as they apply to real property is essential.7
Chapter 6-7
CIPS The Americas
Mortgages
The economic reforms since 1989 have gradually developed a more positive
lending environment in Argentina for both commercial and residential real
estate. In the years of hyperinflation that caused so much instability in all
Latin American economies, mortgage lending for either commercial or
residential real estate virtually disappeared in Argentina.
For commercial real estate, two major traditional conduits of capital
financing, insurance companies and pension funds, were simply not
available sources of funding: insurance companies practically disappeared,
and privatized pension funds are a very new development. Commercial and
residential real estate became of necessity a cash business.8
The mortgage market has expanded due to legal developments that have
allowed the development of the securitization of loans in both the
commercial and residential sectors. Argentine commercial banks now
provide residential mortgage opportunities, as do government-owned
development banks. A sign of the continuing "dollarization" of the
Argentine economy is the large amount of mortgage loans that are now
made in U.S. dollars. Most mortgage loans in Argentina are for a ten-year
period, which used to be the only period allowed by law. Now, 12 year and
20 year mortgages exist, with 11-12% interest rates common, and loan-tovalue maximums available for up to 80-90% of initial loan-to-value.9
Although securitization is increasing the amount of loan capital available to
Argentine banks, the funding available for both the construction of
residential real estate, and the lending required for its purchase, would still
be inadequate without the monetary assistance of the government. The main
vehicle for this assistance is the Banco Hipotecario Nacional. It helps
provide development capital to domestic construction companies as well as
mortgage financing to potential homeowners. The BHN's ability to offer
subsidies for the construction of primarily single-family urban homes has
been strengthened as well by the new laws permitting the securitization of
loans. In 1998 alone it was planning to both privatize itself and to raise new
capital through offerings of US$200 million of mortgage-backed securities
in American capital markets.10
Land Rights Usage
Title registration and confirmation
Every province in Argentina has an official registry of real property. They
are open to the public, and the legal status of any property can be
investigated for any legitimate enquiry, and specifically for any
encumbrances or liens that have been recorded. For a title to be properly
registered, three categories of documents are required:
1.
Documents that "constitute, transmit, modify or extinguish rights;
Chapter 6-8
CIPS The Americas
2.
Documents that "impose attachments and any other injunctions;"
3.
And any other documents required by law, which can vary by
province.11
As is the general practice in Latin America, the registration of title
documents must take place after they have been officially reviewed and
approved by a notary public or, in situations where complications warrant it,
by further administrative or judicial resolution. The fees required for the
registration of title to real property vary according to the market value of the
property in question, and by the size of the mortgage. Fees also vary by
town and by province.12
Areas of continuing difficulty
While the legal framework supporting the real estate market in Argentina is
strong, some experts have pointed to specific areas of governmental
regulation that remain problematic disincentives to the further prospering of
Argentine real estate markets.
1.
In the area of commercial real estate, there is great variety across the
country in terms of zoning regulations on shopping centers, wholesale
stores, and other retail establishments generally. Of particular concern to the
real estate industry are the areas of the country where regulation of
commercial development is so strict that it discourages investment through
the imposition of burdensome time-consuming procedures. A
harmonization of zoning regulations nationally would reduce these negative
barriers.
2.
The other area ripe for reform is the stamp tax. It is a tax that is
applied to an exchange of documents "implementing the creation,
amendment and/or extinction of rights and/or obligations;" for our interest,
in relation to real property. The stamp tax is based on a percentage of the
overall transaction price, and can be from 1-4%. Its percentage varies based
on the type of real estate transaction and the area of the country. Stamp tax
is seen as widely negatively impacting real estate sales while at the same
time providing minimal revenue to the state.13
The disincentives to the growth of real estate markets that arise from often
unproductive governmental regulation and/or taxation are familiar to market
practitioners around the world. The above areas marked out as prime for
reform in Argentina have their market-specific parallels in any country,
which U.S. and other international professionals can call to mind and update
more adeptly than any single independent source.
Foreign Ownership
Foreigners can own real property in Argentina with only one restriction:
only Argentine nationals can own property along the borders of Argentina
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with another country. Argentina has strongly embraced an open free-market
philosophy, and foreign investors in any sector can take their profits,
dividends, or capital back out of the country at anytime without government
restriction.14 Foreign investors have the same legal rights as nationals do
under the laws and Constitution of Argentine including access to local
courts or other administrative procedures for the settlement of business
disputes. In addition, the United States and Argentina signed a bilateral
investment agreement in 1992 through which U.S. investors have the right
to take disputes to international arbitration when other methods of reaching
agreement have failed.15
Foreign investors also can take confidence in the safety of their investments
in Argentina from governmental expropriation. First, the Argentine
government has not engaged in any expropriations since the government
established its current and continuing course of economic reform and
development in 1989. Second, U.S. investors can take heart from the
explicit statement in Article IV of the U.S. and Argentine investment
agreement that investments will not be expropriated or nationalized without
both demonstrable public purpose and the timely payment of compensation
at fair market value.16 The U.S.-Argentina agreement can be reasonably
regarded as securing the general treatment of international investors in the
country.
Recommended Resources
Federacion Inmobiliaria de la Republica Argentina (FIRA)
Dean Fuentes 394, Centro Cordoba 5000
ARGENTINA
Tel & Fax: 54-351-4210-552 or 54-156-501-026
E-mail: [email protected]
Internet: www.argenprop.com.ar/FIRA.htm
Endnotes
1. Fundacion Invertir Argentina web site, www.invertir.com
2. U.S. Department of State, Country Commercial Guide, Fiscal Year
1999: Argentina.
3. Thompson, Russell, "The ground floor: In business again [Latin
American RE investment market]," Barron's, vol. 78, no. 13, pp. 47-48,
March 30, 1998.
4. Maurer, Harry, and Mandel-Campbell, Andrea, "An old city goes for
razzle-dazzle…and opens up the riverside," Business Week, p. 4,
November 17, 1997.
5. Carregal, Santiago, and Radzyminski, Alejandro P., "Argentina:
Securitization," International Financial Law Review, Latin America and
Caribbean Yearbook 1997, pp. 13-14, April 1997.
6. Warn, Ken, "De la Rua pledges new Argentina," Financial Times, p. 1,
Tuesday, October 26, 1999.
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8. Thompson, Russell, "The ground floor: In business again [Latin
American RE investment market]," Barron's, vol. 78, no. 13, pp. 47-48,
March 30, 1998.
10. Rolon, Avelino, "Future developments in real estate law in Argentina,"
International Financial Law Review, Real Estate Lawyers supplement,
p. 8, 1998; Fundacion Invertir Argentina web site, www.invertir.com
11. See endnote 1.
12. See endnote 1.
13. Rolon, Avelino, "Future developments in real estate law in Argentina,"
International Financial Law Review, Real Estate Lawyers supplement,
p. 8, 1998.
14. See endnote 13.
15. See endnote 1.
1999: Argentina.
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Bolivia Country Report
Foreign Ownership
A 1992 Investment law offers incentives and guarantees for both local and
foreign investment in Bolivia. Foreign investors have the same rights and
obligations under Bolivian law as domestic investors. This includes the
right to ownership, as well as the right to repatriate capital and profits
without restriction. Foreign investors also have the right under Bolivian law
to take recourse either to the local courts or to international arbitration to
settle any investment disputes that might arise.1
Endnotes
1 - U.S. Department of State, Country Commercial Guide, Fiscal Year
2000: Bolivia.
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BRAZIL – ICREA Profile
Code of Ethics
The Real Estate Agents Law imposes a Code of Ethics over all
professionals and companies operating in the segment. There are internal
disciplinary processes, with sanctions ranging from fines to violator's
license suspension and cancellation. Sanctions are imposed by COFECI,
through the CRECIs.
Entrance/Licensing Requirements
All real estate agents must enroll with the Real Estate Agents Regional
Councils. All real estate agencies (legal persons) must have a real estate
agent partner as technical responsible. To enroll, the applicant must take the
Real Estate Transactions Technician (High School) course. There is no
compulsority of further education. If the agent wishes to work in another
region or State away from his or her home (where the Regional Council in
which he or she is enrolled is), he or she must transfer his or her enrollment
or obtain a temporary enrollment of the Regional Council in which he or
she wishes to operate. The enrollments or licenses do not need to be
renewed periodically, but annually all professionals and companies
undertake to pay an annuity to their Regional Council.
Foreign Ownership
There are not any important restrictions for foreign real estate purchasers.
Land Registration System
Real estate registration in Brazil is carried out by private notary publics,
under the form of a public permission, under Justice control. All real estate
registries in Brazil are under control and fiscalization of a State Judge. The
real estate registry system in Brazil is quite developed and safe, in which
each real estate can only be registered at a single registry, which keeps the
entire commercial history and the physical identification of each property.
The access to all information of a real estate, including those concerning its
owners, mortgages and other burdens, is public. In the most important
cities, these services are already automated.
Other Professionals
To close a sale, it is necessary a public deed drafted by the notary public,
and its registration by the real estate registrar. The sales can be entered into
directly between sellers and purchasers, but in case of intermediation such
activity can only be carried out by real estate agents or agencies accredited
by the CRECIs. Lawyers are not mandatory, but they are not prohibited in
transactions either, and can only represent any of the parties as attorneys-infact, just like any other person.
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Practitioner Dispute Resolution Systems
Arbitration has only become a feasible instrument in Brazil last year.
Although we have a federal law since 1997, its constitutionality was
contested, and it was only decided by the STF (our Supreme Court) in May
2001. The only arbitration system for agents and agencies that we know is
the Arbitration Council, which has just been created by Secovi-SP to assist
SIEX and other litigations of the participants in the Essential Quality
Program.
Practitioner Services
The services are destined to assist the parties in sales and rentals. The basic
services era: real estate appraisal and publicity (newspapers and placard
placement), purchasers and potential tenants assistance, Contact between
the parties through proposals and counterproposals forwarding, technical
and legal advisory for the parties and real estate documentation, agreements
drafting and assistance with public deeds and their registrations.
Professional relationship with purchasers and sellers
The purchase and sale in the Brazilian real estate market is regulated mainly
by two federal laws: The Real Estate Agent Law (Law number 6530 of
1978), and the Consumer Defense Code (Law number 8078 of 1990). It
does not matter whether there is a written agreement or not (although the
Real Estate Agent Law requires written agreements); in case of proof that
the natural or legal person professional sold or intermediated the sale or
rental or any asset or service to a purchaser or seller, or to a landlord or a
tenant, the Brazilian legislation is quite modern in the protection of
customers rights. In general, the agreements are entered into with the sellers
or with the landlords (owners).
Property Marketing Systems
There have been real estate marketing systems between agents and agencies
in Brazil for over 50 years. The Real Estate Assets Chamber of São Paulo
was established 56 years ago. They are agents or agencies associations, such
as clubs, that usually operate as stock exchanges (real estate auctions). More
modern computerized systems, such as the current American MLSs, are
recent. We have several ones being developed in Brazil, with broad or
restricted access to local professionals and companies. Examples are the
SIEX of Secovi-SP and the real estate portal planetaimovel.com, the
Brazilian Real Estate Network, lead by realty Coelho da Fonseca in São
Paulo, and other systems in several medium and large cities in Brazil. There
is not a national system such as the American MLS of NAR-Homestore yet.
Referral System
The agents and agencies work system is controlled by COFECI - Real
Estate Agents Federal Council, that established a national "reference" in the
practices for all States. But, as it could not be avoided in a country as big as
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Brazil, there are differences regulated by the CRECIs, the Real Estate
Agents Regional Councils, in each region or State. Almost all companies
trading real estate are local, and also restricted to that activity.
Remuneration
The services remuneration is paid by means of commissions (a percentage
over the sale or rental value), always by the seller or landlord, as determined
by the real estate agents legislation. The payments occur when the
agreements are signed, with the sale or rental closed. The percentages
applied for commissions calculation are decided regionally by the Real
Estate Agents Regional Councils (fiscalization and discipline organs that
represent the Real Estate Agents Federal Council in each region of the
country). In general, the values or funds involved in the transactions are
paid and received directly by the parties, but with previous written consent
the intermediaries (real estate agents or real estate agencies) can receive
values for later accounts settlements.
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CANADA – ICREA Profile
Affinity Program
The CREA Affinity Program is made available to members and the offering
is a permission based e-mail system. The program is managed by a third
party that is responsible for vendor selection and marketing the various
components of the offerings. Vendors are selected on the basis of providing
best price and value to the membership.
Code of Ethics
All licensed real estate agents, regardless of province, must adhere to laws
and regulations specific to their profession, which are enforced at a
provincial level. Some regulatory matters are dealt with federally, including
advertising and competition matters.
On a national basis, all members of The Canadian Real Estate Association
must adhere to a Code of Ethics and Standards of Business Practice. These
Standards typically exceed any regulatory or legal requirements. The
Standards are divided into 3 sections – responsibilities of members to the
public, to clients and customers, and to fellow REALTORS. A complete
text can be found at http://www.crea.ca/public/buying_selling/code.html.
Enforcement of the Code is the responsibility of local real estate boards and
provincial associations. Each board and association has policies and
procedures in place for the investigation of complaints and handling of
disciplinary proceedings. Complaints may originate from the public or
members. These hearings cannot make monetary awards or provide
compensation to the public. Procedures followed in any investigation or
hearing are comparable to those used by other professional bodies.
Where disciplinary action does occur, it may consist of reprimands, fines,
suspension of membership or termination of membership. In addition to any
hearing process, a member may have a decision reviewed through an appeal
process.
Each Canadian province and territory determines its respective licensing
requirements for salespeople and brokers. All provinces require successful
completion of a pre-licensing course and exam. In some provinces these
courses may be taken by correspondence or via the Internet. Links to all
provincial association sites, which provide additional information on
licensing, are available through The Canadian Real Estate Association web
site www.crea.ca.
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Most provinces have implemented mandatory continuing education
requiring registrants to complete a prescribed number of courses or credits
over a specified period of time to retain their registration.
There are generally two types of licensing – for a salesperson and a broker
or manager. In most jurisdictions the latter entails additional training, as
well as minimum licensed experience requirements. The broker or manager
has additional responsibilities for managing trust accounts and salespersons
registered under his or her company.
Salespersons or brokers can only market real estate in the province(s) in
which they are licensed. Provincial regulations also require that a person
marketing real estate on behalf of a property owner must be licensed, with a
few exceptions. Licenses are generally renewed every year or two.
Foreign Ownership
Some Canadian provinces do restrict the amount of property a non-resident
investor can purchase.
On Canada’s east coast, the province of Prince Edward Island requires that
a non resident wanting to purchase land in excess of 5 acres or have a shore
frontage greater than 165 feet must make application to the Island
Regulatory and Appeals Commission. More details about the application
process and ownership restrictions are available at www.irac.pe.ca.
Nova Scotia, Newfoundland and New Brunswick, the other east coast
provinces, as well as the provinces of Quebec, Ontario, and British
Columbia do not have restrictions on foreign ownership.
In western Canada there are a variety of restrictions that do exist for foreign
buyers. In Manitoba non-resident non-Canadians are prevented from
owning farmland in Manitoba unless they intend to move to Manitoba
within two years.
The province of Saskatchewan restricts non-Canadian residents to land
holdings of 10 acres, while in Alberta foreign citizens and foreign
controlled corporations may own up to two parcels of land not exceeding 20
acres in total.
Non resident purchasers of real estate should investigate other possible tax
consequences, federal or provincial, such as the Canada Income Tax Act or
provincial land transfer taxes, that may apply.
Information concerning non-resident ownership of real property in Canada
can be accessed in greater detail through the Canadian federal government
website www.investincanada.ic.gc.ca.
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There are two land registration systems commonly used in Canada –
registry or land titles system. Both are established and maintained through
provincial legislation.
Under the land titles system or Torrens System the provincial government
certifies the accuracy of title information as shown on the property record.
The land titles system provides a certified and correct current record of all
land and guarantees the title. This is unlike the registry system, which
requires buyers to search the title and satisfy themselves, based on an
historical chain of conveyances, that a property has a good and marketable
title. Provincial variations exist regarding procedures used in recording and
certifying title.
Registry systems are intended to give evidence of interests that exist with a
specific piece of property and to establish priority to these interests. The
system records title documents on a geographic basis. Due to the growing
complexity of real estate interests, that system has some inherent
weaknesses.
Generally, registry is used in the eastern provinces of Canada, while the
land titles system is associated with the western provinces. In some
provinces the two systems coexist. For example, most of Ontario was on the
registry system, however, due to the cumbersome and outdated attributes of
registry, the province is in the process of converting to the land titles
system. In the Maritime provinces, registry remains the dominant system.
Most of the provinces operate computerized land registration systems.
Regardless of the type of registration system, all are publicly accessible.
Information regarding properties can be secured at a provincial level,
typically through payment of a user or service fee.
Other Industry Professions
Besides licensed real estate practitioners, other professions or individuals
may be involved with or be paid for the sale or rental of property. For
example, in some provinces, a homebuilder may employ unlicensed
salespeople to sell only that homebuilder’s properties, provided that they do
not sell any other properties. Depending on provincial licensing laws,
property managers may not require licensing to deal with the rental of
apartments or private residences.
In all provinces, lawyers may be involved with the sale of property.
Generally, such activity does not require any licensing provided that their
real estate role arose out of their usual solicitor responsibilities. Other
professionals may also play a role in any real estate transaction including
notaries, accountants, appraisers, mortgage brokers and lenders, home
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inspectors, consulting engineers and land surveyors. These groups are
generally involved in assisting or providing expertise on a specific aspect of
the transaction.
A buyer or seller of property is not required to use the services of any
professional group in proceeding with a real estate transaction. While it
would be most common to involve a real estate agent and solicitor in a
property deal there is no legal requirement to do so.
Practitioner Dispute Resolution System
When a commission dispute occurs between members of organized real
estate, they are required to submit it to arbitration through the appropriate
body – local board, provincial or national association. This ensures that
disagreements regarding fees can be resolved in a less costly manner,
without having to resort to legal action, and that any resolution reflects local
real estate practices and customs. The requirement to submit financial
disputes to arbitration only applies to members of The Canadian Real Estate
Association.
Real estate agents would typically market residential properties available
for sale, with a more limited involvement in rental properties. For those
agents specializing in commercial properties, services provided would
include sale and leasing.
Services provided by real estate practitioners include the following:
• Comparative market analysis to assist in setting sale or offering price for
a property
• Recommendations to owner on how to maximize marketability of
property
• Securing appropriate information about a property being listed including
taxes, zoning, physical information such as room sizes, and mortgage
details
• Marketing and advertising seller’s property
• Conducting agent and public open houses
• Prequalifying and assisting purchasers in securing financing
• Conducting showings of properties
• Negotiating terms of sale or lease
• Drafting offers to purchase or lease document reflecting terms and
conditions of sale
• Handling deposits in trust that are provided as part of any negotiated
agreement
• Monitoring and assisting with any terms to be met to complete
transaction
• Providing documentation to other parties assisting buyer or seller,
including legal counsel and financial institutions
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In Canada the vast majority of properties are marketed through the Multiple
Listing System®. MLS® is a co-operative marketing system that shares
property information and commission amongst REALTORS in the local
areas they service. REALTORS are licensed real estate practitioners who
are members of local real estate boards, provincial associations and The
Canadian Real Estate Association.
It is estimated that 70 to 80% of all residential property sales occur through
MLS®. Local real estate boards and associations operate MLS® systems,
which cover virtually all areas of the country. There are a number of
proprietary and third party systems used by the 114 boards and associations
operating in Canada. Many systems are Internet based, and include
residential and commercial properties available for sale or lease.
Listing a property on MLS® gives a seller access to a huge selling force, as
all members of a board which operates an MLS® system can show or sell
their property. For example, in 2001 nearly 270,000 properties were sold in
Canada through MLS®.
The Canadian Real Estate Association owns the MLS® trademark and
establishes the basic operating standards for MLS® systems. The
Association also operates two public national web sites, mls.ca and cls.ca
(under development to be launched July 2002). The mls.ca site promotes
residential properties, while cls.ca includes information on commercial
properties. Between the two sites, over 99% of all MLS® properties that are
listed on board and association systems across Canada can now be found on
the Internet.
Referral Systems
It is common that an individual relocating to another part of Canada, and
having sold a property elsewhere, may be referred by his or her listing
broker to another real estate practitioner in the new location, who will assist
in the purchase. In such instances the company that originally sold the
property will negotiate a referral arrangement whereby it will receive a
certain percentage of the commission earned on the purchase of a new
property.
In Canada there are a number of companies who also specialize in the
management of referrals or relocations on behalf of larger corporations or
governments, and have contractual arrangements with real estate
companies. Participation in any referral arrangements is at the discretion of
each company. The payment and receipt of referrals from a licensed
company in one jurisdiction to another are covered under provincial
regulations. Typically, licensing bodies do not allow payment of referral
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fees from a licensed agent or company to a non-licensed individual or
company.
The majority of real practitioners are licensed through franchises of national
franchise companies. Most local franchises are locally owned and operated.
In the last twenty years there has been a significant increase in the growth
of franchises. Many locally owned and based real estate companies not
affiliated with a franchise also exist.
Relationship of Buyers and Seller to Practitioner
In Canada virtually all real estate transactions involving a real estate
salesperson take place under some form of an agency agreement. Agency is
a legal relationship that carries with it specified obligations that the licensed
real estate salesperson (as agent) owes to a buyer or seller (as client) when
representing them in the purchase or sale of a property. While agency
practices and documents vary from province to province – since real estate
is regulated on a provincial basis – it is common that most agency
relationships with sellers occur through signed agreements. While written
contracts are not mandatory in order to establish an agency relationship
between a buyer and seller, most provinces require that commission
agreements be in writing. Typically, therefore, a property owner will sign a
listing agreement with a practitioner securing their services to sell or lease a
property.
On the purchase side it is still uncommon for buyers to sign written
representation agreements with their agents in order to secure their services.
The Code of Ethics of The Canadian Real Estate Association encourages
members to enter into written representation agreements, and the number of
buyer agency agreements that are being signed is increasing.
Another standard of The Canadian Real Estate Association, reflected in its
Code of Ethics, requires members to disclose in writing to the public their
agency responsibilities in any transaction. Similar legislative requirements
also exist in most Canadian provinces.
Other non agency-based relationships can exist however they would be a
rarity and typically are not identified in provincial regulations.
The majority of property transactions involve a listing agent and a selling or
co-operating agent, both of whom are compensated from the commission or
fee paid by the property owner.
Remuneration
Remuneration is generally paid by the property seller based on commission.
Commissions are negotiable between the property owner and listing agent,
and will vary according to the type of property and level of service being
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provided. The owner will usually contract to pay the agent who lists his or
her property a percentage of the selling price or a total $ amount.
Commissions are paid once the property has been sold, the new owners
have taken possession and title to the property has been transferred to the
new owner unless the offer to purchase provides otherwise.
With a Multiple Listing Agreement the property owner agrees to pay the
listing agent a percentage of the selling price or a total $ amount. MLS®
agreements also specify what portion of the total commission or fee will be
shared with another agent who works with a buyer that purchases the
property.
With some transactions, primarily commercial, a purchaser or lessor will
sign a buyer agency agreement requiring them to pay their agent a fee or
commission should a successful transaction occur. The vast majority of
residential sales occur where the property owner pays a commission, which
is shared between the agents involved in the transaction.
When an offer on a property is prepared it will normally include a deposit,
which is a negotiable amount. If an offer is accepted, provincial laws
require that the deposit is placed in a trust account, typically one held by the
listing agent’s company. Deposit funds in a trust account may only be
released with all parties consent to complete the transaction, which
generally occurs at closing and through the property owner’s legal counsel.
After the listing and selling companies receive their total commission they
will pay the individual agents who worked with the buyer and seller. The
amount of the total commission that an agent receives is dependent on the
business arrangement that exists between the agent and the company. For
example some companies will split the commission received between the
company and the agent, while others will pay out 100% of the commission
to their agent. In the latter instance the agent will have an agreement with
his or her company that they pay the company a regular desk fee, and other
expenses associated with marketing the property (e.g. advertising) while
being entitled to receive 100% of the commission received by their
company.
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Caribbean Area Report
Market Situation
CARICOM
The economic, political, and social environments of the different Caribbean
island nations vary greatly in their impact on real estate, as they do in the
different states of the U.S. However, even though the Caribbean countries
are not a federated union like the U.S., they are coming together under the
umbrella of the Caribbean Community (Caricom). This is a trading group of
12 island nations and three coastal countries with a market of 14 million
people that did US$6 billion in trade with the U.S. in 1997. The member
countries of Caricom are: Antigua and Barbuda, The Bahamas, Belize, the
Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Montserrat, St.
Kitts and Nevis, St. Lucia, Suriname, St. Vincent & the Grenadines,
Trinidad and Tobago.1
In fact, Caricom was created in 1973 to work towards a single Caribbean
currency. This is still in the planning stages, but some aspects of common
market area will be effective from the end of 2000. For example, there will
be free movement of capital and services among the countries from June
2000. Freedom of movement for people and services are being introduced.
The treaty of 1973 is also being rewritten to permit intellectual property
agreements and bilateral investment treaties. In 2000, a Caribbean Court of
Justice will be created which will consider trade disputes as well as have the
role of interpreting the Caricom treaty. The Caricom area currently has a
customs union with tariffs harmonized on imports from third countries. The
regional capital market is also beginning to take root through cross-listing
of stocks on the Barbadian, Jamaican, and Trinidadian stock exchanges.2
The ultimate goal of having a single currency faces serious difficulties from
the wide differences in the countries' economic situations and policies. The
process of reaching common targets in terms of limits on debt service ratios,
currency exchange rate stability, and the maintenance of international
reserve will be a slow one. This is understandable given the poverty of the
region, and the wide disparities in income that exist. For example, the per
capita income of Barbados is US$7,500. In comparison, the per capita
income in Jamaica is one-third of that in Barbados, while in Grenada it is
1/30th.3 The largest importer of U.S. goods out of the Caricom countries is
the Dominican Republic, which is now the 7th largest market for U.S.
goods in the Western Hemisphere.4
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HUD goes island hopping
The United States Department of Housing and Urban Development (HUD)
announced in October 1999 that it would work with the Overseas Private
Investment Corporation (OPIC) towards creating a domestic and
international mortgage market in the Caribbean and Central America. Their
first effort is a US$20 million financing plan for 5,000 families who were
made homeless in Santo Domingo by Hurricane Georges. HUD will assist
in the development of financing mechanisms to encourage U.S. private
investors to originate mortgages for low-income families at competitive
interest rates and reduced fees. HUD and OPIC will also work together to
promote U.S. private sector investment in the homebuilding and mortgage
industries in this region, and in emerging markets generally.5
Tourism
The warm climate, beaches, and ocean are the foundation of tourism in the
Caribbean, which is a major industry for the region. There are signs that the
Caricom countries are developing a region-wide cooperative approach
towards encouraging growth in the tourism industry. For example, in 1997,
the Caribbean Tourism Organization and the Caribbean Hotel Association
developed together the first Caribbean Hotel & Tourism investment
conference. Their goal was to provide a forum for private sector developers
and public policy makers to meet and develop positive relationships. The
hope is that the amount of capital available for tourism projects in the
region will grow through better understanding between these two groups.
By 1997, 25 million visitors came to the Caribbean and spent a record
US$13.3 billion. An increase in tourists coming to the region is predicted to
be 4.6% annually through 2005. The Caribbean Tourist Office therefore
estimates that US$12 billion in development capital is needed to construct
22,000 new rooms and renovate existing space.6
The Bahamas is currently enjoying a thriving tourism industry that received
a strong stimulus to renovation and development from the opening of the
Atlantis mega-resort in the mid-1990s. More than US$1.0 billion has been
invested in renovations, expansions, and developments in the hotel sector of
Grand Bahama Island and Nassua/Paradise Island. Some significant
highlights include the US$290 billion Lucayan mega-resort on 7.5 acres of
Grand Bahama Island beachfront. Also, Atlantis Paradise Island completed
a US$450 million expansion that doubled its rooms, and added a convention
center and a casino, as well as other facilities. Many other expansion and
development projects have been or are nearing completion. The Bahamas
also has improved infrastructure facilities, with the most dramatic perhaps
being The Cat, a catamaran that completes the trip from Miami in under 5
hours.7
The Dominican Republic has seen and continues to see tremendous growth
in the tourism sector. In the first six months of 1999, the number of visitors
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to the country rose 9.6%, and the American Society of Travel Agents has
named it as the #1 top emerging international destination. The government
is helping the growth by investing and supporting investment in the
transportation infrastructure. US$203 million will be invested in airport
improvements in a public/private partnership, and US$104 will be spent in
1999-2000 on new roads and road improvements. Thirty-one new hotels are
planned for the country in 1999-2000, and will create 9,500 new rooms
accounting for US$480 million in investment capital. The largest new
project is privately funded US$250 million project in the Samana area, and
will be a multi-hotel development with an emphasis on sailing.8
Even the little island nation of Grenada has significant current development
in its tourism industry. For example, a Venezuelan company, the Mount
Hartman Development corporation, is constructing a US$75 million hotel
with an 18-hole golf course. This resort will achieve name recognition
quickly, as it will be managed by the Ritz-Carlton Corporation. This project
is not without controversy. In fact, the displacement of poor farmers from
the site is a recurring source of often legitimate protest impacting
development projects throughout the Caribbean. The transfer of the island's
small water supply to resort use from domestic use when capacity to
accommodate both is also a problem in Grenada that repeats itself around
the region.9
Another big project in Grenada, the Blue Lagoon hotel and marina, is a
major influx of US$140 million in development capital. However,
controversy about its financing illustrates another recurring regional issue:
the democratic deficit that occurs when project capital and government
institutions develop questionably close relationships. The Blue Lagoon
hotel has been financed by Czech-born Victor Kozeny, a billionaire who is
hated in the Czech Republic for allegations that he plundered the
privatization programs there. After obtaining an Irish passport, Kozeny
moved to the Bahamas. He has now cultivated connections with the
government of Grenada to such an extent that he has been named an
Ambassador-at-Large.10
Dominican Republic
On first look, a visitor to the Dominican Republic would assume that the
political environment would be quite favorable for the presiding
government. From 1997 through 1999, the country's GDP has increased
more than 6% annually, its position within Caricom is strong, and political
structures are stable. However, President Leonel Fernandez is not popular
because the strong economic growth, largely due to the strength in the
tourism sector, has not benefited much the mass of poor Dominicans. A
1999 inflation of 6.5% is also not helping the government. As the next
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presidential elections approach in May 2000, all the politicians in the
Dominican Republic must face the contradictory tensions that define
politics throughout Latin America: progressing reform while addressing the
need for redistribution.11
Jamaica
The political environment in Jamaica is as difficult as its economic
situation, or rather, increasingly difficult because of it. For example, from
1991-1999, GDP per person shrank by 7%, and is expected to continue to
contract until at least 2001. Forty-one percent of government revenues go
out to payments on the interest on debt alone. Drug dealing, violent crime,
police brutality, and corruption are significant problems. The murder rate in
the capital, Kingston, is high. In a city of around 3/4 of a million people,
there were 953 murders (1998) and 145 fatal shootings of suspects by the
police (1998). There have been two episodes of rioting in the year 1998-99.
Tourism has been negatively affected by international media coverage of
the drugs and crime problems in Jamaica. While a major change in the
political figures, parties, and structures of Jamaica is not expected, further
social unrest in the face of such stagnation is a continuing risk.12
Bahamas
It is illegal for real estate transactions to be conducted by an unlicensed
practitioner. This licensing requirement has been mandated by the national
government.
Jamaica
Real estate sales professionals must possess a license to legally conduct
transactions in Jamaica. While no continuing education courses are required
to maintain the license, there are education and testing prerequisites before a
license can first be obtained. A high school education is the first, minimum
requirement. Then the practitioner must pass a one-month (100 hour)
Salesman's Course, and pay an annual license fee. Salespeople have one
further course after two years of practice, called a Dealers Course, which
comprises a further 160 hours of education. For those wishing extensive
training for Dealers/Brokers/Valuers, there is a four-year Land Economy
course also offered, as with the other courses, by the College of Arts,
Sciences, and Technology (CAST).
The law of agency in Jamaica mandates that practitioners represent one
specific side in the buying and selling equation. In other words, dual agency
is illegal.
Commissions on residential real estate transactions in Jamaica are generally
5%. Commissions when the transaction involves a Jamaican and a foreign
Chapter 6-26
CIPS The Americas
real estate practitioner are usually pre-agreed, and a 50-50 split is not
uncommon, especially for co-brokering arrangements.
Trinidad & Tobago
Real property sale/transfer documents must be formally written and signed
by both buyer and seller. The property, price, and parties must be identified,
but outside of these requirements, there are no standard contract
forms/styles used or required in Trinidad & Tobago. An attorney can write
up the sales contract after the parties to the transaction have reached
agreement. However, if a real estate practitioner is used, he or she may also
make up the contract document. The custom in real estate sales transactions
in Trinidad & Tobago is initial payment of a 10% deposit and then payment
of the balance in 90 days, although other time lengths can be agreed upon.
Also, when a real estate professional has been used, their commission is 35%.
The most significant consideration in the decision to issue a mortgage in
Trinidad & Tobago is the ability to verify the property's value and prove
that its title is free of encumbrances.
A stamp duty must be paid on all real property transfers. It is a percentage
of the sale price that is a graduated tax. When the stamp duty is paid, then a
Board of Revenue stamp is applied to the transfer documents. The
purchaser receives a registered copy of the transfer documents that then
serve as proof of ownership. The originals are kept in file with the
Department of the Register General.13
Land Rights/Usage
Trinidad & Tobago: titling system
Land in Trinidad & Tobago is titled under two systems, the old common
law system (U.K.) and the newer Torrens system (Australia). Most of the
land in the country is held under the old system and the deeds for these
lands are kept, registered, and can be searched for at the Deeds Registry of
the Registrar General's Department. Under the new, Torrens system, the
title is backed by a Land Assurance Fund against which claims can be made
by anyone who has been deprived of their interest in land by fraud. The
government in case of claims exceeding total Fund holdings assures the
Fund. Title searches take 2-3 weeks. The purchaser must have an attorney
make up the title/deed. Closing of the transaction is also the responsibility
of the purchaser and his/her attorney. Titles in Trinidad & Tobago are either
freehold or leaseholds, with the two common leasehold terms being either
25 or 999 years. The purchaser should have a careful title search conducted,
as a property may be constituted of lands held under both the old and new
title systems. This is not necessarily a bar to a transaction, but at the same
time should not be left undiscovered.14
Chapter 6-27
CIPS The Americas
Trinidad & Tobago: land rights case
There is currently a land rights case in Trinidad that may set wide
precedents. Six Trinidad citizens are taking a suit before the former British
colony's highest court, the Privy Council in London. Their cause is the
return of part of 12 square miles of land that formerly were a U.S. military
base. The central issues are land use and compensation. The suit claims that
while the colonial government of Trinidad received compensation from the
U.S. government at the time of use (WWII), some but not all the
landowners were compensated. The suit contends that compensation was
for houses and crops not land. Therefore, as the public purpose of the land
transfer - the military base - is over, then the land should be returned.
The U.S. government signed the land back to the government of Trinidad &
Tobago in 1988. The government has created a special Chaguaramas
Development Authority to direct the development of the tourism industry
on the land, as it has a great deal of prime coastline. The government has no
desire to give back such prime land, and has won two victories in domestic
courts. The suitors contend these judgements were politically motivated and
now look to London for a less-biased (in the suitor's view) judgement. Legal
observers suggest that the case has wider implications for the status of land
throughout the Caribbean and in Canada that was rented to the U.S. during
WWII by British colonial governments.15
Foreign Ownership
Barbados
The government of Barbados has an aggressive program for attracting
foreign investment through the Barbados Investment and Development
Corporation (BIDC). Foreign nationals have the same legal protections as
domestic investors. However, foreign investors must get government
approval for their investments and need to register their investments with
the country's Central Bank to ensure the free repatriation of their profits and
capital. Real property are strongly protected: mortgage claims can be
pursued in court, and liens can be placed on both built and chattel
property.16
Dominican Republic
President Leonel Fernandez proclaimed Decree 2543-45 in January 1998
that abolished restrictions on the ownership of real property by foreigners.
Foreigners now have the same freedom to purchase or invest in real estate,
as do citizens of the Dominican Republic.17
Haiti
Property rights in Haiti are not secure. According to the U.S. Department of
State, Haitian law and bureaucracy negatively effect real property law and
Chapter 6-28
CIPS The Americas
land tenure for both foreigners and citizens. There are several ongoing
property disputes between U.S. and Haitian private entities. The 1987
Haitian constitution also gives the government expropriation rights, but
only for public use, and with fair compensation. There is not a history of
expropriation, but in 1997-8, a large U.S. company approached the U.S.
embassy in Port-au-Prince about a case of unfair compensation. Corruption
is a problem and crime is high, but political violence is rarely directed at
foreign investment.18
Jamaica
There are no restrictions on foreign investment in Jamaica. Foreigners are
free to purchase real estate with the same freedom and legal protection as
Jamaican citizens. The only regulatory policies that may affect real property
investments are environmental impact assessments. Section 18 of the
Jamaican constitution protects property rights; including restricting
government expropriations to those that are required for justifiable public
purpose and for which fair compensation is given. There have not been any
major investment disputes in Jamaica in the 1990s. They're two investment
incentive regimes for real property. The Hotel Incentives Act offers both
income and dividend tax relief for up to 15 years, as well as duty-free
importation of construction materials. The Resort Cottages Incentives Act
allows the same incentives, but for a 7-year period.19
Trinidad & Tobago
The Foreign Investment Act of 1990 has set out the legal framework for the
foreign acquisition of real property. Under the Act, individuals and
companies can purchase up to a limit of one acre of land for residential
purposes and up to five acres for commercial purposes. Foreign real
property purchasers also must register all the particulars of payment method
and personal identification through his/her attorney to the Minister of
Finance. Under the FIA, foreigners nay buy freehold property, or lease
property. Property in excess of the stipulated amounts can be acquired
through the granting of a license by the President. There are also incentives
for tourism projects which can be granted through the approval of an
application by the Minister for Tourism.20
Bahamas Real Estate Association (BREA)
P.O. Box N-8860
Nassau
BAHAMAS
Tel: 242-324-4564
Fax: 242-322-4649
Realtors® Association of Jamaica (RAJ)
9 Aldington Ave.
Chapter 6-29
CIPS The Americas
Kingston, 10
JAMAICA
Tel: 876-960-8831
Fax: 876-960-8831*
Internet: www.realtors-ja.com
Caribbean Tourism Organization, www.caribtourism.com/
Caribbean Hotel Association, www2.chahotels.com
American Association of Chambers of Commerce in Latin America,
www.aaccla.org/
Endnotes
1. www.caricom.org/, Caricom web site; Robb, Drew, "Central America
and the Caribbean," World Trade, vol. 11, no. 9, pp. 30-33, September
1998.
2. Canute, James, "Globalization spurs Caribbean nations to move faster
towards common market," Financial Times, World Trade section, p. 5,
August 13, 1999.
3. See endnote 2.
4. Robb, Drew, "Central America and the Caribbean," World Trade, vol.
11, no. 9, pp. 30-33, September 1998.
5. "OPIC and HUD join to promote homeownership in Central America
and Caribbean, Create mortgage market for U.S. investors," AACLA ENews, October 13, 1999, www.aaccla.org
6. Gibbs, Melanie F., "Caribbean has sunny future," National Real Estate
Investor, vol. 39, no. 5, p. 108, May 1997.
7. "Bahamas," Successful Meetings, Island Guide, pp. 4-6, June 1999.
8. "1999 Successes fuel Dominican Republic's aggressive tourism
development plans for the year 2000," Business Wire, September 28,
1999.
9. Payne, Douglas W., "Letter from Grenada; Grenada selling land to
foreign investors," The Nation, vol. 268, p. 22, March 22, 1999.
10. See endnote 9.
11. "The America's: Calling the blind man's bluff," The Economist, vol.
352, no. 8138, p. 40, September 25, 1999.
12. "The America's: The Caribbean's tarnished jewel," The Economist, vol.
353, no.8139, pp. 37-38, October 2, 1999; Haddock, Fiona, "Jamaican
optimism," Global Finance, vol. 13, no. 9, pp. 33-34, September 1999.
13. M. Hamel-Smith & Co., "Doing business in Trindad & Tobago,"
Trinidadlaw.com web site, www.trinidadlaw.com
14. See endnote 13.
15. Fineman, Mark, "Trinidadians make case for return of choice real
estate," Los Angeles Times, Part A, p. 5, June 11, 1999.
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CIPS The Americas
2000: Barbados.
17. "Foreign ownership restrictions abolished," Latin American Database,
International Trade Administration (U.S.), Dept. of Commerce, 1998;
"Dominican Republic opens its real estate market," World Trade, vol.
11, no. 5, p. 24, May 1998.
2000: Haiti.
2000: Jamaica.
20. M. Hamel-Smith & Co., "Doing business in Trindad & Tobago,"
Trinidadlaw.com web site, www.trinidadlaw.com
Chapter 6-31
CIPS The Americas
Chile Country Report
Market Situation
Currently (1999) the Chilean real estate market is suffering from
oversupply. The period of its greatest growth was from 1985-1995, and this
benefited office, apartment, and single-family residences. During this
decade of explosive construction growth, real estate offered returns that
rivaled stocks and bonds, and over 60,000 residential units were built each
year in the capital, Santiago.
Oversupply in the residential real estate market of Santiago has affected
apartments more than detached residences. There has been a move by the
middle class not only into single-family homes from apartments, but also
away from the city into investments in vacation homes. The percentage of
growth in the oversupply of houses and apartments from 1997-1998 is the
same in both housing types, at 26%, but the number of unsold apartment
units was 10,000 (1998) in comparison to 2,800 (1998) unsold homes.
Still, real estate investments earned 6.5% over the Chilean inflation rate in
1998, even with the oversupply in the residential market. The situation may
be more one of decreasing margins rather than boom to bust. For example,
commercial office space in Santiago remains quite favorably priced in
comparison to other major Latin American cities. While office space in
Mexico City sells for US$3,715 per square meter (about 10.8 square feet),
in Santiago, office space goes for US$2,890 per square meter. The retail and
warehouse sectors in Santiago also show profitability in the region of 89.5% due to high demand and tightening supply.1
Chile has been the pioneer and model country for economic liberalization in
Latin America even with the political brutality of the Pinochet dictatorship.
One example that has directly influenced its real estate market was its
development of a privatized pension system (described below) that has been
used as a model in Argentina and Brazil. However, the current economic
situation colors politics in Chile as it does anywhere when the forecasts are
not rosy. Despite years of economic reform pursued under the Pinochet
dictatorship and now a democratic government, in 1999 almost 30% of the
Chilean population, or 4 million people, are still living in poverty. The
country’s economy is not sufficiently diversified to weather well a global
economy, with copper alone the source of 40% of Chilean exports, and 10%
of total government revenues.2
Chapter 6-32
CIPS The Americas
Chile will have a general election including the election of the President in
December 1999. It is likely that the same tone that influenced the 1998
elections in Brazil and the October 1999 elections in Argentina will
influence the Chilean elections as well as the upcoming 2000 Mexican
Presidential elections. This is the need to soften the social effects of free
market reforms; i.e. to find a way to increase social spending while
retaining the reforms and market liberalization already enacted. Maintaining
social peace in the face of economic hardship is always a pressing need in
Latin America, where the specters of dictatorship are far from distant
memories. However, the talk of finding a “third way” between the free
market and insular state control is not likely to produce anything more than
a delicate balancing act in any Latin American country than it has in
Europe, from where the “third way” discourse has been borrowed.
The Chilean pension system that was established in 1981 has been a
tremendous source of new finance capital to the construction and real estate
industries in Chile, as well as a model imitated around the region. Funds are
brought into the housing finance market from pension funds by the purchase
of a financial security instrument called a letra hipotecaria or LH. A
hipotecaria is a mortgage, and so a LH is a security issued on a residential
mortgage loan. This has expanded the amount of capital in the Chilean
commercial lending market dramatically, and therefore greatly increased the
percentage of home ownership in Chile.3
Mortgages in Chile cannot be for more than 75% of the value of the
dwelling, and the borrower’s monthly household income must be at least
four times the monthly loan repayment. Mortgages are most commonly
taken out for twenty-year terms. The balance of a mortgage is generally
indexed by the variation of the Chilean Consumer Price Index, and so the
interest rate on mortgages, plus the commercial bank’s common 3% extra
lending rate are, in real terms, indexed against inflation. Government
subsidies are also available to stimulate the growth of home ownership. In
1994, about 30,000 families took part in the housing subsidy scheme. The
average amount is 30% of the mortgage loan, but to qualify, families must
have a minimum level of savings and can only get the mortgage from the
state bank, the Banco del Estado. This last requirement reflects the
disinterest of commercial banks in small loans, rather than a legal
stipulation.4
Land Rights/Usage
The Chilean property tax collection system is interesting in how it shows
the possibilities for emerging markets to skip developmental phases to
advance beyond developed industrial economies in some ways with the help
Chapter 6-33
CIPS The Americas
of new technology. One common example is when countries invest in a
nationwide digital cellular phone network rather than completing a partial
system of land phone lines. The Chilean government has a domesticallytargeted Spanish language web site which not only explains real property
taxes, but how they are assessed, and how they can be appealed. This site
places Chile quickly on the way to making Chilean real property tax
assessment information available directly to citizens and foreign investors
through an easily accessed web site format.5
Taxes are only assessed on a minority of Chilean real property, about 1/3.
As of 1994, Chile had 2.3 million non-agricultural real estate properties and
466,000 agricultural properties. Three-quarters of residential properties and
2/3 of agricultural properties are tax-exempt. However, Chile has a
nationally computerized and partially privatized property tax system for the
1/3 of real estate that is taxed. Property values and assessments are made
according to a simple table-driven, computerized system. This
computerized system produces bills for taxpayers, statistics for
administration and evaluation, offers on-line retrieval of tax information to
government officials, and supports both headquarters and field activities
from data collection to valuation and billing.6
However, despite the efficient system connecting the national level with
regional and local assessment activities, the collection of property taxes has
been out-sourced to commercial banks. Taxpayers make their surchage-free
payment of their property tax to a commercial bank, which then makes a
small profit from the interest on payments earned on the money until it is
transferred to the government. Besides the property tax, there is a ValuedAdded Tax due on any real estate transaction in Chile, but excluding
inheritance and gift taxes, real property is not subject to any more taxes in
Chile, which therefore has a fairly low real property taxation burden for the
region.7
Foreign Ownership
According to the U.S. Department of State, Chile has strong legal protection
for property rights, including secured investments in real property. Given
the small size of the country, U.S. confidence in the security of investing in
Chile is shown in the figures for overall U.S. investment in the country of
US$9.5 billion between 1979-1997, and US$913 million in 1997 alone.8
Chapter 6-34
CIPS The Americas
Asociacion Gremial de Corredores de Propiedades y
Promotores de la Construccion (ACOP)
Avda. Providencia 2008-A, Piso 2
Santiago
CHILE
Tel: 56-2-366-0414
Fax: 56-2-233-5110
E-Mail: [email protected]
Internet: www.acop21.com
Corredores De Propiedades De Chile A.G. - COPROCH
Av. Providencia 2019
Of. 41-A
Santiago
CHILE
Tel: 56-2-242-8089
Fax: 56-2-233-3139
Endnotes
1. “Chile – real estate,” Guide to doing business in Chile,
www.businesschile.com web site.
2. Gopinath, Deepak, “Now comes the politics,” Institutional Investor, vol.
33, no. 3, pp. 80-90, March 1999.
3. Lira, Ricardo, “Pension funds and housing finance in Chile: a question
of social efficiency,” Journal of Housing Research, vol. 5, no. 2, pp.
229-246, 1994.
4. See endnote 3.
5. Smith, Kenneth V., “Real estate taxes in Chile: Online, low cost
assessments,” International Real Estate Digest, January 10, 1998.
6. “Chile,” Country report in Youngman, Joan M., and Malme, Jane H., An
International Survey of Taxes on Land and Buildings, Boston, 1994.
7. See endnote 6.
1999: Chile.
Chapter 6-35
CIPS The Americas
Colombia Country Report
Market Situation
The Colombian government is attempting to boost sagging employment
figures by subsidizing the construction of low-income housing. In fact, one
of the promises that President Andres Pastrana made during his successful
1998 campaign was to build 420,000 new Social Interest Housing Units,
known as VIS units. The VIS program is aimed at families with household
incomes up to four minimum wages, which then can access subsidies up to
US$3,300 through INURBE, the Institute of Urban Development. Even the
INURBE scheme faces problems. Its 1999 budget is only US$26 million,
and though the government wants to inject another US$133 million into the
scheme, it remains open whether enough political will exists for this fiscal
increase and for any further attempts to stimulate construction.1
Stimulating housing construction is an essential goal of the Colombian
government. By doing so, the government rather optimistically hopes to add
400,000 new jobs each year. With unemployment at 15% in the first half of
1999, and by government projections themselves expected to rise to 19% by
the end of 1999, the drive to boost the construction sector is an
understandable response. The sector has seen hard times in Colombia in
recent years, with a decline in new construction of over 40% in 1998 and a
further 43% decline in the first trimester of 1999. Even more worrying for
the economy is the amount of middle-class families that are losing their
homes because they cannot make their mortgage payments.
Many middle-income families were part of the old government housing
subsidy scheme. In this program, the real value of loans was tied to
inflation, which is now at 20-40% annual rates. 800,000 Colombians are
now in default on their subsidized mortgages, and after finding their
mortgage debt had doubled in just six years, many have lost their homes to
foreclosure. The situation is so bad that banks have over 50,000 repossessed
properties for which there is simply no market, since most Colombians
either don’t have the money to buy, or don’t want to risk what capital they
still have. Not surprisingly, the residential rental market is also in poor
condition, with units that marketed for only 2 weeks to a month in 1995
taking 3 months or more to rent in 1998-1999. Marketing times for
commercial and retail real estate are even longer. In fact, 900 commercial
real estate landlords in the country’s capital, Bogota, acknowledged having
to lower their rents in 1998-9 to appease tenants who had simply threatened
to go elsewhere.2
Land Rights/Usage
Chapter 6-36
CIPS The Americas
Land tenure
Several types of legal ownership categories for real property exist in
Colombia.
Fee simple ownership exists in Colombia and is locally known as dominio
absoluto or pleno dominio. Condominium units in commercial, office,
industrial and residential buildings are commonly owned on a fee simple
basis. In fact, condominium ownership is also used for investment units in
hotels and for land in subdivisions. A new development is the use of a fee
simple structure for timeshare ownership (utilizacion compartida) in resort
properties.
Another ownership category is that of a leased fee, called a derecho sobre
dominio alquilado, which is legal estate where some of the rights, like the
right to use and occupy the property, have been transferred by a lease, or
contrato de arrendamiento. Most multi-tenant buildings use a leased fee
ownership structure.
A final ownership category is a leasehold estate, derecho de arrendiamento,
bienes formales, where the tenant leases the land and owns the building(s)
and any improvements until the end of the lease. These leases are generally
short-term, even for land leases (contrato de alquiler de terreno). Ownership
rights to any buildings or improvements return to the owner in most cases at
the end of the lease.
Property in Colombia is subject to the familiar four powers of government:
taxation, eminent domain, police power and escheat. Some government rent
control does exist in Colombia, usually for high-density urban apartments.3
Foreign Ownership
In a formal decree (Decree 241), the Colombian government modified a
previous ban on foreign ownership of real estate. One of the reasons for the
previous ban was to prevent the laundering of drug money through real
estate. The Colombian government now believes that it has strict enough
laws and regulations to prevent this. The second reason for opening the
country to real estate investment is the five-year long recession in the
construction industry, and resultant low prices for real property and low
activity in real property markets.
Chapter 6-37
CIPS The Americas
Under Decree 241, issued in February 1999, foreign investment in real
estate is now permitted without limitation for companies whose business is
the purchase and sale of real estate properties, or of securities from the
securitization of real estate and construction projects. In other words, the
Colombian government wants to attract international capital from corporate
and financial markets, while restraining individual investments in
Colombian real estate.4 Colombia moved to further bolster the confidence
of international investors by repealing a constitutional provision that had
given the government the right to confiscate foreign-owned property
without providing compensation, even though the Colombian government
had never exercised this right.5
Federacion Colombiana de Lonjas de Propiedad Raiz
FEDELONJAS
Calle 72 No. 9-55
Officina 1103
Santa Fe De Bogota
COLOMBIA
Tel: 57-1-623-1707 or 622-6966
Fax: 57-1-623-3366
Colombian National Investment Promotion Agency, www.coinvertir.org.co
Endnotes
1. Garcia, Maria Isabel, “Development – Colombia: Middle class housing
plan stumbles,” Inter Press Service, April 7, 1999.
2. See endnote 1.
3. Hurtado, L. Jorge, “Colombia,” chapter 20 in Gelbtuch, Howard;
Mackmin, David; with Milgrim, Michael R., Real Estate Valuation in
Global Markets, Appraisal Institute, 1997.
4. Samper, Paula, and Fandino De la Calle, Ricardo, “Colombia: Foreign
investment in real estate property,” International Financial Law Review,
vol. 18, no. 4, p. 67, April 1999.
5. “Colombia woos foreign investors,” AP Online, Financial pages, June
18, 1999.
Chapter 6-38
CIPS The Americas
Costa Rica Country Report
Market Situation
Costa Rica has long had one of the most stable economies and political
cultures in Central America. The small countries in this region are enjoying
a sort of peace dividend since the 1991 resolution of civil hostilities in El
Salvador, and the 1996 peace agreement in Guatemala. Another strength of
the region is that because of the small size of Central American countries
they tend to attract longer term investors, rather than the high-yield oriented
capital that is vulnerable to quick withdrawal in times of economic doubt.
As a result, these countries have been relatively unaffected by the economic
problems of the larger Latin American markets of Brazil, Mexico, and
Argentina. In fact, there was a 16% rise in foreign investment in Costa Rica
in 1998, with the tourism sector generating US$1.0 billion in that year
alone.1
The Costa Rican economy has suffered but also gained from the recent
difficulties from El Nino and Hurricane Mitch. El Nino boosted coffee
production, and as Honduras and Nicaragua rebuild, much of that material
will be imported from Costa Rica. In fact, the 1998 fiscal budget deficit was
down one percent of GDP to 2.9% in 1998, and overall government
revenues were significantly boosted. Even though it was projected that the
1998 growth rate of 5% would slow down one point to a 1999 growth rate
of 4%, this is still quite positive in comparison to the projected 1999
contractions in the large-scale Brazilian and Argentine economies. The
American company Intel has also made a significant investment in a large
manufacturing facility in Costa Rica, a sign that the smaller scale
maquiladoras, or assemblage industries, are beginning to have a high-tech
future with microelectronics firms.2
Tourism, however, is the great growth area in Costa Rican real estate, and
has been for almost two decades. Some 50,000 American and Canadian
retirees are estimated to already have residences in the country. The
country’s proximity to the U.S., it’s general stability, climate, decent
infrastructure, low cost of living and professional medical care make and
will continue to make the country attractive to North American retirees,
who are being cultivated throughout Central America (See Nicaragua
profile for a further example).3 A confirmation that the real estate industry
internationally has recognized the potential in Central American residential
real estate came in February of 1999, when Cendant-owned Coldwell
Banker signed a master franchise agreement for all of Central America, and
announced they were prepared to immediately enter the Costa Rican
market. Their view is that there is a high-end luxury and resort market in
Central America with US$100 million worth of inventory that more than
justifies a move into the region.4
Chapter 6-39
CIPS The Americas
The current President of Costa Rica, Miguel Angel Rodriquez, has
maintained the market liberalizing reforms begun by the previous
government. In order to continue favorable economic growth, President
Rodriguez has proposed further privatization of three state-run banks as
well as a large beverage company. This is expected to help with the main
economic drag on Costa Rica’s growth, the large budget deficit. There are
current proposals to open the energy and telecommunications markets to
competition, as well as to privatize a large percentage of the social security
funds. The country still faces social problems from poverty and landless
citizens, which can negatively impact the tourism industry (see below), but
the need to pull back on reform is not as urgent as in the faltering larger
Latin American economies.5
Land Rights/Usage
Costa Rica is one of the few Latin American countries to have allowed
fairly unrestricted purchase of real property by foreigners for some years
now. It is then an unpleasant irony that there have been serious conflicts in
recent years between foreign property owners and aggressive squatters who
openly harass those who oppose their encroachment and occupation of
private lands, even to the point of violence. What many potential foreign
buyers do not realize is that the land laws of Costa Rica essentially do not
regard private property ownership as an inviolable right and therefore grant
squatters significant rights within a short period of time.6
Squatters begin to gain legal rights to occupation of a particular private
property within three months of establishing themselves there, and cannot
be removed without recourse to the courts. After they have been on the site
for a year or more it is very difficult to have them evicted, and after 10
years the squatters can register the land as their own, thus essentially
acquiring the owner’s title without any transaction. This is a serious
difficulty for both Costa Rican and foreign property owners. It is further
complicated by the vagaries of acquiring clear land title in Costa Rica, by
the largely ineffective results of recourse to the judicial system, and by
governmental corruption. Not to be forgotten are the direct threats from
squatters themselves, as at least one American landowner was killed in an
open armed confrontation with squatters in 1998. As of that year, the U.S.
government had not yet ruled out the use of economic sanctions if the
government of Costa Rica did not begin to make serious attempts to
resolves these land disputes.7
Foreign Ownership
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Under Costa Rican law, real property rights are legally secured and
enforced, and the recording of mortgages and titles are mandatory.
However, the property title disputes, as addressed above and below, should
serve as a warning to investors to be vigilant about both the purchasing and
continued ownership of real estate in Costa Rica. Even the National
Registry, where legal title to real property is recorded, is not immune to
what the U.S. Department of State refers to as “abnormalities.”8
Government expropriation
According to the U.S. Department of State, the government of Costa Rica
has expropriated large tracts of land in the past for the creation of national
parks, biological refuges, and indigenous reserves. Costa Rica still
expropriates land for building roads and other kinds of public infrastructure.
The Constitution of Costa Rica, under Article 45, states that real property
cannot be expropriated from either a national citizen or a foreigner without
proof of public interest and prior payment. However, the U.S. State
Department is aware of several U.S. individuals or entities that are still
seeking restitution for expropriations that date back fifteen or more years.
Also, even when payments have ultimately been made, the Costa Rican
courts have not always required that either interest be added to delayed
payments, or that awards be insulated from inflation. That said, the U.S.
government’s position is that both the current and past governments have
made notable attempts to resolve these outstanding expropriation disputes,
and several of the significant and lengthy cases have been partially
concluded with either the return of the property or payment of partial
compensation.9
Ownership restrictions
One major restriction on land ownership in Costa Rica, for both foreign and
domestic investors, is the Maritime Zone Law. This law governs the use of
the first 200 meters of beachfront property in Costa Rica. The first 50
meters of beachfront cannot be developed. Investors through a government
concession can lease the remaining 150 meters of beachfront, if the land is
zoned for it. This is where vigilance is again required on the part of the
investor. Most beachfront land in Costa Rica is not legally zoned for
concessions. Therefore, a proper search of the zoning situation of a
particular beachfront property is essential for both foreign and domestic
investors to avoid becoming the lessor of a concession that has not been
officially zoned. Such a concession could ultimately be declared
nonexistent, and therefore legally null and void. Also, half of the
development capital for these concessions must be Costa Rican, although in
practice this often leads to the use of the name of a cooperating Costa Rican
citizen on lease contracts.
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Investors should also be aware that traditional paths that cross private
property have legal status as public rights of passage, a tradition derived
from ancient Roman law and preserved in other countries such as the
United Kingdom. The above mentioned “anomalies” at the National
Registry where land title records are kept include information that can be
either incomplete or contradictory, so careful title research is important, as
is the use of a lawyer experienced in the laws, customs, and issues particular
to Costa Rica.10
Costa Rican Investment and Development Board, www.cinde.or.cr
Endnotes
1. 1 - Lasaga, Manuel, “Central America today,” Business Economics, vol.
34, no. 3, pp. 22-29, July 1999.
2. 2 - See endnote 1.
3. 3 - Stevens, Jennifer, “Real estate in Costa Rica,” International Living
Magazine, 1998.
4. 4 - “Coldwell Banker real estate corporation signs master franchise
agreement for all of Central America,” Business Wire, February 3,
1999.
6. 6 - Kovaleski, Serge F., “Squatters threaten foreigners: Land ownership
unsafe in Costa Rica,” The Washington Post, March 3, 1998.
8. 8 - U.S. Department of State, Country Commercial Guide, Fiscal Year
2000: Costa Rica.
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Ecuador Country Report
Market Situation
It may seem strange to begin to profile a country with reference to past and
present natural dangers and disasters. In the case of Ecuador it is only
prudent. Mount Pichincha, that overlooks the country’s capital, Quito,
covered the city with thin film of ash on October 5, 1999. Vulcanologists in
the country felt the city was protected by natural geographical defenses, but
still gave the mountain a 90% chance of erupting in the near future. The
important tourist industry in Ecuador is suffering. The Tungurahua volcano
is also expected to erupt soon right near the popular Banos tourist center.
Flooding from El Nino destroyed many of the country’s roads, and in 1998
a prominent beach resort, Bahia de Caraquez, was partially destroyed by an
earthquake.1
Equivalents to these natural disasters can be found in the country’s political
and economic life. In the spring of 1999, the government placed a freeze on
domestic bank accounts to battle inflation. Since then, the country’s
currency has been devalued several times, and there have been successive
waves of general strikes. Overall, the economy in Ecuador is expected to
shrink by at least 7% during 1999, and the annual inflation rate was already
at 60% by the fall of 1999.2 And in September and October of 1999,
Ecuador became the first country to default on Brady bonds, which are
dollar-denominated bonds partially backed by U.S. Treasury bonds. This
default, plus the country’s lack of credible policies to deal with this and its
many other economic problems, will effectively cut the country off from
private international capital for some time.3
However, those not put off by the current economic turmoil in the country,
and the possibility of further political and social unrest, may see Ecuador as
a real estate bargain. The country has much unspoiled natural beauty and
can boast of having both the Galapagos Islands and the Amazon within its
national boundaries. The shortage of cash domestically from the bank
account freeze is forcing many people to sell their real estate as an alternate
way to access funds for business or living. The result has been lower real
estate prices in all residential sectors and in all parts of the country.
A two-bedroom condo in the center of the capital, Quito, can sell for
US$21,000.
A 2,200 sq. ft. house on the Pacific with water, electricity, and telephone
just twenty minutes from the city of Portoviejo can sell for under
US$12,000.
A gated coastal resort community with a water treatment plant, security,
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tennis courts, and sauna will sell beach plots for US$30,000.
At Salinas, Ecuador’s premier coastal resort, a two bedroom condo with
access to many common recreational amenities will sell for under
US$40,000.4
Ecuador has not enjoyed a long history of political stability. Currently, none
of the 13 legislative parties has a majority. Nor is there much commonality
among their political agendas. Former President Abdala Bucaram, elected in
1996, was removed by congress for “mental incapacity” after little more
than six months in office. In January of 1999, the Ecuadoran government
itself acknowledged corruption as one of the biggests drains on the national
economy. Former President Fabian Alarcon was arrested for corruption in
March of 1999. As of November 1999, President Jamil Mahuad had
presided over several devaluations of the country’s currency several times,
numerous national strikes, and had made the decision to renege on a portion
of the country’s foreign debt. His attempts at reaching an austerity-based
lending agreement with the IMF are complicated by the lack of domestic
political consensus-building that is required to enact needed reforms.5
In Ecuador, many properties for sale are not listed. There are no multiple
listing services.6
Foreign Ownership
In the judgement of the U.S. Department of State, sufficient protection for
property rights is given in Ecuadorian law. Foreign investors are warned
that because of the problems with corruption, gaining protection for
property rights from the local court system has at times been complicated or
unsatisfactory.7
Endnotes
1. “The Americas: Fuming in Ecuador,” The Economist, vol. 353, no.
8140, p. 40, October 9, 1999.
2. “Finance and economics: Latin bondage,” The Economist, pp. 94-6,
October 9, 1999.
3. Tyson, Laura D’andrea, “The message in letting Ecuador default,”
Business Week, Industrial/ technology edition, p. 22, October 25, 1999;
See endnote 2.
4. Scott, Gary, “Living in Ecuador – Real estate in Ecuador,” International
Living Magazine, July 1999, www.escapeartist.com
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5. “Current risks: Ecuador,” World Trade, vol. 12, no. 11, p. 36, November
1999; “Government presents strategic plan up to 2025,” BBC Summary
of World Broadcasts, January 26, 1999.
6. See endnote 4.
7. U.S. Department of State, Country Commericial Guide, Fiscal Year
2000: Ecuador.
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El Salvador Country Report
Market Situation
El Salvador has enjoyed significant and increasing levels of foreign
investment since the end of the civil war in 1991. Inflation is down to 4.2%
and 1999 growth is predicted to be 3.2%, down 0.6% from 1998, but
healthy given the impact of Hurricane Mitch and anxiety among investors
about the March 1999 Presidential elections. The elections resulted in the
victory of Francisco Flores as President, which encouraged market
confidence in the continuance of the economic policies of former Presidents
Calderon and Cristiani. The government of El Salvador has only a modest
deficit, a low level of external debt, and healthy capital flows from family
remittances and long-term loans from multilateral lending agencies. The
maquiladora, or assembly industry, is strong in El Salvador, focused mainly
on textiles and apparel, and grew from US$82 million in revenue in 1990 to
US$609 million in revenue in 1995. Further market liberalization is also
expected from privatization in the energy and power sector. Investor
confidence in El Salvador is thus expected to grow.1
El Salvador has also made progress in reducing the bureaucracy that had
negatively affected the development of foreign trade and investment.
Currently, the country allows investors in industrial activity unrestricted
remittance of net profits. Resident corporations also enjoy a favorable fixed
income tax rate, and benefits also exist for investors in (primarily industrial)
free trade zone areas. Cumbersome administrative procedures do still exist
for foreign investors, such as the requirement that investors register with the
Ministry of Economy. Investment permission and registration procedures
can take months, and information regarding these procedures can be hard to
get as well as contradictory.2
As far as the growth of the real estate industry specifically in El Salvador,
one major U.S.-owned real estate corporation, Coldwell Banker, sees
Central America as a market worth their attention. In February 1999,
Coldwell Banker announced the signing of a master franchise agreement for
all of Central America, with plans to expand from a base in Costa Rica into
Guatemala, El Salvador, Belize, Honduras, Panama and Nicaragua. The
company believes there is a significant high-end luxury and resort home
market in this region with room for future development.3
Land Rights/Usage
Property rights are not fully secure in El Salvador, according to the Land
Policy Network of the World Bank. To try and deal with the problems of a
densely populated and highly urbanized country, forced land distribution
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was undertaken during the 1980s.4 The reforms of the 1980s were not
successful and in 1997 Ana Guadelupe Castillo, from the National
Association of Agricultural Workers of El Salvador, estimated that 57% of
the rural population of El Salvador, some 450,000 families, did not have
land of their own. Also, farmers are struggling under such high debt and
high production costs that they are being forced to sell their land.5 The
Land Policy Network has suggested market deregulation as a solution to
these rural land problems. They hope the result will be similar to what
occurred in Chile during the 1980s: a gradually merging of farms too small
to be productive into medium sized farms which are productive enough to
compete economically, but not so large that further disenfranchisement of
the rural population occurs.6 The government response and its resulting
rural impact have not yet been determined.
The Constitution of El Salvador technically gives and safeguards the right
of its citizens to own private property. In fact, this right dates back to the
creation of the country's civil code in 1857. The civil code stipulates the
creation of a national registry of deeds. The National Registry of Deeds
(Registro Nacional de las Escrituras y Hipotecas) was established and the
rules for its functioning finally promulgated in 1897. El Salvadoran law also
provides for the following government powers over real property within its
national borders: taxation, maintenance of economic order (which may
include use of eminent domain and police powers), and escheat. Taxes on
real estate in El Salvador are low for the region, with the only tax due
applying to the purchase of property.7
Foreign Ownership
Three laws constitute the legal framework for foreign investment in El
Salvador: the Foreign Investment Promotion and Guarantee Law (1988); the
Export Reactivation Law (1990); and the Free Zones Law (1998). Foreign
investors may hold dollar accounts in El Salvador and may use these
accounts when seeking local financing. Also, 50% of net profits from
investments in either commercial or service industries can be remitted
legally - 100% in practice. When a business is terminated, there are no
restrictions on the repatriation of funds, as long as they are in proportion to
what was initially invested. Confidence in the economy has been increasing
internationally, as 1995 foreign investment was US$250 million, while
1998 foreign investment totaled over US$1 billion.8
Foreign investors should be aware of the need to be cautious about property
rights in El Salvador. Although the laws of the country technically protect
private property, difficulties in enforcing property rights do occur.
Enforcement is becoming more reliable, but the assistance of the U.S. and
other multilateral agencies remains essential, particularly in the reform of
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local law enforcement. Foreign investors have the right of recourse to the
local judiciary to resolve disputes, but this is slow, expensive, and often
unsatisfactory. The Salvadoran court system is different from the American
system in working primarily with written rather than oral arguments. Also,
despite attempts at judicial reform and weeding out corrupt judges and
administrators, there are persistent rumors that money can buy either
decisions or lack of enforcement. Foreign investors are advised to include a
clause in contracts that mandate arbitration proceedings - if possible in an
international forum.9
American Chamber of Commerce of El Salvador, www.amchamsal.com
Endnotes
1. Lasaga, Manuel, "Central America today," Business Economics, vol. 34,
no. 3, pp. 22-29, July 1999.
2. "Trade and Investment Barriers," Latin America Database, International
Trade Administration, Department of Commerce, 1998.
3. "Coldwell Banker real estate corporation signs master franchise
agreement for all of Central America," Business Wire, February 3,
1999.
4. "Land issues in Central America," Land Policy Network document,
World Bank web site, last listed document update in November 1998.
5. Sequeira, Marciel, "Central America: Rural workers say land is
returning to the rich," Inter Press Service, April 9, 1997.
6. See endnote 4.
7. Portillo, Carlos A., "El Salvador," chapter 19 in Gelbtuch, Howard;
Mackmin, David; with Milgrim, Michael R., Real Estate Valuation in
Global Markets, Appraisal Institute, 1997.
8. "Improved investment climate," Caribbean Update, IAC Newsletter
Database, September 1, 1999.
9.
Chapter 6-48
See endnote 8.
CIPS The Americas
GUATEMALA – ICREA Profile
Code of Ethics
There is Code of Ethics in professional associations, but not in the market
place. All are bound by the commercial and civil codes. AGBRV has an
Honor Tribunal to conduct an internal discipline process. The board of
Directors is responsible for its enforcement.
There is legislation that requires licensing, but it is mute and never has been
applied. There is no mandatory continuing education requirement.
Supply and demand regulates the real estate market. There are some
statutes in the commercial code, but anyone that chooses to work real estate
is free to do so with no major requirements other than the ability to make
the necessary contacts and market the properties. Of course any
commercial efforts require registration for fiscal compliance.
Foreign Ownership
There is no legislation that restricts foreign investment. However outright
ownership is limited in the case of state reserves such as the river banks,
seas and frontiers, ecological reserve areas etc. Otherwise there are no
restrictions whatsoever.
We have a National Registry for Property which is mandatory to adhere to.
It is computerized. It is run and accessible by the Government Registrar.
Other Industry Professionals
A Notary is usually involved in all purchase and rental contracting,
elaborating the document, putting his public faith to it’s authenticity and
that of the signatures, and taking charge of notifying the registry and
municipality of the title transfer. Lawyers can sell properties.
Lawyers, notaries or other professionals are not always required to be
involved to complete real estate transactions since property can be
transferred in private documents, but it is a very unsafe and little used
procedure.
There is a mechanism, other than through the legal system, to adjudicate
remuneration disputes between real estate practitioners, but it is not widely
used.
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Services primarily assist in sale and rental. However, there are moments
when consultation is given for other aspects or services needed by the
client. Real estate practitioners primarily matches offer and demand by
promoting products for developers or sellers, or searching for property
through professional networks. There are practitioners that also assist with
financial services, loan procurement, administration and consulting.
A practitioner may market properties anywhere in the country. There is no
regional/local restrictions. A non-resident can market properties. The
conventional means for property promotion are used in Guatemala.
Newspapers, fliers, radio, television and in some cases internet. Marketing
varies in scope depending upon the financial ability of the practitioner.
Generally promotion is local, regional or national. There are web based
marketing systems, but they are mostly through the newspapers online.
Residential, commercial, sale and rental properties are all included in
marketing. There is one proprietary system that has not been successful.
There is no MLS in Guatemala that is accepted.
Referral System
There is no referral system in Guatemala, but between colleagues, many
times the referral system is used. Referrals is commonplace.
Most companies are locally based. They are generally the companies that
handle real estate also develop or construct, although there are those entities
that are only real estate sales oriented.
Relationship of Buyer/Seller to Practitioner
Legal obligations between the “practitioner and the party” vary according to
the type of “realtor or practitioner” in each case. In Guatemala there is the
constructor who sells his own products…in this case there are always
contractual agreements with purchasers. If a real estate “agent” or
intermediary is involved, there are those companies that will require some
sort of written agreement to guarantee commission payments and or
representation privileges, however many times real estate companies will
work even without these agreements. We have no exclusive listing service,
and clients often list their properties with many real estate agents or
brokers…as companies or independents., Commission agreements are
often only verbal.
Practice has it that the agreement is usually with the seller. It is the seller
that is responsible for paying the commission, although it is the buyer who
provides the funds. Real Estate professionals have become accustomed to
asking the buyer to draw two checks upon closing, in order to avoid
problems with fee collection from the seller. There is no set rule for
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contracts to be in writing or in verbal. Contracts are not mandatory, but
they are recommendable for the practitioners protection. Other types of
relationship between real estate practitioners and the consumer exist, e.g.
facilitator.
Remuneration
Generally remuneration is paid upon closing by the seller with money
charged from buyer. Commission is the method of payment. The payment
is made upon closing, or in the case of rentals a portion of the first months
rent.
Generally attorneys draw up the contracts and receive funds from buyers,
giving them to their clients. At times the Realtor is also the intermediary
for receiving funds. The most common practice is for all to be present at
the contract signing and money transfers hands there. Usually, custom
rules. We have no law that requires a said commission. The rule of the
market determines payments.
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Honduras Country Report
Market Situation
Due to Hurricane Mitch, 1998 was the most economically disastrous and
disrupted year in the history of Honduras. Initial estimates, which are likely
to have risen, put total losses to the country's economy at US$3.0 - US$5.0
billion. This is a loss of over one-half of annual GDP, and at the same time
one-third of the Honduran people became homeless from either storm
damage or flooding. The country's agricultural business, a major sector of
the economy, suffered tremendous damage, as did the national
infrastructure of bridges and roads. International economic aid of significant
scope was sent immediately and continues to be made available to
Honduras. The country has bounced back from the natural disaster with
remarkable tenacity. Extensive spending on bridges, roads, and new
residential housing is at least expected to create much needed improvements
in the quality of the national transportation and housing infrastructure, as
well as be a source of employment growth through the construction
industry.1
As far as the growth of the real estate industry specifically in Honduras, one
major U.S.-owned real estate corporation, Coldwell Banker, sees Central
America as a market worth their attention. In February 1999, Coldwell
Banker announced the signing of a master franchise agreement for all of
Central America, with plans to expand from a base in Costa Rica into
Guatemala, El Salvador, Belize, Honduras, Panama and Nicaragua. The
company believes there is a significant high-end luxury and resort home
market in this region with room for future development.2 Honduras has
Pacific beaches, islands, and mountainous rainforests as sites for eco-tourist
development. Honduras is also part of the five-nation Mundo Maya tourism
initiative in the region, and has both Mayan ruins and historic colonial
villages.3
Foreign Ownership
Honduras has an Investment Law that gives foreigners the same rights in
property ownership as domestic investors have under the Honduran
Constitution and applicable laws, with a few exceptions that will be
addressed here. Foreigners have the right to free acquisition, profit, use, and
disposition of real property in Honduras. Foreign investors also have
unrestricted rights to set up, buy, or sell their business investments without
government intervention. The only prohibition on foreign ownership is a
constitutional stipulation against the ownership by foreigners of land with
40 kilometers (25 miles) of shorelines or national borders. There is
movement in the Honduran government to have this restriction lifted to
stimulate tourism development projects. While tourism development is an
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area of strong potential along the north coast, on the Bay Islands, and in the
rainforest regions, local legal counsel is extremely important when
engaging in these transactions. This is due to the difficulties that can arise in
establishing and asserting property rights in Honduras - especially outside
the major cities. The Honduran Congress has passed laws that allow
foreigners to purchase coastal property in tourism zones, yet the
constitutional prohibitions against this have not been repealed. There are
currently 100 property disputes involving U.S. citizens registered with the
U.S. Embassy in Honduras that date from the last 6 years.4
Honduran Foundation for Investment and Development of Exports (FIDE),
www.hondurasinfo.hn/
Endnotes
no. 3, pp. 22-29, July 1999; "Economic profile," Web site of the
Industrial Development Group - Honduras (Internationally), or FIDE the Foundation for Investment and Development of Exports (in
Honduras).
2. "Coldwell Banker real estate corporation signs master franchise
agreement for all of Central America," Business Wire, February 3,
1999.
3. "Investing in Honduras," Web site of the Industrial Development Group
- Honduras (Internationally), or FIDE - the Foundation for Investment
and Development of Exports (in Honduras). See also El Mundo Maya
web site, www.escape.ca/~dkehler/emmhome.html
4. U.S. Department of State, County Commercial Guide, Fiscal Guide
1999: Honduras.
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MEXICO – ICREA Profile
Code of Ethics
The Mexican Association of Real Estate Professionals (AMPI) has
developed a Code of Ethics which must be observed by all members of that
organization. Violation of the provisions may result in (1) a warning; (2)
an admonition; (3) the temporary suspension of rights, or (4) expulsion
from the Association. An Honor and Justice Commission oversees
compliance.
Section One: Relations with the Public
Article 1. It is the basic duty of every real estate professional to obtain
education with the specialty of Real Estate.
Therefore, the Real Estate Professional has the obligation to be up to date
regarding her field by being informed of the changes that could affect the
real property, not only in her own city but also in the Nation in general.
With the knowledge acquired, he shall be able to contribute an opinion in
relation to rules, legislation, better use of the land, planning, and other
aspects related to real property.
Article 2. The Real Estate Professional has the obligation to be informed
about real estate market conditions, since, among others, his function is to
inform his principal about the fair value of real properties.
Article 3. One of the most important functions of a Real Estate Professional
is to protect his principal against fraud, abuse or immoral practices in the
real estate field. Consequently, it is her duty to help prevent harm to the
public as well as to prevent any act that could injure the dignity and
integrity of the Real Estate profession.
If such acts were performed by a member of the Mexican Association of
Real Estate Professionals, the person who becomes aware of such an act,
must present proof to the National Advisory Council so that, in accordance
with AMPI By-Laws AMPI can proceed to penalize the violator of this
Code of Ethics.
Article 4. Truth must be the guideline for the actions of the Real Estate
Professional. Upon accepting a property to administrate or to sell, the Real
Estate Professional shall inspect it before she administrates it or offers it for
sale to avoid mistakes, exaggeration of qualities of the property offered, or
hiding information about it.
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Article 5. The Real Estate Professional shall not participate in transactions
that for any reason may damage the interests of any of the contracting
parties, or a third party, or another Real Estate Professional.
Article 6. The Real Estate Professional shall not contribute to the
declaration of false information in deeds or other public documents, nor
shall he make false declarations in the presence any authority. Integrity in
all actions shall justify the confidence deposited in her by her principal.
Article 7. When using any means of publicity, the Real Estate Professional
must be very careful to provide accurate information in the advertisement,
since it must reflect the exact reality and by no means should it be distorted.
Article 8. The Real Estate Professional, in order to protect the parties to a
transaction, must attempt to obtain, in writing, all facts, promises and
agreements related to each transaction. The exact agreement reached by the
interested parties shall be stated in the related documents, which shall be
signed by them. Each party shall keep a copy of these, including the Real
Estate Professional who will keep one for his files.
Section Two: Relations with the Client
Article 9. Accepting any business from a principal involves the commitment
of promoting and protecting said client’s interests. This is an obligation of
loyalty towards someone who has entrusted him with business. This duty,
which is of utmost importance, involves the need to act with absolute justice
and honesty towards all the parties involved in a transaction.
Article 10. As guarantee of the interests that have been put in the hands of
the Real Estate Professional, the latter must inform his Buyer client
truthfully about
a) Qualities and defects of on the property proposed or desired.
b) The feasibility or complexity of completion of the proposed transaction.
c) All the circumstances involved in the business entrusted to him.
Furthermore, the real estate professional must never oppose the wish of any
of the parties to the transaction to consult an attorney, notary or any other
professional with regard to:
I. Problems affecting the property.
II. Restrictions or limitations that could affect the property.
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III. Encumbrances etc, that could restrict the use or enjoyment of the
property.
IV. The structural soundness of the construction.
V. Whether or not the correct materials were used to build the property.
In general, the Real Estate Professional must cooperate with all consultants
and advisors that his principal needs to consult with in order be comfortable
with her real estate transaction.
Article 11. The fees collected by the Real Estate Professional must be fair
compensation for her work and knowledge on the subject, in accordance
with the policies of the area where the property is located.
These fees can be calculated based on a percentage of the purchase price, or
can be a fixed amount.
An "over-price" (net listing) is unethical. This is considered as unfair
compensation that will damage the interests, of the client who is selling.
Article 13. In the event the Real Estate Professional is interested in
acquiring, for himself or for his company, a property that a client listed with
him, he shall inform his client of his intention and suggest that a
professional appraisal be obtained. If both parties agree, the transaction
shall be carried out on that basis.
Article 12. In the event the Real Estate Professional is interested in
acquiring, for himself or for his company, a property that a client listed with
him, he shall inform his client of his intention and suggest that a
professional appraisal be obtained. If both parties agree, the transaction
shall be carried out on that basis.
Article 13. lf the Real Estate Professional is granted an exclusive right to
sell, she shall give priority to said listing. Therefore, the Real Estate
Professional may explain to her principal the advantages that said
exclusivity grants to both parties.
Article 14. If the Real Estate Professional makes a payment on behalf of a
client and obtains a discount, said benefit shall always be credited to client.
Article 15. The Real Estate Professional shall be extremely careful with
respect to confidential information confided by a client. She must not
divulge or give opinions or information about clients or about that, which
has been said to her in confidence.
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Article 16. In making a judgment about the value of a property, the Real
Estate Professional must carefully analyze all the elements surrounding it,
which could affect the business in question.
He shall never give an opinion regarding the value of property in which he
has or could have an interest unless this circumstance is made clear and is
perfectly understood by the client. He shall never give an opinion about the
value of properties in which he is not experienced. In these cases, if out of
his area of expertise, the professional must consult an appraiser expert in the
field. Every circumstance surrounding these cases must be disclosed to the
client.
Article 17. The Real Estate Professional must obtain authorization from the
owner, before advertising a ´property. The Real Estate Professional must
never advertise properties that have not been offered to him/her directly by
the owner, and if an offer comes from another agent, she must obtain
written authorization from the other agent to promote the property.
Article 18. The Real Estate Professional must attempt to obtain written
offers presented on the properties listed with him. She is obligated to
present all written offers to the owner, whatever the offer might be, with the
purpose of allowing the owner to compare and be able to decide whether it
is acceptable or not based, on the terms presented.
Section Three: Relations with Other Real Estate Professionals
Article 19. The Real Estate Professional shall not take advantage of other
colleagues. He has an obligation to share with them the experience and
knowledge that has been acquired through studies and experience with
different transactions.
Article 20. In the event of a conflict between two Real Estate Professionals
of the same organization, resolution shall be made by a panel formed by
two members of the organization elected in accordance with its Statutes.
Said resolution shall never be turned over to an outside court of law. The
Real Estate Professional shall accept and submit to the verdict issued by the
aforementioned panel.
Article 21. If the Real Estate Professional is accused of unethical practices
and does not accept guilt, she may voluntarily present the facts to the
Directors of the National Advisory Council and to the body stipulated in the
Statutes.
Article 22. The Real Estate Professional shall abstain from making
comments with respect to business actions performed by another Real
Estate Professional in the same Association. If his opinion is officially
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requested, said opinion must be based on the absolute truth and shall be
given in a cordial and professional manner.
Article 23. The Real Estate Professional shall not accept an exclusive listing
that is currently listed with another Real Estate Professional. She shall
respect the rights of the first one until the term of said exclusive listing
expires, even if the owner wishes to change. Likewise, the Real Estate
Professional who accepts an option is obligated not to transfer her rights to
a third party without the consent of the initial Real Estate Professional and
the owner.
Article 24. The Real Estate Professional should cooperate with other Real
Estate Professionals in making sales and in distributing the commissions
earned as agreed, in writing. In the event of sale of an exclusive listing, the
Real Estate Professional, representing the buyer, must deal with her fellow
Real Estate Professional who gave her the property for sale and not with the
owner.
Article 25. A Real Estate Professional shall not recruit the services of a
colleague's employee without previous consent of said colleague.
Article 26. A sign offering a property for sale, rent or exchange should not
be placed by more than one Real Estate Professional.
Article 27. In the best interests of the community, the Real Estate
Professional should be loyal to his local real estate organization and to his
colleagues, since this will benefit the organization, its associates and his
own business.
Currently Mexico does not have a license law though the states of Sonora,
Sinaloa and Guanajuato require the registration of real estate practitioners.
Agents working with clients in those states should verify local requirements
for specifics.
In the rest of the country, there is no regulation of practitioners and any
Mexican citizen can promote and offer real estate for sale. Non-Mexicans
must obtain an immigration status permitting them to work in the field. This
status could be a business visa for single transactions or the FM-3 (nonresident) or FM-2 (resident) status. Mexican Consulates in the U.S. and
Canada can provide further information about the requirements for each
different status.
No minimum educational requirements are in place though AMPI, the
Mexican Real Estate Association, has signed agreements with The
Normalization and Certificacion Board of Labor Competency (CONOCER)
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which establishes criteria and which tests basic proficiency in the subject
matter. This is a new program which is being tested in Monterrey, Mexico
and may be extended to the rest of the country.
Foreign Ownership
Fee simple ownership is permitted. No foreign relations permit is required
but the deed must be recorded in the National Foreign Investment Registry
located in Mexico City, in addition to standard recordation in the local
property registry.
Non-Mexicans must obtain adequate immigration documents in order to
promote and transact a real estate operation on behalf of others when the
real property is located in Mexico. A real estate license issued in
practitioner’s state of residence will probably be required. Mexican
Consulates can provide further information on the requirement.
For residential properties located in the interior of the country, NOT in the
restricted zone:
Many foreigners acquiring property in the interior also put the property in
trust in order to avoid the need for probate proceedings for the heirs. If no
trust is used a Mexican will indicating disposition of the property is
recommended.
For properties located within the “restricted” zone:
Article 27 of the Mexican Constitution of 1917 prohibits foreigners from
owning residential real estate within thirty miles (50km.) of any coastline or
sixty miles (100 km.) of either border. This area is known as the
“restricted” zone.
In 1973, recognizing that many foreigners would enjoy owning a retirement
or vacation home in Mexico, and would bring needed dollars to the country
through such ownership, the Mexican bank trust, the fideicomiso, was
established and approved for the purchase of real estate located in the
restricted zone. For the first time since 1917, a non-Mexican could invest in
a recreation or retirement home and feel safe that his or her investment was
secure.
Under the bank trust, legal title is placed in the name of a Mexican bank, in
trust, under a permit from the Secretary of Foreign Relations. The Mexican
bank holds the title to the vacation or retirement home for the
buyer/beneficiary of the trust, the non-Mexican who purchased the trust
rights in the property. The bank administrates the property in accordance
with the instructions of the buyer/beneficiary. The buyer/beneficiary enjoys
the same rights of ownership as does a Mexican national. He may build on
the property, tear down existing buildings, modify them, rent, lease or sell
at anytime conforming only to internal bank regulations for this type of trust
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and to the general laws of the country established for all persons.
Additionally, the beneficiary may finance the purchase and instruct the
trustee bank to enter into the security agreement with the lender.
The trustee bank may not, without express written consent from the
beneficiary, sell, transfer or encumber the property.
The beneficiary may name the parties he or she selects as co-beneficiaries
and may name substitute beneficiaries upon death of the primary
beneficiaries, thus avoiding probate in Mexico. Care must be taken
however, in establishing the wording and terminology used in the
succession of rights in conformance with applicable Mexican law.
A permit to establish a Mexican bank trust (fideicomiso) can now be
obtained for a term of fifty years and can be renewed. In acquiring a
property with an existing trust, the seller may assign the rights in the
existing trust and the new buyer will enjoy the term established in the
original trust permit. In other words, a trust established in 1995 will expire
in 2045. Prior to 1993, the term of the trust was thirty years. Thus a trust
established in 1990 would expire in 2010, unless extended or the original
trust permit extinguished and a new permit obtained for fifty years.
The cost for the permit issued by the Secretary of Foreign Relations,
including registration in the National Foreign Investment Registry is
currently about $ 1,500.00 U.S. and bank trust administration fees generally
range from $200. U.S. to $750. U.S. annually. There are other expenses
involved in the acquisition of a property, however, and it is wise to request
a written estimate prior to beginning the transfer process.
The Mexican corporation as a vehicle for acquisition of real property:
Under the 1993 Foreign Investment Law, a corporation established in
Mexico is considered as Mexican under the law, even if all the shareholders
are foreigners. Thus a Mexican corporation with 100% foreign ownership
can acquire real property in fee simple ownership, even in the “restricted”
zone. This, however, is ONLY for non-residential property: a hotel, a
restaurant or other type of commercial use property. Not only is it a
violation of the foreign investment law to place a retirement or vacation
home in the name of a Mexican corporation, but also it is generally more
costly than through a trust due to the requirement for periodic tax
declarations and taxes on corporate assets.
Title investigations and the public registry. The Public Registry system in
Mexico is not unlike that of the United States and Canada in that title,
whether in trust or in fee simple ownership, must be registered in order to
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give notice to third parties as to the interest in the property. A certificate
can be obtained from the Public Registry in the municipality where the
property is located. This will provide information as to encumbrances on
title. Title insurance is now also available in many parts of Mexico.
Automated data bases are not available so an investigation of title requires
review of each and every document in the chain of title. These documents
should be available through the Public Registry in the municipality where
the property is located but there are occasions when the Notary Public
records should also be searched.
Since possession is a highly important factor in establishing ownership, a
physical inspection of the property being considered is essential.
Closing Costs, Procedures and Parties involved in a transfer: The costs
involved to transfer property can range from 3% to 6% of the price of the
property, depending upon total amount of the purchase and the value
declared. The lower the purchase price, the higher the percentage of cost to
price, due to certain fixed amount permits and costs. Following is an
example of some of the steps involved in obtaining a registered title, and the
costs for same. Costs will vary with the property and a written estimate
should always be obtained prior to initiating the process.
Amount to be declared in the transaction: Mexican law says that taxes
must be paid on the higher of the following: purchase price OR appraised
value. Since many appraisals are lower than the actual selling price,
transfer taxes and subsequent property taxes may be considerably lower if
the appraisal value is declared. Payment on this basis has taken place for
many years in many parts of the country. It is, however, illegal. Should the
buyer choose to pay taxes this way, it is vital to understand that: 1. it is
violation of the law and 2. the tax base will be low for declaration of value
in the property when it is resold. If financing the property through an
institutional lender, full value must be declared.
Official appraisal: The appraisal must be made by an appraiser who is
usually an architect or civil engineer and who is recognized as a Perito
Valuador, Official Appraiser, by the property tax authorities in the
municipality where the property is located . In most of the Mexican states
there is a public appraisal entity which provides the “minimum legal value”
of the property. If you buy a property under this amount, you will be
subject to a capital gains tax. The official appraisal is required prior to
completing any transfer of title. If an institutional lender is involved, a
commercial appraisal may also be required. The official appraisal will
generally cost $300. to 500. dlls. plus a modest amount paid to the public
registry department for authorization of the appraisal.
A commercial appraisal will generally range from 0.1% to 0.3% of the total
value of the property.
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Foreign relations permits: If the property you are purchasing is already in
a trust (fideicomiso) you may either: request assignment of the rights to you,
or may request a new trust for fifty years. In either case, a permit from the
Secretary of Foreign Relations is required and the new deed must be
registered in the National Foreign Investment Registry. The difference in
cost for the permit to establish a new trust and for a permit to assign rights
is minimal. The factors to be considered are: 1. Remaining term of the
existing trust - when will it need to be renewed?; and 2.-What are the annual
bank fees under the existing trust?
If the permit has an unexpired term of less than thirty five or forty years
and/or the annual bank administration fees are more than $500.00 U.S., it
probably makes sense to obtain the permit for a new fifty year trust with a
bank offering more attractive fees.
Notary fees: The Mexican Notary Public is an attorney who has practiced
his profession for at least five years and has been appointed by the governor
of the state in which he is practicing. His duties and obligations include;
drafting of the deed, calculation of seller’s capital gains taxes and buyer’s
acquisition taxes and to "give faith" to the validity of signatures. The
persons signing before him must prove they are who they say they are.
Because the responsibility and potential liability for the actions of the
Mexican Notary Public are considerably higher than those of Notaries
Public in the U.S. and Canada, the notary’s fees will also be substantially
higher than those charged on the other side of the border. These fees are
based upon a rate schedule reviewed and approved annually by the College
of Notaries Public and are tied to the amount declared in the property
transfer.
I.V.A.: The Impuesto Sobre Valor Agregado (I.V.A.) is a value added tax
which is charged on all services. It is currently 10% of the value of services
provided in the Northern border cities, the Baja Peninsula and Quintana
Roo, and 15% for services provided in the rest of Mexico. Many trustee
banks are headquartered on mainland Mexico, thus the I.V.A. charged on
their services will be 15%. IVA taxes must be paid on services provided by
the Notary, the appraiser and any other professionals whose services are
used.
Bank administration fees: If title to the property being acquired is in a
bank trust there will be annual fees for the administration of same. Over the
past few years there has been a substantial decrease in annual fees and it
makes sense to shop around for the most favorable rate for the property
being purchased if a new trust is contemplated. If an assignment, new rates
may possibly also be negotiated. Traditionally, trustee banks have not sent
annual statements. It is important to request a statement from your trustee
bank at least ninety days prior to the anniversary of the trust and pay on
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time to avoid penalties, or to contract with a company providing this
payment service.
Title search and insurance: In the recently formed state of Quintana Roo
and Baja California Sur (changed from territories to states less than thirty
years ago) and in some of the Southern states, there are few databases. In
some other states such as Nuevo Leon, Coahuila, Jalisco, Mexico,
Chihuahua, Guanajuato, Aguascalientes, etc. Databases are computarized
and the title search process is easier. Two U.S. based companies are legally
established and authorized by the Mexcian Insurance Commission to issue
title policies to domestic and foreign investors. Title search and insurance is
a highly important part of title acquisition.
Property taxes: are a municipal tax and income benefits the municipality.
Typical rates for residential dwellings is 6.5 (pesos) per 1,000 and 13 per
1,000 for properties destined as rental units Vacant lots are rated at 26 per
1,000 with an increase of 2.6 per annum for each year there is no
construction declared on the lot. Maximum amount is 52 per 1,000.
Valuations for property tax purposes are generally made every two to three
years or at the time of sale of a property. Property taxes must be brought
current prior to transfer of the title. Since property taxes are voted by each
state congress, the amounts stated above can vary from state to state.
Acquisition tax: The acquisition tax, or transfer tax, is generally paid by
the buyer. It is currently 2% of the declared value of the property in most
parts of the country.
Capital gains taxes: A foreigner who sells property in Mexico is liable
under special rules, much like the United States, for the payment of the
I.S.R. (Impuesto Sobre la Renta) which is the Mexican equivalent of the
Capital Gains tax. Liability is either 20% of the declared value of the
transaction or 35% of the net value, taking into consideration the length of
time held, the improvements made, commissions paid and other allowable
expenses. The formula is complicated and the tax should be figured both
ways and confirmed by the Notary Public who will be having the
documents recorded and making the tax payments. This is a seller tax and
title cannot transfer to the buyer under this tax has been paid.
Settlement fees: Attorneys and Notaries Public often oversee parts of the
previously described required steps to a transfer. The buyer, however,
usually has to do certain of his own legwork and can certainly do so if he
has a good command of the Spanish language. Unless the buyer has a lot of
time to spend on the activity, it may make sense to hire a company whose
sole purpose is to supervise and coordinate the permits, tax payments and
other myriad of details so necessary to obtain full legal right to the property
being purchased. Fees for these services will vary with the value of the
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property and the complexity of the situation. It is important to always
request a written estimate of all the expenses prior to beginning the transfer.
In Mexico there are four basic classifications for property:
1. Original property of the Mexican nation which includes parks,
forests, volcanoes, marshlands and many of the islands in the Nation.
2. Property of the Mexican nation by decree established through
Article 27 of the Mexican Constitution of 1917 and includes all
minerals, water, oil and the federal maritime zone which consists of a
strip of land twenty meters wide back from the high tide zone on all
Mexican coasts.
While these properties belong to the Mexican government and cannot be
sold, concessions for exploitation and use may be obtained.
3. Social properties which consist of communal lands established
prior to the discovery of America and are respected in many Indian
communities today, and Ejidal properties.
EJIDAL (E-hee-dal) properties were established in Article 27 of the
Mexican Constitution of 1917 as an outcome of the revolution and
represent probably fifty percent of all the land in the country
Hundreds of Millions of acres from the original Spanish land grants were
expropriated by the government and classified as "ejidal" properties. The
state retains ownership of these lands and the peasants, the farmers, have
the right to Usufruct, to use them to grow their crops on them. Rights of
usage pass from father to son....but these properties have not always been
able to be rented or sold.
Per decree published on February 26, 1992 certain ejidal lands can be
converted to private property through a process known, in Spanish, as
PROCEDE... the procedure. Through this process, ejidal lands are divided
into three types:
1. Lands for human settlements;
2. Lands for common usage; and
3. Lands for parcels......
Human settlement land is that which is necessary for the development of
the community and is composed of the urban zone and would include the
school area, a youth development area and such other uses as may be
determined as important to the community. These properties cannot be
sold, are not subject to prescription and cannot be encumbered.
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Common Usage Lands: are lands that have not been reserved for the
human settlement, nor have been designated as parcel lands. These
properties cannot be sold, nor are subject to prescription and cannot be
attached by liens or encumbrances. Usage of these lands may be granted to
mercantile societies or civil associations in which the ejido participates
(joint ventures). Such a granting of usage must be approved by the
Agrarian Reform Department prior to finalizing an operation...and then also
approved by the entire ejidal group.
Parcel Lands: Per Articules 76 and onward in the Agrarian Law, the
useage of parcel lands are granted to individual ejiditarios (farmers), and
neither the ejido assembly nor the ejidal commissioners may use these
properties without the written consent of the title holders.
Holders of title to an ejidal parcel, do not enjoy fee simple ownership. The
parcel deed is granted to an individual to use the property exclusively. The
individual may transmit it through inheritance to son, he/she may grant the
usage to others, may rent it or may transfer it to other members of the ejido.
The right to use a parcel exclusively is granted through a Certificate which
must be registered in the National Agrarian Registry.
Parcel lands may be converted to private property. This, however, is not an
automatic process and it should not be assumed that the holder of a
Certificate of Right to Use a Parcel, may sell his or her land to an outsider.
This is not possible until the entire ejidal group goes through the
PROCEDE process. The Procede process consists of seven steps and may
take as much as five years to accomplish.
4. The fourth property classification is Private Property which can be
obtained in a fee simple deed or in trust as explained below, through
purchase, gift, judicial decree or prescription. Size is limited to 100
irrigated hectares (250 acres) on irrigated land. This applies only to
agricultural property, not for urban, suburban or ranch properties.
Through NAFTA, provisions have been set up for binding
arbitration between the three signatory countries;.the U.S., Mexico
and Canada, at the government level, the company level, and at the
individual level. Arbitration is carried out per the rules of one of the
established arbitration commissions and provisions have been made
for enforcement of the arbitration award in the applicable court of
law if it becomes necessary. Should the losing party in the
arbitration award choose not to honor the agreement made through
arbitration, the applicable court will enforce the award.
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Mexico’s arbitration law was enacted on July 22, 1993 and is
contained in Articles 1415 through 1457 of the Mexican Code of
Commerce.
International arbitrations are governed by this law when they take place in
Mexico. They are defined as arbitrations between parties who are residents
of different countries or the place of the arbitration is located outside of the
country in which the parties have their residency. The parties may specify
the place of arbitration in their agreement. If this is not done, the statute
specifies that the place which had the most substantial relationship of the
agreement/litigation will be the place of arbitration.
Many real estate practitioners are now suggesting that the arbitration clause
be included in all contracts for the purchase and sale of real property.
Marketing System
On line multiple listing systems are used in limited areas of Mexico and it is
hoped that usage and cooperation with other agents will increase.
The real estate agent is prepared to list and promote property for sale. More
and more of them are marketing on the internet. While the basics of a
fiduciary relationship is outlined in Article 267 of the Mexican Commerce
Code, buyer and seller separate agency is not common in Mexico, most
agents represent both parties. The foreign agent who wishes to represent
his/her buyer should probably obtain a written agreement with the listing
agent outlining duties and responsibilities of each agent and determine the
method of payment of commission and amounts, at the beginning of the
negotiations.
Remuneration
The real estate agent generally works on a commission basis, not a salary.
Commission is generally paid by the seller at the time of buyer’s signing
final documents at the Notary Public office. It is important for cooperating
agents to obtain a written agreement with the Seller’s agent prior to closing
of the transaction.
Escrow: (Handling of Trust Funds)
Traditionally, the buyer and seller have met at the Notary Public’s office to
sign the deed and to exchange funds and deliver possession of the property.
With increasing sophistication in the marketplace, some agents have
established trust accounts and manage third party funds for release upon the
performance of conditions. Currently no bonds or errors and omissions
insurance is available in Mexico to protect these funds.
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Certain companies in the country have established escrow services as third
party neutral agents. Some of them maintain principal escrow accounts in
FDIC insured accounts in the United States. Since there is no Mexican
government regulation of these companies or accounts, it is important to
request references and track record if one is going to use their services.
Certain title insurance companies are now offering the escrow services
through their U.S. based escrow accounts when used in conjunction with the
issuance of a policy of title insurance.
Since agent management of third party funds is a new area in Mexico, it
makes sense to check carefully on costs, operating procedures and
reputation of those who will be handling the funds in a transnational
operation.
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Nicaragua Country Report
Market Situation
Nicaragua was badly hurt by Hurricane Mitch in 1998, but not as badly as
Honduras, the most adversely affected country in the region. The
Nicaraguan economy incurred US$1.0 billion in losses from the storm, but
economic growth in 1998 was still 3.8%, and predicted to slow only to
3.4% in 1999. As in Honduras, the construction industry in Nicaragua has
had a great deal of reconstruction work to do in the wake of the storm.
Although the storm was a terrible event, the country will end up with a
vastly improved national infrastructure in roads, bridges, power, housing
and telecommunications.1 In real estate, many see the beginning of a boom
in the vacation home market in Nicaragua. The Central American resort
home market began its growth in Costa Rica in the 1970s, expanded to
Belize in the 1980s, and developed in Honduras in the 1990s. The Pacific
coastline and the shores of Lake Nicaragua are seen as the areas with strong
vacation market development possibilities.2
All leaders in Central America are currently evaluated in relation to the
1998 hurricane crisis. President Aleman of Nicaragua has been judged to
have performed well. On one of the other issues still troublesome for the
country, property rights (see below), the president has been working to
address the problem. Its successful resolution is crucial to maintaining the
achieved political peace in the country. He has engaged the Sandinistas in
dialogue over both outstanding land ownership questions and about further
electoral reform. Progress must be made on both of these issues for the
continuation of social peace and economic growth. Another political and
economic success for Nicaragua was President Aleman's renegotiation of
the country's external debt burden with the so-called "Paris Club" of
lenders. This will help the government with its ongoing task of lowering its
overall debt burden, among the highest in the world.3
Real estate practice and supporting institutions are still underdeveloped in
Nicaragua. Most purchases are cash transactions with the buyer and seller
directly negotiating. It is also difficult to judge market values, as
information for price comparisons is not formally available in such a new
market.4
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Land Rights/Usage
In the post-Sandinista era, contentious land title issues remained unresolved.
Specifically, determining who exactly is the owner of a property is a source
of continuing social discontent. The source of the current problem lies back
in Sandinista land reforms. The Sandinistas made land reform a priority,
which is not surprising in a country, actually an entire region, with a long
history of vastly unequal distribution of land. During their time in power in
the 1980s, the Sandinistas distributed meager land parcels to 200,000 poor
families, mainly 15 by 30-foot plots (4.5 by 9 meters) now covered by
simple shacks. Not all, but a good deal of the land redistributed belonged to
Nicaraguans who had decided to leave the country during Sandinista rule.
Since the fall of the Sandinistas from power, and the election of Violeta
Chamorro as president in 1990, many former landowners began to seek the
return of their land. Many of them are now U.S. citizens and have sought
the aid of the U.S. government in their fight to get their land back. The
government of Nicaragua has rejected returning the land as an option. It has
judged that taking small allotments of land from hundreds of thousands of
poor citizens would negatively impact social peace. Removing the only
possession of any notable economic worth from this section of the poor is
also seen as a bad recipe for growing domestic economic strength. In fact,
the government is carrying out an essential task that the Sandinistas had
failed to accomplish on any notable scale: granting title to the redistributed
plots. The Nicaraguan government had given out 51,000 titles as of 1997,
and hoped to complete the land-titling project by 1998.
However, the question of compensation for former landowners remains
open in many cases. Some resolution was found through a government
scheme to issue 15-year bonds pegged to the U.S. dollar, to raise the
US$600 million that it is estimated the landowner compensation scheme
will finally cost. It is doubtful that all compensation cases will ever be fully
resolved. Cases where the properties are furnished houses occupied by
former Sandinista soldiers are difficult to conclude, as are compensation or
land reclamation claims by the family of the former dictator Somoza.5
Foreign Ownership
Regarding real property investment, Nicaragua's focus is on attracting
foreign retirees to buy and then move to Nicaragua full-time for their
retirement. The government has passed specific laws stating that
participants in the scheme will pay no taxes on their foreign income, and
can bring in US$10,000 of household goods, plus a car, duty free. 6,000
Canadians and Americans had relocated to Nicaragua as of 1999.6 Foreign
investors should remember to check carefully the land title of any property
they consider purchasing. The Sandinistas did manage to issue some land
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titles during their time in power, and some properties can therefore have
more than one title on them, let alone more than one claim to the title.
The Embassy of the United States in Managua has a web site that provides
trade and economic information on Nicaragua.
www.usia.gov/abtusia/posts/NU1/wwwhcom.html
Endnotes
no. 3, pp. 22-29, July 1999.
2. Castillo, Ricardo, "Nicaragua turning into real estate bonanza," Star
Tribune (Minneapolis, MN), Travel section, p. 11G, August 29, 1999.
3. See endnote 1.
4. See endnote 2.
5. Hartman, Carol, "Who owns Nicaragua? UW-Madison's Land Tenure
Center helps Nicaraguans resolve thorny land title disputes brought on
by the return of former property owners," Wisconsin State Journal, p.
1B, March 16, 1997; Cearley, Anna, "Nicaragua remains a land divided
as ownership struggle continues," The San Diego Union-Tribune, p. A24, October 12, 1996; "Nicaragua regulations: New property rights law
to boost investment," EIU ViewsWire, The Economist Intelligence Unit,
December 10, 1997;"Nicaragua. Land reform reformed," The
Economist, The Americas section, p. 31, December 20, 1997.
6. See endnote 2.
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Panama Country Report
Market Situation
The major development in Panamanian real estate is the reversion of the
Canal Zone from the United States to the government of Panama. The
country will regain more than 300,000 acres of military lands, that includes
commercial and residential property. The total value of land and buildings
being turned over to Panama is estimated at US$4 billion. The U.S.
facilities include hotels, airports, and golf courses in addition to 7,000
buildings from five U.S. Army bases, two U.S. Air Force bases, one naval
station, and industrial and residential areas. The Panamanian government
agency in charge of the development of the Canal Zone is called the
Interoceanic Region Authority (ARI). By the end of 1998, US$1.0 billion
had already been committed to Canal Zone developments. International
confidence in the country has also been expressed in the US$1.5 billion that
had been invested by major U.S. and other foreign corporations to locate
offices/activities in Panama by 1999.1
In 1993, Panama began a US$685 million 10-year tourism development
plan. It offers foreign investors tax and financial incentives (see below). The
aim of the plan is for new tourism-related activities, services, and
accommodation facilities to be created on both former U.S. military
facilities and as yet unused land. Panama also intends to develop the former
military bases at each end of the canal, the ports of Cristobal and Balboa, to
provide better cargo and shipping facilities, as well as improved services for
passengers and crews. Overall, a wealth of investment potential exists in all
sectors of real estate in the Canal Zone area, from industrial and warehouse
facilities, to residential, retail, and hotel projects.2
Foreign Ownership
One specific, all-inclusive law does not regulate foreign investment in
Panama. Instead, the constitution and several separate laws define the
bounds of investment. The result of the legal framework of Panamanian law
is an environment friendly to foreign investors. They may invest directly as
an individual, through a foreign corporation, or through a Panamanian
corporation of their own. Foreign ownership of real property is unrestricted
except for the islands and in the first 10 kilometers (6.5 miles) from both the
Panama-Costa Rica and the Panama-Colombia borders. There are even
incentives to foreign investment in Panamanian real estate, especially in the
tourism sector.
Tourism Law 30 was passed in 1994 to promote both foreign and domestic
investment in this area. The law creates financial incentives for investment
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in designated tourism development zones. These are: (i) total exemption
from income tax for 15 years; (ii) total exemption from real estate tax for 20
years; (iii) total exemption from import tax on materials, equipment, and
furnishings, as long as these are not available in sufficient quality and
quantity in Panama; and (iv) total exemption for 20 years on the use of piers
or airports built for the development.3 There are likely to have been and
continue to be further developments in government legal and financial
incentives in the tourism sector. A local lawyer should be consulted to assist
in staying up to date and compliant with current opportunities and
regulations.
Asociacion Panamena de Corredores y Promotores de Bienes Raices
(ACOBIR)
Balboa, Ancon Ave. Morgan Duplex 301A
REPUBLIC OF PANAMA
P.O. Box Address:
Apartado 873580
Sona 7
REPUBLIC OF PANAMA
Tel: 507-228-7840
and: 507-228-7847
Fax: 507-228-7807
The Interocean Region Authority (ARI) administers and promotes
investment in the Canal Zone. It has a web site at: www.ari-panam.com
Endnotes
1. "Panama Canal makeover," Commercial Investment Real Estate
Journal, September/October 1998; "Panama Canal turnover sparks
investor interest," National Real Estate Investor, vol. 41, no. 5, p. 12,
April 1999.
2. "Panama Canal makeover," Commercial Investment Real Estate
Journal, September/October 1998.
3. Pedreschi, Carlos Bolivar, "Panama; Foreign Investment Laws 1994,"
LatinFinance, no. 60, p. L22, September 1994.
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Paraguay Country Report
Land Rights/Usage
There are three key issues regarding land rights in Paraguay.
Pressure for increased access to/distribution of land has lead to invasion and
occupation of rural property by the rural poor. These occupations have often
resulted in expropriation and validation of occupying peasant ownership by
the government. In part, this government affirmation is a way to reward
supporters with plots of land. There is a 1992 law requiring compensation
for any expropriations, but the fiscal condition of the government makes
this unlikely in practice.
The right to private ownership is guaranteed by the 1992 Constitution of
Paraguay. The practices of a byzantine and corrupt legal system greatly
complicate the defense of property rights in reality.
There is a national lack of coherent property surveys and corresponding
land registers. A World Bank program targeted at improving land
registration in Paraguay began its first implementation phase in 1993. The
project is not complete.1
Foreign Ownership
Foreign investors face no specific restrictions to investment in Paraguay.
They are guaranteed the same treatment under the law as national citizens.
Foreign investors are also allowed unrestricted repatriation of both their
capital and profits, less a 5% tax on profit repatriation. The overall tax
burden in Paraguay is low. There is no personal income tax, however there
is a 10% value-added tax on transactions, and a 30% tax on business
earnings. Also, in 1994 the government of Paraguay legalized the long
standing practice of doing business contracts in foreign currency
denominations. In view of the length of court disputes in Paraguay, and the
widespread assumption of judicial corruption, foreign investors in Panama
should take advantage of Law 117/91 that allows for international
arbitration for any disputes that may arise between foreign investors and the
Paraguayan government.2
Endnotes
1 - U.S. Department of State, Country Commercial Guide, Fiscal Year
2000: Paraguay.
2 - See endnote 1.
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Peru Country Report
Land Rights/Usage
The historical use of land in Peru illustrates how the same problem of
unequal land distribution that arises in all Latin America countries takes a
different form in the social practices of each. One common denominator is
that change in land use comes from extra-governmental pressure. In Peru, a
non-governmental organization called the Institute for Liberty and
Democracy (ILD) actually worked to introduce in 1990 a new system of
property registration to work towards the goal of providing property rights
to all Peruvians. This was a goal they felt could not be met from the then
current government structures for land registration, so the ILD conceived of
and enacted a new system. The ILD had three major goals in their efforts:
(i) to give Peruvians legally binding proof of ownership that would then (ii)
provide now land-owning citizens with the right and impetus to build on
their land, as well as having collateral for loans, which finally would lead to
(iii) the creation of a popular mortgage and credit insurance market.1
Peru historically has had a large informal sector to its economy. By 1990,
50% of the housing in the metropolitan area of Lima had been built
informally (i.e. in violation of government regulations). At the same time
less than 4% of that housing stock, housing over half of the city's population
had been titled by that year. In fact, by 1990, after a century of existence the
Peruvian government's real estate register had only provided official titles to
half of the formal housing in Lima. Staggering bureaucratic inefficiencies
existed as a barrier to obtaining a legal land grant. The Institute for Liberty
and Democracy (ILD) found that an individual attempting to obtain legal
title to a plot of land and permission to build on it had to "comply with 207
administrative formalities, associated with 48 different government
agencies, in a process requiring a minimum of 43 months." The ILD then
estimated that to get the necessary land development and building permits
took an additional 40 months. Establishing the legal right to own and build
a home in Peru therefore took at least 7 years.2
However, to keep half of the population in the informal housing sector sets
an unnecessary further economic loss on what is already a generally
impoverished segment of the society. The ILD carried out a study in Lima
that found out that over a ten-year period, houses with proper title were
worth on average 9 times more than houses without title (i.e. in the informal
housing sector). Therefore, the organization created a new land register to
replace what existed governmentally. The system was built with simplicity,
deregulation, and decentralization as its guiding principles. Through it, the
ILD managed to also create a popular mortgage system for use in an
informal realty market. Participation in the popular mortgage market
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became possible for Peruvians previously denied access to credit markets
once they had achieved tenure rights in the ILD land register. The ILD also
put together an out-of-court mortgage foreclosure process that not only
helped to ensure creditor confidence, but also made foreclosure possible
within two weeks - compared to the 3-4 years in the formal Peruvian
mortgage system. All of this work has greatly expanded the amount of
Peruvians who have been able to truly become citizens of their own
country: to own land, have economic capital, and access to the banking
system.3
Foreign Ownership
The 1993 Peruvian Constitution, the Foreign Investment Promotion Law
(1991), and the Framework Law for Private Investment Growth (1991) form
the legal structures for private investment in Peru. Foreigners can own real
property in Peru, with the exception that they cannot own land with 50
kilometers (30 miles) of any of the country's borders. Concessions for
operations in the border zones can be granted only with high-level
government approval, and so are not practicable except for corporations
interested in establishing sizable operations.
The constitution mandates that the government can only expropriate public
property for public interest or national security reasons. Expropriations also
take a congressional act to be put into effect. No U.S. citizens have any
expropriation disputes with the Peruvian government at this time. However,
should investment disputes arise, foreign investors should be aware that the
local court system is slow and outcomes unsure.
Foreign investors are wise to be careful about terrorist threats in the rural
areas of Peru. The metropolitan Lima is considered safe by the U.S.
Department of State, which also does not consider corruption a serious
problem in Peru, especially in relation to the rest of South America.4
Endnotes
1. Soto, Hernando de, "The creation of property rights in Peru," ORER
Letter, pp. 1-5, Summer 1990.
2. See endnote 1.
3. See endnote 1.
1999: Peru.
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Uruguay Country Report
The U.S. government categorizes Uruguay as a stable democracy where
respect for the law is the norm.1
Land Rights/Usage
Real property rights are legally protected and enforced in Uruguay.2
Foreign Ownership
Except for areas considered to be part of the national security domain, there
are no restrictions on the ownership of private property or the establishment
of any business. Corruption is not a serious problem in Uruguay.3
The Embassy of Uruguay, Washington, D.C., www.embassy.org/uruguay/
Endnotes
2000: Uruguay.
2. See endnote 1.
3. See endnote 1.
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Regional Issues - Trade Pacts in the Americas
Much of the current media focus is on the development of the European
Union (EU) and its introduction of a single currency, the Euro, as well as its
expansion into Eastern Europe. This is understandable, as an expanded EU
will have an integrated market of over 300 million consumers, and therefore
be the first major competitor to be able to match the United States in terms
of the size of their internal market. In this era of globalization, what is often
left out of the news is that we in the United States continue to be our own
largest trading partner.
However, there are several major trade agreements in the Americas that are
moving towards the creation of different common markets within the
Western Hemisphere. The North American Free Trade Agreement (NAFTA)
is only one such trade pact in the Americas. While the United States
remains the largest economy in the region, accounting for 75% of the
US$10 trillion dollar economy of the Western Hemisphere, these other free
trade pacts will be increasingly appearing in our political and business
headlines.
There are six major free trade pacts in differing degrees of development in
the Americas. The Andean Pact includes Bolivia, Colombia, Ecuador, Peru
and Venezuela. The Central American Common Market (CACM)
encompasses all the countries from the Mexican border to the Panama
Canal. The Caribbean Community (CARICOM) is made up of 11 island
nations and 3 coastal countries (See Caribbean Profile). Mercosur, the
Southern Cone Common Market, has as its members: Argentina, Brazil,
Paraguay, and Uruguay, with Bolivia and Chile as Associate Members. The
North American Free Trade Agreement (NAFTA) includes the United
States, Canada, and Mexico. Finally, the newcomer, the Free Trade Area of
the Americas (FTAA) is still in its infancy, and is a still-pending series of
negotiations to create a common market of the Americas.
Currently the strongest trading block in the Americas is undoubtedly
NAFTA. From an American point of view, it is arguably the only one of
significant importance. Canada is the number one trading partner of the
U.S., and Mexico comes in second. Latin America also accounts for only
15% of U.S. trade, and half of that is with Mexico. There is still great
ambivalence within the U.S. about the NAFTA agreement, and polls do not
show significant public support for further U.S. integration with Latin
America. However, the future possibilities for growth in Latin American
countries cannot be ignored even though setbacks still occur. The rapidly
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changing demographics of the U.S. towards an ever-growing Hispanic
population will also increase the political desire for greater links with Latin
America - even if the current electorate does not have the foresight to
realize this.
The major impetus towards these free trade agreements outside of NAFTA
is the concern of Latin American and Caribbean countries that in a world
dominated by colossal trading blocs like the EU and NAFTA, the formation
of regional trade pacts is their only hope to get fair treatment in global trade
negotiations. Already, Mercosur and the Andean Pact began in 1999 to start
negotiations towards a merger of the two groupings, with the potential of
creating a South American Free Trade Area (SAFTA). Might the Caribbean
Community and the Central American Common Market either unite or
negotiate to join SAFTA? This would create potentially powerful NorthSouth tensions, a desire of Brazil's, which will dominate a SAFTA
organization. Brazil also speaks of a SAFTA alliance with the EU that
might in the long run represent a potential loss for creating an Americaswide front in negotiations with the EU as it expands to a market of
potentially 400 million people.
In 1994, the 34 countries of the Americas met in Miami and declared the
goal of forming a Free Trade Area of the Americas. The state goal was for
an initial agreement to be signed by 2005. Negotiations are still scheduled
to go ahead, but the outcome is still unsure. The recent downturn in the
Brazilian economy (1999) caused tremendous friction in Mercosur,
especially between Brazil and Argentina. There is still talk of dollarization
in Argentina and all around Latin America, which is another point of
friction in existing trade pacts. Also, the merger between Mercosur and the
Andean Pact is still tentative, and the initial agreement to move ahead in
July 1999 was preceded by a breakdown in talks in June.
In the United States, some envisage NAFTA as still the best way to move
forward to further integration. Mexico is of this view, as it covets its status
as the only Latin American country with a free trade pact with the U.S.
Through NAFTA, Mexico also has veto power on incoming countries. It
must also not be forgotten that there has been much talk but almost no
action on the accession of Chile into NAFTA. Nonetheless, the Americas
are coming together into distinct trading blocs. Some of them, such as the
Caribbean Community, are even hoping eventually to achieve economic
union and a single currency. Further negotiations and integration of Latin
American markets can occur without U.S. participation.
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As Latin America is an area of significant U.S. interest in terms of
corporate, financial, and individual investments in real estate, developments
among and within these trade pact areas is of relevance to U.S. real estate
practitioners. Despite the prevailing political distaste in the U.S. for further
involvement in Latin America, the movement towards hemispheric
integration may end up being as important as the Treaty of Rome that set
the stage for today's European Union in the 1950s. As the FTAA
negotiations move toward 2005, expect this issue to come more and more
toward the front pages of the daily news.
Information Resources
There are many excellent sources for further research on these trade
agreements. This following are all web-based resources, and of necessity
represent only a small portion of what is available.
Someone with a serious interest in one or all of these trade agreements will
need to search further both for Internet resources and among books and
periodicals.
The Andean Pact
There are two government documents, one U.S., one Australian, that clearly
discuss the implications development of the Andean Pact.
"The Andean Pact: In the forefront of the integration movement," Paul W.
Moore and Rebecca K. Hunt, Office of Latin America, U.S. Department of
Commerce.
www.tradecompass.com/library/doc/itbam/05-94ART03.html
"The Andean Pact: An integration pioneer," Australian Department of
Foreign Affairs & Trade.
www.dfat.gov/geo/americas/la/andean_pact.html
The Central American Common Market (CACM)
The Text of the Treaty
www.sice.oas.org/trade/camertoc.stm
The Secretariat for Central American Economic Integration
www.imf.org/external/np/sec/decdo/seica/htm
The Caribbean Community and Common Market (CARICOM)
Official CARICOM web site
www.caricom.org/
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"The Caribbean Community and Common Market," Library of Congress,
Federal Research Division
http://rs6.loc.gov/frd/cs/caribbean_islands/cx_appnc.html
"CARICOM & Preparation for Free Trade Agreement negotiations," Mr.
Arthur Gray, Director, Foreign Policy and External Economic Relations,
Caricom Secretariat.
http://hostings.diplomacy.edu/iirt/conf/Diplo2000/Text?GRAY1.HTM
The Free Trade Area of the Americas
The Free Trade Area of the Americas organization
www.ftaa-alca.org/
"Hemispheric Free Trade: Making the vision a reality," Amb. Everett Ellis
Briggs, Americas Society/Council of the Americas, Op-eds and published
articles
http://counciloftheamericas.org/oped6.html
"Free Trade of the Americas by 2005: Is it working?" Syrous K. Kooros,
Bruce L. McManis, Fernando Albareda
http://wwwsbanet.uca.edu/docs/proceedingsII/98sri267.txt
Mercosur
There is an excellent informational web site on the Mercosur common
market that provides an extensive overview of its history and functioning at:
www.americasnet.com/mauritz/mercosur
The North American Free Trade Agreement (NAFTA)
The NAFTA Secretariat
www.nafta-sec-alena.org/
"Notes on NAFTA: The masters of mankind," Noam Chomsky, Documents
on Mexican Politics
www.cs.unb.ca/~alopez-o/politics/chomnafta.html
"NAFTA at 5 years report card," Public Citizen: Global Trade Watch,
December 1998
www.citizen.org/pctrade/nafta/reports/5years.htm
Chapter 6-80
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U.S.A. – ICREA Profile
Code of Ethics
The Code of Ethics and Standards of Practice of the NATIONAL
ASSOCIATION OF REALTORS® is designed to establish a public and
professional standard of professional behavior and practice against which
the conduct of REALTORS® and REALTOR-ASSOCIATE®'s may be
judged. Adherence to the Code is an obligation accepted by REALTORS®
and REALTOR-ASSOCIATE®'s as a consequence of their membership in
the REALTOR® organization, to ensure high standards of professional
conduct to serve the interests of their clients and customers. It was first
adopted on July 29, 1913, at the sixth Annual Convention of the National
Association of Real Estate Boards (Association's name was changed to
National Association of REALTORS® in 1974). The Code was first
adopted as "Rules of Conduct" to be recommended to real estate boards for
voluntary adoption. Compliance with the Code was made a condition of
membership in the National Association in 1924, and has remained so to
date.
Enforcement of the Code of Ethics is a privilege and responsibility of each
board and association as established in Article IV of the Bylaws of the
NATIONAL ASSOCIATION OF REALTORS®. As stated in Part Two,
Membership Duties and Their Enforcement in the Code of Ethics, the
Directors may take disciplinary action against any member after a hearing
before the Professional Standards Committee as provided hereinafter.
In some states, legal standards of conduct such as those in the NAR Code of
Ethics have been adopted into law. Additionally, the NAR has also adopted
and publishes 70 Standards of Practice that interpret various articles in the
Code of Ethics. The complete Code of Ethics and Standards of Practice are
available at http://nar.realtor.com/.
Licensing:
In every US State and in the District of Columbia, real estate agents and
brokers must be licensed to practice real estate, that is, to provide real estate
brokerage and sales services for compensation. However, the licensing
requirements in each state differ. Prospective agents should contact the real
estate licensing commission in the state in which they wish to work to
verify exact licensing requirements.
Any person who for compensation, or the promise of compensation, lists or
offers to list, sells or offers to sell, buys or offers to buy, negotiates or offers
to negotiate either directly or indirectly for the purpose of bringing about a
sale, purchase, or option to purchase, exchange, auction, lease, or rental of
real estate, or any interest in real estate, is required to hold a valid real estate
license.
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Basically, a person must be licensed in the state within which he or she
negotiates a sale or purchase of a real property. In some cases a real estate
broker may sell an out of state property without a license in the state where
the property is located so long as he conducts the negotiations entirely
within the borders of his own state. Some state laws also permit a broker in
one state to split a commission with a broker licensed in another state as
long as each conducts negotiations only within the state where he is
licensed.
Education:
Typical state eligibility for licensing requires an individual to be at least 18
years of age, a high school graduate, and to pass a written examination. The
examination is more comprehensive for brokers than for agents. It includes
questions on basic real estate transactions and laws affecting the sale of
property in that state. Most states require candidates for the general sales
license to complete between 30 and 90 hours of instruction.
In addition, most states require continuing education for license renewal.
State licenses typically must be renewed every one or two years, usually
without re-examination but with verification that a minimum number of
hours of continuing education courses have been completed. Currently,
there is no continuing education requirement for salespersons in
Massachusetts, Rhode Island, and South Carolina.
A large number of agents and brokers have some college training. College
courses in real estate, finance, business administration, marketing, statistics,
economics, law, and English are helpful. Over 1,000 universities, colleges,
and junior colleges in the United States offer courses in real estate. At some,
a student can earn an associate or bachelor's degree with a major in real
estate; several offer advanced degrees. Many local real estate associations
that are affiliated with the National Association of REALTORSÒ sponsor
courses covering the fundamentals and legal aspects of the real estate field.
Advanced courses in mortgage financing, property development and
management, and other subjects are also available through various national
affiliates of the National Association of REALTORSÒ. Many
REALTORSÒ pursue professional designation programs to receive training
in specializes areas such as appraisal, commercial, property management,
international, etc. The Certified International Property Specialist (CIPS)
designation is awarded to individuals who complete a course of study and
provide evidence of experience and expertise in international real estate
matters.
Nonresident:
Each state has its own licensing laws and regulations. Although all states'
laws permit issuance of a license to a nonresident, the various requirements
for continuing licensure of nonresidents often make obtaining and
maintaining a nonresident's license impractical and, in fact, create a barrier
to licensure. For instance, according to the Association of Real Estate
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License Law Officials, only 13 states will license nonresidents without
additional education and examination. An additional 15 states will waive
education and examination requirements if they have a written reciprocal
agreement with the nonresident applicant's state of residence. However,
many of those 15 states have written agreements with less than six states.
Other states require that nonresident applicants meet all of the same
requirements that residents must meet even though they have met
substantially similar requirements in their state of residence. For more
information on state licensure law and license reciprocity, please contact the
Association of Real Estate License Law Officials at ARELLO, P.O. Box
230159, Montgomery, AL 36123-0159.
Real Estate Regulations:
In the United States, the legislature of each state has the authority to enact
laws to protect the public interest from unqualified real estate practitioners,
and to promote the healthy growth and professionalism of the real estate
industry. This includes licensing and regulation of real estate brokers and
salespersons. Normally, two entities work together to implement all
requirements of the state license requirements for the real estate industry.
The state real estate commission usually involves five to nine members who
primarily deal with adopting rules and regulations to implement the license
law from the state legislative agency. The commission may also be involved
in enforcement of the regulations and disciplining licensees who violate
them. Some of the members are licensees from the real estate community
and others are non-licensed members of the general public. The state real
estate department or real estate division manages all real estate licensees in
the state on a daily basis. In addition, the staff in the department may be
involved in the investigation of alleged malpractice or audits of broker trust
fund accounts. For a listing of state real estate regulation agencies in the
United States, please visit www.arello.org.
Foreign Ownership
Based on the statistics from the US Department of Commerce, the amount
of foreign investment in the US real estate business was over $44 billion in
1998 and is expected to continue to rise. The political and economic
stability, an inventory of investment-grade properties on the market, an
environment that does not discriminate against foreign investment,
attractive risk-return ratio, and tax incentives are the main factors that
attract foreign investors.
Foreign investors have typically invested in major metropolitan areas, such
as New York, Boston, San Francisco, and Washington, D.C. However, they
are beginning to expand into other areas, including suburbs, where they
have experience and familiarity with the market.
Generally, the central (federal) government's involvement in U.S. land law
is very limited, mainly in the sensitive resources, industries, federal and
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state owned real properties, and land comprising territories. Federal laws in
bankruptcy, environmental, securities, and income tax also have impact to
real property transactions. In essence, American land law is state law. Each
state has its own statute and/or regulation that govern foreign real estate or
land ownership. State laws are divided into certain roughly identifiable
categories in terms of governing foreign ownership. Approximately
eighteen states have legislation or adopted constitutional amendments to
remove common law disabilities on alien ownership of land. For example,
the statutes in Nevada expressly allow nonresident aliens to hold, take and
enjoy real property on the same terms as resident aliens, and also allow
nonresident corporations to do so on the same terms as domestic
corporations. In another seven or eight states, there is no express restriction
on foreign ownership and therefore by implication none exists.
Some states may have limitations on alien ownership in terms of acreage or
size. In Wisconsin, the limit is set to 640 acres for a nonresident alien unless
it is acquired by devise or inheritance or as a collection of a debt. Others
may have restrictions on the length of ownership, e.g., a maximum of five
years' ownership in Nebraska is allowed. For more information, please refer
to "Foreign Investment in U.S. Real Estate, A Comprehensive Guide,"
Section of Real Property, Probate and Trust Law, American Bar
Association, Timothy E. Powers, or contact legal counsel.
Ownership of American real property passes under state laws by voluntary
delivery of transfer documents, as in the case of sale, or by operation of law,
as in the case of inheritance. The various state land registration systems may
cause some confusion as the sponsoring governmental body which
maintains the office in which documents are recorded simply provides an
archive where an interested person may determine the quality of title to a
particular parcel of real property. Constructive notice of ownership can be
given to the world at large by recording an instrument of ownership
transfer, such as a deed. Recording a valid and duly delivered deed, lease,
mortgage or other instrument of transfer prevents a third party from falsely
claiming to be a legitimate purchaser from the owner. However, the
recording may not help whereas document is void due to forgery or failure
of delivery. The Statute of Frauds, a version of which is in effect in every
state, requires that there is written evidence of the essential elements of
transactions effecting land transfers in order to validate them.
Due to the complexity of foreign ownership in the U.S., it is advisable to
seek help from a legal professional before deciding to invest in the U.S. real
estate.
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The following professionals, in addition to real estate agents, may be
involved in a real estate transaction. Please note that a buyer or seller may
not necessarily choose to employ all of the professionals listed below in a
real estate transaction.
1. Lenders (banks, mortgage loan institutes) - A lender provides funds
necessary to complete a transaction and may provide other
assistance to a home buyer with finance related issues;
2. Attorney - An attorney may be involved in contract preparation,
related document inspection, closing document reviewing,
closing/settlement, etc.;
3. Appraisers - An appraiser is usually involved in evaluating the value
of a property;
4. Inspectors - An inspector examines the property in an effort to
identify hidden defects or problems that the buyer may not have
noted or is incapable of identifying;
5. Notaries - Notaries notarize documents, that is, they witness and
affirm the authenticity of signatures on the documents. Sometimes,
this service is provided free as a courtesy by a client's banking
institution, or by the transaction closing agent;
6. Title companies - Title companies provide title insurance to a real
property, and may also provide closing or escrow services. Title fee
varies from company to company;
7. Accountants - Accountants help buyers or seller recognize and solve
tax and finance related issues;
8. Surveyors - A surveyor measures land and charts its boundaries,
improvements, and relationship to the property surrounding it. A
survey is often required by the lender to determine the exact
property boundaries of the property and assure that the correct legal
description of the property is given in the deed.
In some states, lawyers may be allowed to provide real estate
services. Although lawyers, notaries or other professionals may not
necessarily be required in real estate transactions, it is in a client's
best interest to get expert help from those professionals since real
estate investment probably is the largest financial investment in a
person's lifetime.
In cases of disputes, arbitration and mediation offer benefits to real estate
practitioners, e.g. faster than litigation; less expensive than litigation;
discourages litigation of frivolous claims; in mediation, parties do not
forfeit their legal rights to arbitrate or litigate the dispute if mediation is
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CIPS The Americas
unsuccessful; parties actively participate in the process and control
outcomes; process contributes to long-term goodwill between brokers and
their clients and customers; provides a service which brokers and
salespeople can offer to their clients and customers; improves image of
profession and members because they have taken the initiative to find and
provide alternatives to litigation; potential for lowering cost of Errors &
Omissions insurance by lowering the number of claims that must be settled
or litigated by the insurance company.
The National Association of REALTORS® publishes the Code of Ethics
and Arbitration Manual for use by its member boards. It addresses the
arbitration and mediation of disputes between members (as described
below), as well as the enforcement of the Code of Ethics. These programs
are designed primarily to resolve disputes between members of a local
association of REALTORS®, but may also be used in some situations by
buyers and sellers. The disputes arising out of remuneration between
brokers are governed by Article 17 of the Code. Article 17 is the
REALTOR®'s obligation to arbitrate certain monetary disputes rather than
litigate them. Arbitration is mandatory when the dispute is a contractual one
or a specific non-contractual dispute defined by Standard of Practice 17-4,
and is between REALTORS® associated with different firms and arising
out of their relationship as REALTORS®. Standard of Practice 17-4 defines
the types of non-contractual disputes that are required to be arbitrated.
Standard of Practice 17-4 recognizes that in some situations where a
cooperating broker claims entitlement to compensation arising out of a
cooperative transaction, a listing broker will already have compensated
another cooperating broker or may have reduced the commission payable
under a listing contract because a cooperating broker has expressly sought
and/or chosen to accept compensation from another source, e.g., the seller,
the purchaser, etc. Under the circumstances specified in Standard of
Practice 17-4, the cooperating brokers may arbitrate between themselves
without naming the listing broker as a party. If this is done, all claims
between the parties, and claims they might otherwise have against the
listing broker, are extinguished by the award of the arbitrators. For complete
text of the Ethics Code and related information, please visit NAR's web
site at http://www.realtor.com. Although individual states may provide for
arbitration for all licensees, only REALTORS® have pledged to arbitrate as
outlined in NAR's Code of Ethics.
A real estate agent plays a key role helping his clients and customers in the
process of selling and purchasing real properties. Current statistics indicate
that approximately 75% of all home sale transactions involve the services of
a REALTOR®. A REALTOR® is a member of the National Association of
REALTORS®. All REALTORS® agree, as a condition of membership, to
abide by the REALTORS® Code of Ethics, the basis of which is fair and
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ethical treatment for all parties. Traditionally, real, real estate agents
represented the seller and received a commission for selling the real estate.
The agent/agency provided services ranging from evaluating and pricing the
property, marketing it through various means, negotiating the price,
assisting in the resolution of issues that may arise during the listing, and
closing the sale. In recent years, however, the "buyer agent" has become
more common. Many states, with the strong encouragement of NAR, have
passed legislation and/or regulations that expressly sanction or provide for
both buyer agency and disclosed dual agency. A buyer agent helps his
clients to determine how much they can afford to borrow based on their
income and savings, and may assist them to identify lenders to provide
financial services. The buyer agent works to locate properties that meet his
client's specific needs, such as location, price range, property conditions,
etc. In a small number of cases the buyer's agent receives a fee or
commission from the buyer, but it is far more common for the buyer's agent
to be paid a portion of the commission earned by the seller's (listing) agent.
The buyer agent also will represent the buyer to negotiate a price. As with
all agency relationships, it is important, and may be required by law, for
each agent to disclose which party or parties he is representing to all other
parties involved in the transaction.
Property Marketing System
Generally, there are three levels of real estate markets in the United States:
National, Regional, and Local. A variety of marketing devices and
techniques exist in the real estate market such as multiple listing systems,
national or international systems of exposure, real estate company and
franchise networking, and advertising including: classified, real estate
magazines, newspapers, brochures and flyers, signage, Internet, open
houses, and more.
A Multiple Listing Service (MLS) is a cooperative arrangement where a
group of brokers pool all of their listings and offer to compensate other
brokers in the group if they produce a ready, willing and able buyer for a
listed property. It is a proprietary marketing system that may only be
accessed by its broker members who make their own exclusive listings
available to other brokers and gain access to other brokers' listed properties
as well.
In most markets brokers belonging to the MLS are required to file new
listings with the MLS within a specific, fairly short period of time, usually
48 hours after they are obtained. Any member of the MLS can show and
attempt to sell the property. Some MLS's contain virtually all types of
properties including residential and commercial, while other may be
restricted to one or the other of those property types.
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With the wide spread of the Internet technology, today's MLS services offer
their members additional information services such as instant access to
information about the status of listed properties, mortgage loans, real estate
taxes and assessments, municipalities and school districts. Much of this
information can also be viewed on publicly accessible websites such as
www.Realtor.com, though the information provided on such sites does not
include all that is available to brokers through the MLS. Web based systems
allow members to search and access listings from laptop computers,
palmtops, and cell phones. Leads can be sent directly to REALTORS®' email address, pager, and also to potential buyers. Needless to say, the
Internet with its advantages of low costs, far-reaching and openness is
having a tremendous impact on the real estate industry and has become a
powerful tool.
The National Association of REALTORS® has played an important role in
facilitating the establishment and operation of local or regional MLS
systems throughout the United States. Founded in 1907, NAR has over
750,000 members in all 50 states, the District of Columbia, Puerto Rico,
Guam and the U.S. Virgin Islands. Currently, there are about 1.3 million
U.S. homes listed on NAR's web site (http://www.realtor.com/). At that web
site, a visitor can view a real property by entering a MLS ID#, State/City,
Zip Code, or clicking on a navigation Map.
Referral Systems
In most states in the United States, it is illegal for a broker to pay a
commission to anyone other than a salesperson licensed with the broker or
to another broker licensed in the same state. However, this is not to be
confused with referral fees paid between brokers in different state for leads.
Referral fees are generally legal as long as both individuals are licensed in
their respective states. The Real Estate Settlement Procedure Act regulates
referral fees or "kickbacks."
A typical relocation transaction involves a company moving an employee to
another location. The company agrees to bear the costs associated with the
sale of the employee's current home and the purchase of another one
pursuant to the employer's relocation policy. The company often retains a
relocation management company to administer its policy and manage the
proper application of the policy for the relocating employees. The employee
is told that the employer's relocation expense benefits are available through
the designated relocation company, which, in turn, registers the employee
with the approved brokers in both the departure and destination areas. The
relocation company is paid a referral fee if a commission is generated from
this referral. If everything goes well, it is a very efficient and beneficial
business relationship to all parties. The brokers within the approved
network receive referrals they may not have had otherwise. Employers can
recoup or reduce the costs of relocating employees and relocation
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companies legitimately collect referral fees for the services they provide. In
some instances, however, employees may not fully understand the
procedures and inadvertently involve a broker not approved by the
relocation company. Disputes may then arise regarding payment of a
commission to such a broker, or the amount of the commission to be paid.
Affinity Groups/ Relationships:
Affinity groups are organizations or entities whose members (for example,
employees, alumni, customers, etc.) receive benefits or special services by
virtue of their membership in the group. These benefits may include
discounted real estate brokerage fees, or other services related to a real
estate transaction. Affinity groups use a variety of mechanisms to distribute
benefits to their members. For example, a major airline awards frequent
flier miles to members of its frequent flyer program when they buy or sell a
home through brokers at or affiliated with it as affinity partners. In other
cases an affinity group received a percentage of the brokerage commission
paid on each referral. There are numerous variations on these programs.
One of the significant legal issues concerning affinity groups is the question
of who may receive a portion of a real estate commission or a referral fee.
All states except California have a statute or regulation addressing the issue
of who may share a real estate commission. Some states allow
commissions/fees to be shared with principals, (i.e. the buyer and seller).
The issues raised by affinity group real estate benefits are very complicated
and must be handled carefully. Many state laws are subject to interpretation
by the Real Estate Commission.
More information on this subject is available in the NAR Information
Central Virtual Library under the title "After-the-Fact Referrals and Affinity
Relationships."
Agency:
Traditionally, the relationship formed between real estate brokers and their
clients was an agency relationship. Generally, an agency relationship is one
where a principal (such as a buyer or seller of real estate) gives the agent
legal power to transact matters of all types on the principal's behalf. The
agent has fiduciary obligations to his or her principal and must be faithful to
the principal. In addition, the agent must safeguard the principal's
confidential information, demonstrate loyalty to the principal, excise
reasonable care and diligence, exhibit competence, act in the principal's best
interest, be accountable for handling all paperwork and funds promptly, and
execute other duties as specifically outlined in the listing contract or buyer's
agency contract.
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There are now various types of broker-client relationships including, but not
limited to agency, and each state in the United States determines which are
allowed and the respective governing laws and regulations. Historically,
real estate professionals were hired by and represented the seller, but in
recent years, this has changed as buyers also perceived a need for
representation and practitioners began to offer such representation to
buyers. States also began to address various forms of agency and other
brokerage relationships through state statutes and regulations. A dual agent
represents both the seller and buyer, and can be an individual or a brokerage
company. Disclosed dual agency is legal in most states, provided both
parties give informed consent to the arrangement. A buyer agency
relationship is established by signing a contract or agreement stating that the
agent is legally representing the buyer. The buyer agent may receive a flat
fee or a share of the commission, or both, based on the terms of the agency
agreement. To protect consumers interests, most of the states in the United
States have either statutes or regulations in place. By 2000, almost all states
had enacted statutes or regulations providing for disclosure of agency
relationships, including many that also specifically state the rights and
obligations of parties in real estate agency and other types of brokerage
relationships. Some statutory or regulatory schemes require a detailed
agency disclosure statement at the initial interview that defines a licensee's
general duties to the consumer; prescribe the various types of brokerage
relationships and the duties owed to consumers; and/or establish the concept
of "designated agency" and "transaction broker." These laws clarify up front
who works for whom in a real estate transaction and inform consumers of
the options for service available. As a result they enable buyers, sellers,
lessors and lessees to make informed decisions.
Non-Agency:
In general terms, a "sales contract" in real estate is a written agreement
providing for the buyer's agreement to pay a specified sum in exchange for
the designated property, subject to specific terms and conditions, accepted
and signed by both buyer an seller. Real estate sale agreements are often
required to have particular provisions specified by local or state law. Sales
contracts provide for the eventual transfer of title, the legal right to
ownership of land, to real property. The contract's purpose is to provide the
rules governing the parties' rights and obligations during the time between
the agreement to transfer real property and the actual transfer of title. The
statute of frauds requires that contracts for the real estate be written to be
enforceable. A proposed contract is an "offer" until it is accepted by both
parties. The required elements of any valid real estate contract consist of (1)
Names of the parties; (2) Description of the property; (3) Selling price and
other materials terms of the sale; (3) Date for transfer of title to the property
(5) Signatures of the parties.
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Sales Contracts:
In general terms, a "sales contract" in real estate is a written agreement
providing for the buyer's agreement to pay a specified sum in exchange for
the designated property, subject to specific terms and conditions, accepted
and signed by both buyer an seller. Real estate sale agreements are often
required to have particular provisions specified by local or state law. Sales
contracts provide for the eventual transfer of title, the legal right to
ownership of land, to real property. The contract's purpose is to provide the
rules governing the parties' rights and obligations during the time between
the agreement to transfer real property and the actual transfer of title. The
statute of frauds requires that contracts for the real estate be written to be
enforceable. A proposed contract is an "offer" until it is accepted by both
parties. The required elements of any valid real estate contract consist of (1)
Names of the parties; (2) Description of the property; (3) Selling price and
other materials terms of the sale; (3) Date for transfer of title to the property
(5) Signatures of the parties.
Remuneration
Commission:
In the United States, real estate agents typically are paid on a commission
basis, rather than on the basis of a salary. They get paid only after the
property search is over, the contract negotiated and the transaction
complete. The commission is usually divided between two brokers since
most of the transactions involve two brokers, one that produces the buyer
and the other that markets the property and otherwise assists the seller.
Under the typical arrangement, the seller pays a commission to his agent,
who then offers and pays a portion of that commission to the agent working
for the buyer. The buyer commonly pays nothing to his agent directly.
Listing brokers in the United States commonly receive a commission in the
range of 5% to 7% of the sales price, but there are no standard or
established percentage and each agreement may be negotiated separately.
As noted, listing brokers and agents typically split the brokerage fee with
the agent working with or for the buyer. The split also is not established and
each listing broker sets the split he offers to other brokers, although "even"
50-50 splits are not uncommon. For probate sales, commissions are set, or
at least approved, by the probate court. Sellers may be more able to
negotiate a lower commission rate for more expensive homes, or in highly
competitive markets, than in other circumstances. In reality, the exact
commission-sharing arrangement may be determined by several factors,
including whether the commission is for a listing, a sale, or both; the listing
solicited by the salesperson or assigned by his/her brokerage's management;
and whether it is a particularly difficult transaction or simple transaction.
Commissions are earned by the broker or brokerage firm, which then pays a
portion of that commission to the agent involved in the transaction. Some
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brokerage firms employ a 100% commission arrangement, whereby the
agent receives the entire amount of the commission earned by the firm in
exchange for the agent paying to the broker a flat fee each month for the use
of the company's resources and/or facilities. Although some companies may
charge an additional fee for each transaction, the basic principle is to allow
salespeople to keep nearly all the commission income they produce. A
common form of extra compensation is the bonus plan whereby a bonus is
paid to highly productive salespeople at the end of the year.
Each state has its own laws and regulations that govern payment of real
estate commissions, but most states prohibit the sharing of commission fees
with any unlicensed person or entity. In recent years, several states have
enacted rules or legislation to allow the sharing of a commission with an
unlicensed practitioner from outside the US, if the country in which the
practitioner works has no licensing body.
Escrow:
Escrow is a legal device that assists in the completion of a transaction,
including delivery of the deed to the buyer and the sale price to the seller.
An escrow account or arrangement can be created by a separate contract or
within the sales contract itself. Before the title to the real property can be
transferred, a deed is delivered by the seller to the escrow agent, and the
buyer delivers the sale price also to the escrow agent. When the escrow
agent is satisfied that the deed and the sale price provided are acceptable, he
delivers the deed to the buyer and the sale proceeds to the seller. He may
first record the deed with the local government agency responsible for
recording documents. The escrow fund is usually held by a service provider
in an escrow account to protect the buyer's interests. Several states have
created their own rules to regulate escrow services due to the complexity of
escrow issues. For instance, some states require service providers, under
certain circumstances, to pay interest on escrow accounts to mortgagors.
Other states may have restrictions on the establishment and maintenance of
escrow accounts such as how much can be held in an escrow account.
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VENEZUELA – ICREA Profile
Code of Ethics
CIV has a Code of Ethics that must be respected and followed by their
affiliates and certified members. Every local Chamber has a "Disclipinary
Tribunal" to attend to violations of the Code of Ethics.
Legally there does not exist minimal conditions for the real estate
profession. As a result, the profession lends itself to informality and taken
with little seriousness. In many cases, this is reflected in real estate scams
and unsatisfied customers. In the CIV in 9/01 a process of certification was
begun by the association, obliging those who possess a minimum amount of
experience required in the sector, to be an active practitioner and have a
minimal number of courses and studies defined by a rule. There already are
250 people registered in this certification program, and their expectation is
that they will certify about 1,000 more in 2002. To remain active in the
certification process, the interested party needs to complete a minimum
hour of activities of professional betterment (ex., courses, assistance at
Conventions, etc.) and demonstrate having been active in the real estate
business.
The primary objective of the certification process is to give more formality
to the real estate sector and to develop and give credibility to "serious"
professionals.
Given the fact that this certification process is not legally recognized, the
CIV needs to permanently promote the real estate sector so that people who
require our services can get it from true, "certified" CIV members.
CIV offers two times per year its program titled "formation of real estate
brokers" (130 hour course), and also many diverse workshops specialized in
diverse materials, forums and speeches. In this sense, it would be
opportune to interchange programs of training and certify it (your courses).
There does not exist any type of restrictions for the real estate profession
between one state and another. A real estate professional can practice in
various states within Venezuela simultaneously.
Foreigners can also exercise the profession freely in Venezuela.
The "control" issue we are trying to do through CIV. Certification is
renewable every two years if the person completes a minimal amount of
coursework and/or attendance at events related to the profession, they must
be active, and having developed ethically.
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If a "certified" person incurs a violation of our Code of Ethics, the license is
taken away.
Foreign Ownership
There are no limitations on ownership of real estate for foreigners.
Every Municipal authority should count with a real estate database that can
identify different properties and owners that exist within its jurisdiction.
The access to this information will depend on the administrative
transmittals that every municipal office will solicit. Some municipalities
can have access to this information which is already systemized and
computerized. The Public Registry information is not computerized. There
are only computerized systems in some offices, only in the most important
ones in Caracas metro area.
In the majority of the registries of the country the information is handled
manually.
There exist private companies that copy the information and systemize it.
Access to that is by subscription only.
In Venezuela there do not exist professional restrictions to exercise the
profession. With regards to the drawing up of documents involved in
buying/selling, they should be drawn up by a lawyer who is registerd with
the "Colegio de Abogados". Notaries and registries should also be law
professionals.
Practitioner Dispute Resolution System
There exist two centers of Conciliation and Commercial arbitration where
one can vent differences between contracted parties. One is coordinated
through the Chamber of Commerce and the other through VENANCHAM.
CIV has written agreements with both institutions to educate out affiliates to
use these services if necessary.
Services are variable depending on the type or case. A real estate
professional should be capable of supporting all of the administrative, legal
and financial requirements involved in the real estate transaction (selling as
well as renting), like a search of possible buyers/sellers and the structure of
the negotiation.
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Property Marketing System
Real estate offerings are published in different communication forms -- TV,
radio, magazines, press, and lately in real estate portals. There exist real
estate networks conformed by groups of companies that form part of a
multiple listing service. In this system is included C21 and RE/MAX. CIV
is in the process of developing its own MLS to give this service to all
certified professionals.
Referral System
CIV has a registry database of real estate member companies, which include
construction and promotion firms, consultancies, financial entities,
brokerage, and/or administration. Some companies can realize various
activities at a time as well as offer multiple services. Without fail, though,
affiliated companies are not the only ones that exist in the country. So, it is
difficult to know the exact number of companies dedicated to real estate.
On another note, since there are no regulations in the real estate sector,
many people exercise the profession as free-lancers, so there are no labor
statistics.
It is common practice to services via a written agreement, between the
buyer and seller. What they do is establish the obligations between both
parts, amount of payment, how payment will be made, time limit of
contract, etc.
Remuneration
There is not a regulated rate. The rate of payment/commission is between
3-5% of the total amount of the transaction, if it is done in buy/sell
operations. There does not exist an actual fee. In the case of rentals, the
payment/commission is equivalent to one month's rent, covering the renter
as well as the owner. In general, payments take place once the operation is
realized, in accordance with the service conditions established formally in
the contract, between the buyer and the seller.
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Appendix
Measurement Conversions
Square Measures
1 sq. centimeter
0.1550 sq. inch
1 sq. inch
6.452 sq. centimeters
1 sq. decimeter
0.1076 sq. foot
1 sq. foot
9.22903 sq. decimeters
1 sq. meter
1.196 sq. yards
1 sq. meter
10.7639 sq. feet
1 sq. yard
0.8361 sq. meter
1 hectare
2.471 acres
1 acre
0.4047 hectares
1 sq. kilometer
0.386 sq. mile
1 sq. mile
2.59 sq. kilometers
1 hectare
10,000 sq. meters
Appendix-1
CIPS The Americas
Foreign Real Estate Cooperating Associations
The National Association of REALTORS® has cooperating agreements
with 70 international real estate associations in 55 countries. Following is a
listing of those organizations with contact information.
Argentina
Mr. Nestor Pirosanto, President
The Argentina Chamber of Horizontal Properties and Real Estate
Activities
CAP-H
Perú 570, Capital Federal
Buenos Aires Argentina
Tel 011-54-114-342-5128
Fax 011-54-114-345-0010
[email protected]
www.caphai.com.ar
NAR President’s Liaison: Maria Taticchi
NAR Ambassador Association: REALTOR® Association of Greater Fort
Lauderdale
Argentina
Mr. Hugo Mennella, President
Camara Inmobilaria Argentina
CIA
Bartolome Mitre 784 - Piso 2
1036 Capital Federal
Buenos Aires Argentina
Tel 54-11-5031-3333
Fax 54-11-5031-3333
[email protected], [email protected]
NAR President’s Liaison: Maria Taticchi
Lauderdale
Australia
Mr. Tony Brasier, President
Mr. Bryan Stevens, Chief Executive Officer
Real Estate Institute of Australia
REIA
GPO Box 234
Deakin West, ACT 2600 Australia
Tel 61-2-628-24277
Fax 61-2-628-52444
Appendix-2
CIPS The Americas
www.reiaustralia.com.au/
NAR President’s Liaison: Richard Mendenhall
Austria
Mr. Anton Holzapfel, Executive Officer
Dr. Margret Funk, Vice President
Österreichischer Verband der Immobilientreuhänder
OVI
Favoritenstraße 24/11
Wien 1040 Austria
Tel 43-1-5054875
Fax 43-1-504875-18
www.ovi.at
NAR President’s Liaison: Susan Greenfield
Bahamas
Mr. Patrick Strachan, President
Ms. Andrea Brownrigg, Chair, International Committee
Bahamas Real Estate Association
BREA
Chamber of Commerce, Collins Avenue
P.O. Box N8485
Nassau Bahamas
Tel 242-325-4942
Fax 242-322-4649
www.bahamasrealestateassociation.com
NAR President’s Liaison: Chip Lubeck
NAR Ambassador Association: REALTORS® Association of the Palm
Beaches, Inc.
Brazil
Mr. Romeu Chap Chap, President
Mr. Laerte Temple, Managing Director
Sindicato das Empresas de Compra, Venda, Locação e Administração de
Imóveis de Sao Paulo
SECOVI-SP
Rua Doutor Bacelar, 1043
04026-002 São Paulo - SP Brazil
Tel 55-11-5591 1300, laerte's 55 11 5591 1285
Fax 55 11 2578 3145
www.secovi.com.br
NAR President’s Liaison: Jose Augusto Pereira Nunes
Appendix-3
CIPS The Americas
NAR Ambassador Association: REALTOR® Association of Greater
Miami and the Beaches, Inc.
Bulgaria
Mr. Orlin Vladikov, President
Ms. Galia Nedeva, Executive Director
National Real Property Association
NRPA
36 A Patriarch Evtimii Blvd.
Fl.1, Apt. 3
Sofia, 1000 Bulgaria
Tel +359 (2) 988-6890, +359 (2) 980-1470
Fax +359 (2) 988-6891
www.nsni.bg
NAR President’s Liaison: Diane Cummins
NAR Ambassador Association: Putnam County Association of
REALTORS®
Canada
Mr. Gerry Thiessen, President
Mr. Pierre Beauchamp, Chief Executive Officer
Canadian Real Estate Association
CREA
Minto Place, The Canadian Building
344 Slater Street, Suite 1600
Ottawa, Ontario K1R 7Y3 Canada
Tel 613-237-7111
Fax 613-237-9054
[email protected]
www.crea.ca
NAR President’s Liaison: Walt McDonald
CEPI
Mr. Frans A.J. Burgering, President
Mr. Xavier Ortegat, Executive Director
Conseil européen des Professions immobilières, European Council of
Real Estate Professions
CEPI
Avenue de Tervueren 36 bte 2
B-1040 Brussels Belgium
Tel 32-2-735-49-90
Fax 32-2-735-99-88
[email protected]
www.cepi.be
NAR President’s Liaison: Norman Flynn
Appendix-4
CIPS The Americas
CEREAN
Mr. Arthur Ohanesyan, President
Ms. Joanna Iwanowska, Executive Vice President
Central European Real Estate Associations Network
CEREAN
ul. Srebrna 16
Warsaw 00-810 Poland
Tel +48-22-620-6899
Fax +48-22-620-6289
www.cerean.com
NAR President’s Liaison: Art Godi
Chile
Mr. Werther Araya Steck, President
Ms. Flor Aguilera Soto, Executive Officer
Asociacion Gremial De Corredores De Propiedades De Chile
COPROCH
Avda. Providencia, 329, Piso 2
Santiago, Chile
Tel 56-2-341-3368
Fax 56-2-274-9730
[email protected]
NAR President’s Liaison: Kimberly Kirschner
NAR Ambassador Association: Raleigh Regional Association of
REALTORS®
Chile
Mr. Jose Antonio Alemparte Vallarino, President
Mr. Cristián Domínguez Smith, General Manager
Camara Nacional de Servicios Immobliarios ACOP
ACOP-CNSI A.G.
Avda. Providencia 2008-A, Piso 2
Santiago, Chile
Tel 56-2-366-0414
Fax 56-2-233-5110
[email protected]
www.acop.cl
NAR President’s Liaison: Kimberly Kirschner
NAR Ambassador Association: Raleigh Regional Association of
REALTORS®
China
Mr. Chunhua Song, President
Mr. Zhengyi Zhu, Vice President/Secretary General
China Real Estate Association
Appendix-5
CIPS The Americas
CREA
No.59B, Fuxing Road
Beijing 100036 People's Republic of China
Tel +86-10-6822-4455
Fax +86-10-6828-1299
[email protected]
www.estate-china.com
NAR President’s Liaison: Fanny Chu
NAR Ambassador Association: San Francisco Association of
REALTORS®
China-Hong Kong
Ms. Karen Wong, President
Society of Hong Kong Real Estate Agents
SHKREAL
Nan Fung Tower, Room 913, 9th Floor
173 Des Voeux Road Central
Hong Kong People's Republic of China
Tel (852) 2575 1260
Fax (852) 2838 0062
[email protected], [email protected], [email protected], [email protected]
www.hkrealtors.com
NAR President’s Liaison: Kenneth Li
NAR Ambassador Association: Houston Association of REALTORS®,
Inc.
Colombia
Mr. Sergio Mutis Caballero, President
Dr. Ismael Molina Giraldo, Secretary General
Federacion Colombiana de Lonjas de Propiedad Raiz
FEDELONJAS
Carerra 13A No. 97-24
Santa Fe De Bogota Colombia
Tel 57-1-623-0426 or 57-1-622-6966
Fax 57-1-623-3366
www.lonja.org.co
NAR President’s Liaison: Toni Napolitano
Costa Rica
Ms. Emilia Piza, President
Ms. Mercedes Castro, International Liaison
The Costa Rica Chamber of Real Estate
CCCBR
Apartado 1006-2100-Guadalupe
Appendix-6
CIPS The Americas
San Jose Costa Rica
Tel 506-283-0191
Fax 506-283-0347
www.camaracbr.or.cr
NAR President’s Liaison: Bill Powers
NAR Ambassador Association: Arizona Association of REALTORS®
Costa Rica
Mr. Nicholas Viale, President
Mrs. Gioconda Yoko Zuniga, Administrator
Costa Rica Global Association of REALTORS®
CRGAR
Attn: M. Nicholas Viale, Oficina Century 21 Coastal Estates
Junto al Hotel Diria, Playa Tamarindo
Guanacaste Costa Rica
Tel 506-653-0300
Fax 506-653-0600
www.costaricare.net
NAR President’s Liaison: Bill Powers
NAR Ambassador Association: Arizona Association of REALTORS®
Czech Republic
Ing. Jaroslav Novotny, President
Ing. Arch. Jan Boruvka, Secretary General
Association of Real Estate Offices of the Czech Republic
ARKCR
Na Chodovci 2880/3
Praha 4 - Sporilov 141 00 Czech Republic
Tel 42-02-71762953
Fax 42-02-7176-6401
[email protected]
www.arkcr.cz
NAR President’s Liaison: Jana Herdova
NAR Ambassador Association: Chicago Association of REALTORS®,
Inc.
Denmark
Mr. Steen Winther-Petersen, National President
Mr. Henrik Dahl Sørensen, Chief Executive
Danish Association of Chartered Estate Agents
DE
Islands Brygge 43
2300 Copenhagen S Denmark
Tel 45-70 25 09 99
Appendix-7
CIPS The Americas
Fax 45-32-64-45 99
[email protected]
www.de.dk
NAR President’s Liaison: Phyllis Schwartz
NAR Ambassador Association: Greater Las Vegas Association of
REALTORS®, Inc.
El Salvador
Ms. Marida Alfaro, President
Mr. Luis Ernesto Dominguez, Vice President
Camara Salvadorense de Bienes Raices/ El Salvador Chamber of Real
Estate
CSBR
Edificio Granplaza, Local 504
Col. San Benito
San Salvador El Salvador
Tel 503-245-1133
Fax 503-245-1130
[email protected]
http://www.fecepac.org/asistentes/paises.asp?pais=1
NAR President’s Liaison: Carlos Fuentes
NAR Ambassador Association: Greater Tampa Association of
REALTORS®
FeCePac-ACBR
Federation of Real Estate Associations of Central America
FeCePac-ACBR
Calle Guadalupe de Goicoechea, 100 mtrs Al Oeste y 65 Mtrs. Al Sur de la
esq. Suroeste del Edificio del segundo cimiento judicial
Bario Esquivel Bonilla
San Jose Costa Rica
Tel +506-240-6677
Fax +506-240-6673
[email protected]
www.fecepac.org
NAR President’s Liaison: Deborah Valledor
Finland
Mr. Risto Volanen, President
Mr. Jukka Malila, Chief Executive
Suomen Kiinteistönvälittäjäliitto ry.
SKVL
Malminkaari 5
Helsinki 00700 Finland
Appendix-8
CIPS The Americas
Tel +358-9-5308-500
Fax +358-9-5308-5050
[email protected]
www.asuntoverkko.com
NAR President’s Liaison: Maire Rosol
NAR Ambassador Association: Utah Association of REALTORS®
France
Mr. René Pallincourt, President
Mr. Denis Fichot, Chief Executive
Federation Nationale de l'Immobilier
FNAIM
129, rue du Faubourg Street Honore
75008 Paris France
Tel 33-1-44-20-77-00
Fax 33-1-42-25-80-84
www.fnaim.fr
NAR President’s Liaison: Barbara Schmerzler
NAR Ambassador Association: Connecticut Association of REALTORS®
Germany
Mr. J.P. Henningsen, President
Mr. Hans Eberhard Langemaack, Business Manager
Immobilienverband Deutschland
IVD
Littenstrasse 10
Berlin 10179 Germany
Tel +49-30-27-57-260
Fax +49-30-27-57-2649
[email protected]
www.ivd-bundesverband.net/
NAR Ambassador Association: Florida Association of REALTORS®
Greece
Mr. Savvas Savvaidis, President
Mr. Kostantinos Kopnitsanos, Vice President/Liaison to NAR
Hellenic Association of REALTORS®
HAR
Odos Kerkyras 47
11362, Athens Greece
Tel 30-182-32-931
Fax 30-188-10-936
www.sek.gr
NAR President’s Liaison: Angela Eliopoulos
Appendix-9
CIPS The Americas
Guatemala
Mr. Cirilo Chua, President
Ms. Lucrecia De Boleres, Executive Director
Camara de Corredores de Bienes Raices de Guatemala
CCBRG
Boulevard Vista Hermosa 8-71
Zona 15, Vista Hermosa I
Guatemala City Guatemala
Tel +502-369-5090
Fax +502-369-4696
www.ccbrg.org
NAR President’s Liaison: Carlos Fuentes
NAR Ambassador Association: Greater Tampa Association of
REALTORS®
Honduras
Mr. Eduardo Sanchez, President
Asociacion Nacional de Agencias de Bienes Raices de Honduras
ANABIR
Col. Castaño Sur, Paseo Virgilio Zelaya Rubí
Bloque C, Casa #24
Tegucigalpa Honduras
Tel +504-566-1146
Fax +504-669-0809
http://www.roatan-realestate.com/
NAR President’s Liaison: Patrick Crowley
Hungary
Mr. Peter Mehrli, President
Mr. Sándor Kispál, Secretary General
Magyar Ingatlanszövetség
HREA
Margit krt. 43-45
H-1024 Budapest Hungary
Tel 36-1-336-0072 or 36-1-315-1039
Fax 36-1-336-0073
[email protected]
NAR President’s Liaison: Zsolt Szerencses
NAR Ambassador Association: Orlando Regional REALTOR®
Association
Appendix-10
CIPS The Americas
India
Mr. Chetan Narain, President
Mr. Naresh Malkani, Chairman
India Institute of Real Estate
IIRE
c/o 'NARAINS CORP', 203, Rajesh Centre
Opp. Bus Depot, S. V. Road, Andheri (W)
Mumbai 400 058 India
Tel +91-22-2628-8595, +91-22-2628-3442
[email protected], [email protected], [email protected]
www.iire.co.in
NAR President’s Liaison: Shalini Madaras
NAR Ambassador Association: Denver Board of REALTORS®
Indonesia
Ir. Yan Mogi, President
Ir. Munawar Saleh, Executive Director
Persatuan Perusahaan Realestat Indonesia
REI
Rukan Simprug Indah
Jl. Teuku Nyak Aruef No. 9B
Jakarta, Selatan 12220 Indonesia
Tel 62-21-7278-9105
Fax 62-21-7278-9155
[email protected]
NAR Ambassador Association: Georgia Association of REALTORS®
Indonesia
Mr. Tirta Setiawan, President
Mr. Darmadi Darmawangsa, Secretary General
Asosiasi Real Estate Broker Indonesia/Indonesian Association of Real
Estate Agents
AREBI
c/o PT. ETIKA REALTINDO
Sampoerna Strategic Square Building, LG Floor, Jalan Sudirman 45-46
Jakarta 12930 Indonesia
Tel 62-21-8370-5901
Fax 62-21-8370-5902
NAR Ambassador Association: Georgia Association of REALTORS®
Ireland
Mr. James O'Halloran, President
Mr. Alan Cooke, Chief Executive Officer
Irish Auctioneers and Valuers Institute
IAVI
Appendix-11
CIPS The Americas
38 Merrion Square East
Dublin 2 Ireland
Tel 353-1-661-1794
Fax 353-1-661-1797
[email protected]
www.realestate.ie
NAR President’s Liaison: Jim Kinney
NAR Ambassador Association: Chicago Association of REALTORS®,
Inc.
Israel
Mr. Nachman Shecter, President and Chairman of the Board
Mr. Nachman Shecter, Chairman of the Board
MALDAN - Association of Real Estate Brokers in Israel
MALDAN
Rechter Center
Eilat Israel
Tel 972-8-637-5730
Fax 972-8-637-6365
www.maldan.org.il
NAR President’s Liaison: Mark Levine
Italy
Mr. Franco Arosio, National President
Mr. Alberto Capanna, Vice President, International Affairs
Italian Federation of Real Estate Agents
FIAIP
Sede Nazionale Piazzale Flaminio, 9
00196 Roma Italy
Tel 39-06-321-9798
Fax 39-06-322-3618
[email protected]
www.fiaip.it
NAR President’s Liaison: Carol Kope
NAR Ambassador Association: New York State Association of
REALTORS®, Inc.
Jamaica
Ms. Lorraine Levy-Finlason, President
Ms. Cheryl Manning-Mowatt, Administrative Officer
REALTORS® Association of Jamaica
RAJ
Shortwood Professional Centre
40 Shortwood Road, Unit 14
Kingston 8 Jamaica
Appendix-12
CIPS The Americas
Tel 876-925-6223
Fax 876-969-3009
www.realtorsjamaica.com
NAR President’s Liaison: Matey Veissi
NAR Ambassador Association: Greensboro Regional REALTORS®
Association, Inc
Japan
Mr. Mitsugi Kawaguchi, President and General Director
Mr. Kaishi Kotajima, Executive Vice President
All Japan Real Estate Association
AJREA (Zen Nichi)
Zennichi Kaikan
3-30, Kioichi, Chiyoda-ku
Tokyo 102-0094 Japan
Tel 81-3-3263-7030
Fax 81-3-3239-2198
[email protected]
www.zennichi.or.jp
NAR President’s Liaison: Takashi Misawa
Japan
Mr. Hiromichi Iwasa, President
Mr. Toshiyuki Jinnai, Secretary General
The Real Estate Companies Association of Japan
RECAJ
Kasumigaseki Building, 7th Floor
2-5 Kasumigaseki 3-chome
Chiyoda-ku, Tokyo, 100-6007 Japan
Tel 81-3-3581-9421
Fax 81-3-3581-7530
www.fdk.or.jp
NAR President’s Liaison: Yukio Yamaoka
NAR Ambassador Association: Hawaii Association of REALTORS®
Japan
Mr. Kazuo Fujita, President
Miss Kyoko Shirasuna, Member of Staff
National Federation of Real Estate Transaction Associations
NFRETA
Zentakuren Building,
2-6-3 Iwamoto-Cho,
Chiyoda-ku, Tokyo, 101-0032 Japan
Appendix-13
CIPS The Americas
Tel 81-3-5821-8111
Fax 81-3-5821-8101
[email protected]
NAR President’s Liaison: Faye Dillman
NAR Ambassador Association: Virginia Association of REALTORS®
Japan
Mr. Masatoshi Miura, President
Mr. Kiyoharu Usui, Secretary General
The Association of Real Estate Agents of Japan (Fudosan Ryutsu Keiei
Kyokai)
FRK
Bridgestone-Toranomon Building, 5th Floor
3-25-2 Toranomon
Minato-ku, Tokyo, 105-0001 Japan
Tel 81-3-5733-2271
Fax 81-3-5733-2270
[email protected]
www.homenavi.or.jp
NAR President’s Liaison: Yukio Yamaoka
NAR Ambassador Association: Missouri Association of REALTORS®
Korea
Mr. Si-Girl Jang, President
Mr. Jin Hyung Suh, Chief, Real Estate Policy Research
The National Association of Real Estate Brokers
NAREB
4th Floor NAREB Building
930-42 Bongchun-8 Dong, Kwanak-Gu,
Seoul, 151-058 Korea
Tel 82-2-879-1100
Fax 011-822-886-4314
www.nareb.or.kr
NAR President’s Liaison: Steve Lee
NAR Ambassador Association: RealSource Association of REALTORS®
Korea
Mr. Jun Hyun Kim, President
Korea Real Estate Brokers Association
KREBA
10th Floor, Shinsung Building
820-8 Yeoksam-dong, Kangnam-gu
Seoul, 135-932 Korea
Tel 82-2-556-7772
Fax 82-2-562-2552
Appendix-14
CIPS The Americas
[email protected]
www.kreba.net
NAR President’s Liaison: Steve Lee
NAR Ambassador Association: RealSource Association of REALTORS®
Latvia
Mr. Edgars Shins, President
Ms. Irina Syarky, Executive Director
Latvian Real Estate Association
LANIDA
45/47 Elizabetes Street
Riga LV-1010 Latvia
Tel 371-7-332-034
Fax 371-7-332-034
[email protected]
www.lanida.lv
NAR President’s Liaison: Mickey Knickerbocker
NAR Ambassador Association: Michigan Association of REALTORS®
Malaysia
Ms. Puan Khatijah Abdullah, President
Ms. L.C. Seow, Honorary Secretary General
Malaysian Institute of Estate Agents
MIEA
No. 88-B, Jalan SS 21/39, Damansara Utama
47400 Petaling Jaya
Selangor Darul Ehsan, West Malaysia Malaysia
Tel 60-3-7727-7477
Fax 60-3-7727-3693
[email protected]
www.miea.com.my
NAR President’s Liaison: John Pinson
NAR Ambassador Association: Palm Beach Board of REALTORS®
Mexico
Mr. Galo Blanco, President
Mexican Association of Real Estate Professionals
AMPI
Rio Rhin #52
Col. Cuauhtemoc, C.P.
06500 Mexico, D.F. Mexico
Tel 52-55-5566-4260
Fax 52-55-5566-4323
www.ampinacional.com.mx
NAR President’s Liaison: Adrian Arriaga
Appendix-15
CIPS The Americas
NAR Ambassador Association: Texas Association of REALTORS®
Netherlands
Mr. Oscar Smit, President
Mr. Gerard Cremers, Secretary General
Dutch Association of Real Estate Brokers and Real Estate Experts
NVM
Fakkelstede 1,
Postbuss 2222
3430 DC Nieuwegein Netherlands
Tel 31-30-608-5185
Fax 31-30-603-5468
[email protected]
www.nvm.nl
NAR President’s Liaison: Brian Huggler
NAR Ambassador Association: Greater Lansing Association of
REALTORS®
New Zealand
Mr. Howard Morley, President
Real Estate Institute of New Zealand
REINZ
202 Parnell Road
PO Box 5663
Auckland, 1 New Zealand
Tel 64-9-356-1755
Fax 64-9-379-8471
[email protected]
www.reinz.co.nz
NAR President’s Liaison: Steven Wayne
NAR Ambassador Association: Washington Association of REALTORS®
Nicaragua
Mr. Abrahm Blandon, President
Ms. Maya Arguello, Vice President
Camara Nicaraguense de Corredores de Bienes Raices
CNCBR
Rotonda Ruben Dario 1c al Sur 20 vrs abajo
Managua Nicaragua
Tel +505-270-2413, +505278-2108
[email protected]
www.bienesraicesdenicaragua.com
NAR President’s Liaison: Lucia Sacasa
Appendix-16
CIPS The Americas
Norway
Mr. Øivind Andreas Tandberg, President
Mr. Finn Tveter, General Manager
Norwegian Association of Real Estate Agents
NEF
Hansteensgate 2
Oslo 0253 Norway
Tel 47-22-54-20-80
Fax 47-22-55-31-06
[email protected]
www.nef.no
NAR President’s Liaison: Frank Young
NAR Ambassador Association: Oklahoma City Metropolitan Association
of REALTORS®
Panama
Ms. Elda Sanson, President
Mr. Jose Boyd, International Liaison
Asociacion de Corredores y promotores de Bienes Raices
ACOBIR
87-3580, Zona 7
Panama Republic de Panama
Tel 507-228-7840
Fax 507-228-7807
www.acobir.com
NAR President’s Liaison: Didi Rogers
NAR Ambassador Association: Orlando Regional REALTOR®
Association
Paraguay
Mr. Jorge Figueredo-Fleitas, President
Mr. Jorge Figueredo-Fleitas, President
Paraguay Association of Land Development and Chamber of Real Estate
Companies
APEL - CAPEI
Edificio "Cardinal" 3 Piso - Of.10
Alberdi N 456 C/ Oliva
Asuncion Paraguay
Tel (595 21) 490-263
Fax (595 21) 490-263
[email protected]
www.apel-capei.com.py
NAR President’s Liaison: David Segrest
Appendix-17
CIPS The Americas
Peru
Mr. Luis Isasi Cayo, President, General Committee of Buildings
Mr. Marco Paz, Staff
Camara Peruana de la Construccion
CAPECO
Av. Victor Andres Belaunde 147, Via Principal 155
Edificio Real 3 - Of. 1402, San Isidro
Lima Peru
Tel +511-441-7042; 441-7043; 440-7032
Fax +511-441-7028
[email protected]
www.capeco.org
NAR President’s Liaison: Ligia Hernandez
NAR Ambassador Association: Puerto Rico Association of REALTORS®
Philippines
Mr. Silvestre D. Belen, President
Ms. Agnes M. Acosta, Director, International Affairs
Philippine Association of REALTORS® Boards, Inc.
PAREB
Unit 302 Merchant Square Condominium
E. Rodriquez Sr. Avenue corner Mabolo St.
New Manila 1112, Quezon City Philippines
Tel 63-2-723-1197
Fax 63-2-723-4685
www.pareb.com.ph
NAR President’s Liaison: Susan Barlin
Poland
Mr. Marek Stelmaszak, President
Ms. Monika Nowikow, Executive Officer
Polish Real Estate Federation
PREF
ul. Sliska 52
Warsaw 00-826 Poland
Tel 48 22 825 39 64 or +48 22 825 39 56
Fax 48-22-825-3956
www.pref.org.pl
NAR President’s Liaison: JoAnne Johnson
NAR Ambassador Association: Northern Virginia Association of
REALTORS®
Appendix-18
CIPS The Americas
Portugal
Mr. José Eduardo Macedo, President
Mr. Manuel José Falcao Sotto Mayor Negrão, International Liaison
Associação dos Profissionais das Empresas de Mediação Imobiliária de
Portugal
APEMIP
Rua D. Luís de Norohna, no. 4, 2.˚
1069-165 Lisbon Portugal
Tel 35-1-21-792-8770
Fax 35-1-21-795-8815
www.apemi.pt
NAR President’s Liaison: Marsha Price
NAR Ambassador Association: Massachusetts Association of
REALTORS®
Romania
Ms. Ruxandra Cleciu, President
Mr. Cristian Mitris, Executive Manager
Romanian Association of Real Estate Agencies
ARAI
Str. Stirbei Voda, Nr. 160, Bl. 22B
et. 3, Ap. 12, Sector 1
Bucharest Romania
Tel 40-2-1260-2665, 40-7-4436-7820
Fax 40-2-1260-2665
www.arai.ro
NAR President’s Liaison: Emil Mongeon
NAR Ambassador Association: Williamson County Association of
REALTORS®
Russia
Ms. Elena Dranchenko, President
Mr. Alexander Vorontsov, Executive Vice President
Russian Guild of REALTORS®
RGR
4th Floor
14/1, Radio Street
Moscow 105005 Russia
Tel +7-095-261-9680
Fax +7-095-261-9680
[email protected]
www.rgr.ru
NAR President’s Liaison: Sofia Menahem
Appendix-19
CIPS The Americas
Russia
Mr. Igor Artemenkov, President
Ms. Natalya Skub, Director of Public Relations
Russian Society of Appraisers
RSA
Novaya Basmannaya, 21-1,
Moscow 107078 Russia
Tel 7-095-267-46-02
Fax 7-095-267-56-10
[email protected]
www.mrsa.ru
NAR President’s Liaison: Sofia Menahem
Singapore
Dr. Amy Khor, President
Ms. Koh Tzu Min, SISV Secretariat
Singapore Institute of Surveyors and Valuers
SISV
20 Maxwell Road
10-09B Maxwell House
Singapore 69113 Singapore
Tel 65-222-3030
Fax 65-225-2453
[email protected]
www.sisv.org.sg
NAR President’s Liaison: Kelvin Wong
NAR Ambassador Association: Arcadia Association of REALTORS®
Singapore
Mr. Peter Koh Hock Guan, President
Ms. Nina Ho, Director
Institute of Estate Agents
IEA
480 Lorong 6 Toa Payoh
East Wing #08-02
Singapore 310480 Singapore
Tel 65-6323-1770
Fax 65-6323-1773
[email protected]
www.iea.org.sg
NAR President’s Liaison: Kelvin Wong
Appendix-20
CIPS The Americas
NAR Ambassador Association: Arcadia Association of REALTORS®
Slovak Republic
Mr. Lubomir Kardos, President
Mr. Martin Lazik, Secretary General
National Association of Real Estate Offices of Slovakia
NARKS
Celakovskeho 11
811 03 Bratislava 1 Slovak Republic
Tel 421 2 54 41 41 74
Fax 421-2-54-43-09-89
[email protected]
www.narks-real.sk
NAR President’s Liaison: Paul Scott
NAR Ambassador Association: Traverse Area Association of
REALTORS®
South Africa
Mr. Bill Rawson, President
Ms. Kate Colsell, Staff
Institute of Estate Agents of South Africa
IEASA
10 Howard Studios
Sheldon Way
PINELANDS 7405 South Africa
Tel 27-21-531-3180
Fax 27-21-531-2931
www.ieasa.org.za
NAR President’s Liaison: Nancy Macaluso
Spain
Mr. Jose Antonio Ugarte Arriola, President
Mr. Javier Martinez de los Santos, Executive Director
Asociacion Empresarial Gestion Inmobiliaria
AEGI
Lopez de Aranda, 35
28027 Madrid Spain
Tel +34-91-320-8070
[email protected]
www.aegi.org
NAR President’s Liaison: Judy Schomaker
NAR Ambassador Association: Sarasota Association of REALTORS®
Appendix-21
CIPS The Americas
Sweden
Ms. Solweig Lindéll-Sohlberg, President
Mr. Lars Kilander, Executive Vice President
Association of Swedish Real Estate Agents
MÄKLARSAMFUNDET (ASREA)
Svärdvägen 25 A
SE-182 33 Danderyd Sweden
Tel 46-8-544 96 550
Fax 46-8-544 96 555
www.maklarsamfundet.se
NAR President’s Liaison: Ruth Krinke
NAR Ambassador Association: Colorado Association of REALTORS®,
Inc.
Thailand
Khun Somsak Muneepeerakul, President
Real Estate Broker Association
REBA
C/O Dr. Somsak Muneepeerakul, Forbest Properties Co., Ltd.
387/1 Soi Prasart Court, Suanplu, South Sathorn Rd.
Bangkok 10120 Thailand
Tel 66-2-287-4568/69/70
Fax 66-2-287-3854
http://www.reba.or.th/
NAR President’s Liaison: Nita Pichedvanichok
NAR Ambassador Association: Minneapolis Area Association of
REALTORS®
Ukraine
Mr. Alexander Bondarenko, President
Mr. Arthur P. Ohanesyan, First Vice President and Liaison to NAR
Ukrainian Realtors® Association
URA
AFNU, A/s 25
Kyiv 01021 Ukraine
Tel +38-044-295-9383, +38-044-240-9307
Fax +38-044-254-0021
http://www.asnu.net/eng/index.html
NAR President’s Liaison: Dan Jordan
NAR Ambassador Association: Realtor® Association of Pioneer Valley
United Kingdom
Mr. Chris Hall, President
Appendix-22
CIPS The Americas
Mr. Peter Bolton-King, Chief Executive
National Association of Estate Agents
NAEA
Arbon House, 21 Jury Street
Warwick, England CV34 4EH United Kingdom
Tel 44-1926-496800
Fax 44-1926-400953
[email protected]
www.naea.co.uk
NAR President’s Liaison: John Mike
NAR Ambassador Association: REALTORS® Association of the Palm
Beaches, Inc.
Uruguay
Mr. Roberto Pedragosa, President
Mrs. Cristina Imelio, Secretary General
Camara Inmobiliaria Uruguaya
CIU
Rincon 454 Piso 3 Esc. 321
Edificio Bolsa de Comercio
Montevideo C.P. 11000 Uruguay
Tel +598-2-915-4919
Fax +598-2-915-4921
[email protected]
www.ciu.org.uy
NAR President’s Liaison: Gustavo Lumer
Venezuela
Mr. Luis Emilio Vegas Bianchi, President
Ms. Nancy Baquero, Executive President
Camara Inmobiliaria de Venezuela
CIV
Edificio I.A.S.A., Piso 5, Oficina 502
Plaza la Castellana, Av. Principal Urb., La Castellana
Caracas 1060 Venezuela
Tel 58-212-267-3256
Fax 58-212-261-7321
www.cim.org.ve
NAR President’s Liaison: Francisco Angulo
Lauderdale
Vietnam
Mr. Trihn Huy Thuc, Chairman
Vietnam Real Estate Association
Appendix-23
CIPS The Americas
VREA
c/o Ministry of Construction, Housing Bureau
37 Le Dai Hanh
Hanoi Vietnam
Tel 84-4-976-0853
Fax 84-4-821-5208
[email protected]
NAR Ambassador Association: Oregon Association of REALTORS®
South America
Mr. Wilder Ananikian, President
Mr. Antonio Passaro, Secretary General
Mercosur Real Estate Federation (Confederacion Inmobiliaria Mercosur
y Chile)
CIMECH
Edificio Bolsa de Comercio
Rincon 454 Esc. 321/CP 11.300
Montevideo Uruguay
Tel 598-2-915-4919
www.cimechweb.org
NAR President’s Liaison: Aida Turbow
Appendix-24
CIPS The Americas
Glossary
A
The Americas
The region of the world that includes the countries of North, Central and South
America and the islands of the Caribbean.
Andean Region
A region of South America named for its proximity to the Andean mountains.
Countries in the region include: Bolivia, Columbia, Ecuador, Peru and Venezuela.
Animism
The belief in the conscious life of nature or natural objects.
B
Balance of payments
A system of recording all of a country’s economic transactions with the rest of the
world for a particular period of time.
Base industries
The industries in which countries specialize in due to natural, human or other
resources. Base industries usually provide a country with goods for export.
C
Capital flow
The movement of money, people, skills and innovations across national boundaries
in exchange for other goods or services.
Capital good
A good that creates other capital (i.e., equipment, factories, etc.).
Glossary -1
CIPS The Americas
Country assessment model
A group of characteristics used to examine and determine the real estate potential
of a new market.
The Caribbean
A region of the Americas that includes all of the islands between North and South
America, from Cuba to Trinidad and Tobago.
Caribbean Common Market (CARICOM)
An agreement developed to establish a common external tariff and promote free
trade among the Caribbean islands of Antigua-Barbuda, Bahamas, Barbados,
Belize, Dominica, Grenada, Guyana, Jamaica, Monserrat, St. Kitts-Nevis, St.
Lucia, St. Vincent-Grenadines, Trinidad and Tobago, and Suriname.
Central America
A region of the Americas that connects North America to South America. These
are the countries south of Mexico, but north of Columbia. They include: Belize,
Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama.
Central American Common Market (CACM)
An agreement developed to establish a common external tariff and promote free
trade among the Central American countries of Costa Rica, El Salvador,
Guatemala, Honduras and Nicaragua.
Central American Economic Action Plan (PAECA)
An agreement developed to revitalize the Central American Common Market
(defined above). Member countries include: Costa Rica, El Salvador, Guatemala,
Honduras and Nicaragua.
Civil law
A code of law in which the government writes statutes that apply to rights,
responsibilities and duties. (Also known as Roman law.)
Common law
A code of law in which rights, responsibilities and duties are determined by the
courts on a case-by-case basis.
Consumption-to-savings ratio
A comparison of the amount of money a population spends to the amount of
money it puts into savings.
Glossary-2
CIPS The Americas
Counter trade
The process of buying goods or services with other goods.
Currency
A medium of exchange that holds value in a particular nation or market and can be
exchanged for goods or services.
D
Dependent nation
A country that relies on another nation for foreign relations and/or defense.
E
European Union (EU)
A union formed among 15 European countries to promote cooperation by
removing trade barriers and creating a single economic market. (Also known as
the European Common Market.)
Exchange rate
The value of one currency in terms of another, or the amount that must be paid in
one currency in order to obtain an amount in another currency.
F
Fideicomisimo
A bank trust established by the Mexican government to allow foreigners to hold
real estate in restricted zones. A Mexican bank holds title to the property, but the
foreigner is the beneficiary. As a result, the foreigner is entitled to use, lease or
sell the property as he or she sees fit. Fideicomisimos may be renewed after a
period of 50 years.
FIABCI (International Real Estate Federation)
A member organization developed to encourage communication within the
international real estate community for increased business and improved financial
success.
Flight capital
Assets that are divested in a country other than the investor’s home country. The
name is derived from the act of placing capital in another country in the event that
Glossary -3
CIPS The Americas
the investor may have to “flee” his or her home country due to internal conflict.
Today, many foreigners chose to invest in other countries for a variety of reasons.
Flight capital frequently takes the form of foreign real estate.
Foreign national
A foreign citizen who is present in another country.
G
Globalization
The movement by countries, companies, organizations and people toward a single
market environment.
Gross domestic product (GDP)
The value of all goods and services produced in a country during a given period.
This includes production by foreign-owned facilities within the country, but does
not include that of domestic companies abroad.
Gross national product (GNP)
The value of all goods and services produced by a country’s firms, regardless of
location. This does not include production of foreign-owned companies within a
country.
I
Independent nation
A country that controls all of its own affairs apart from that of other nations.
Inflation
An increase in the pricing environment due to a rise in the volume and availability
of money and credit and a reduction in the availability of goods.
Infrastructure
The economic and social foundations of a community or nation. Elements of
infrastructure include transportation, power, communications, banking, education,
and health systems.
International Monetary Fund (IMF)
A global agency that regulates trade barriers and stabilizes currencies in order to
provide a controlled environment for international capital flow. The IMF also
provides loans and financial support for countries in financial crisis.
Glossary-4
CIPS The Americas
L
Latin America
A region of the Americas that includes the entire western hemisphere south of the
USA. Latin America is comprised of the countries that developed from the
colonies of Spain, Portugal, and France – or those with languages derived from
Latin.
Liquidity
The ability to convert assets or investments into cash without significant loss.
Loan to value (LTV)
The amount of money borrowed as compared to the total value of a property. It is
determined by dividing the amount of the loan by the property value.
M
Macquiladora
A factory in Mexico that is owned by a foreign company, but employs Mexican
labor to assemble foreign products for sale in foreign markets.
N
Non-resident alien
A foreign citizen who is granted entry, but is not a resident of the USA.
North America
The northern continent of the Americas, including Canada, the USA and Mexico.
North America is the third largest of the seven continents in the world.
North American Free Trade Agreement (NAFTA)
A pact that prohibits tariffs and unites Canada, Mexico and the USA in one of the
world’s largest free-trade zones.
Glossary -5
CIPS The Americas
P
Per capita income
A nation’s income per unit of its population. This is determined by dividing the
GDP by the population.
R
Resident alien
A foreign citizen who is granted temporary residency in the USA.
Restricted zone
Area in Mexico in which foreigners may not own real estate. The zone is defined
as 100 kilometers wide along all borders and 50 kilometers along all coasts. (The
development of fideicomisimos now allows foreigners access to this land through
bank trusts.)
Roman law
See civil law.
S
South America
The southern continent of the Americas, which is comprised of 12 nations.
Ten of the countries are Latin American: Argentina, Bolivia, Brazil, Chile,
Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela. Two of the
nations are former dependencies: Guyana and Suriname.
Southern Cone
The southernmost region of South America. Countries include Argentina, Brazil,
Chile, Paraguay and Uruguay.
Specialization
The process that takes place when a country chooses to focus only the export of
particular products and services for the sake of efficiency. It also occurs when a
real estate professional focuses his or her practice on a particular type or area of
property.
Glossary-6
CIPS The Americas
T
Title
A legal right to ownership.
Trade balance
The net difference between the value of imports and the value of exports in a
country for a particular period of time.
V
Valuation
The act of assessing the value or price of a property or investment.
W
Western Hemisphere
All of the countries and continents in the world that are west of the equator.
World Bank
An international organization which finances commercial and infrastructure
projects, particularly in developing nations. World Bank loans must be supported
by the government.
Glossary -7
CIPS The Americas
Glossary-8
CIPS The Americas
Index
G
A
globalization ............................1-2
Andean Group Common Market
(ANCOM) ............................3-4
I
C
independent nations .................2-2
capital flow...............................1-2
Inter-American Development
Bank (IDB) ...........................2-9
Caribbean Basin Initiative
(CBI) .....................................3-5
M
Caribbean Common Market
(CARICOM) .........................3-5
Central American Common
Market (CACM)....................3-4
country assessment model........4-4
currency....................................1-3
currency conversions ...............1-6
D
dependent nations.....................2-2
economic environments
Andean Countries................2-12
Canada, USA and Mexico...2-10
Caribbean ............................2-12
Central America ..................2-11
Southern Cone.....................2-13
economic indicators ...............3-13
F
fideicomisimos.........................5-4
maquiladoras...... see Mexican real
estate properties
Mexican real estate properties
agricultural............................5-5
commercial ...........................5-3
hotels and resorts ..................5-6
maquiladoras.........................5-6
residential..............................5-3
vacation ownership ...............5-3
Mexico
brokerage practices .............5-14
contracts and notaries .........5-14
cultural and business
differences.........................5-12
financing .............................5-19
foreign ownership
limitations .........................5-16
leases...................................5-21
marketing and selling..........5-22
networking and
relationships......................5-10
taxation ...............................5-19
timeshare regulations ..........5-14
mordida ...............................5-11
Free Trade Area of the Americas
(FTAA) .................................3-6
Index-1
CIPS The Americas
N
NAFTA (North American Free
Trade Agreement) ................ 3-2
offshore banking...................... 3-6
Organization of American
States (OAS)......................... 2-9
P
PAECA (Central American
Economic Action Plan) ........ 3-3
R
regional trends
Latin America....................... 3-9
overall real estate.................. 3-9
USA .................................... 3-11
S
Southern Cone Common Market
(MERCOSUR) ..................... 3-5
subregions
economic .............................. 2-6
geographic ............................ 2-6
T
trade agreements
content .................................. 3-2
Index-2
CIPS The Americas
Resources
Internet Resources
General Information
CNN Americas newspage: www.cnn.com/WORLD/americas

Journal of Commerce: www.joc.com

The Wall Street Journal: www.wsj.com

Signals in the Noise, Gordon Davis, International Operations,
National Association of REALTORS®

State Department's Consular website:
http://travel.state.gov/travel/cbpmc/cbpmc_2223.html.
Regional/National Information
Ari Feldman Realty (Guide to Mexican Real Estate):
www.mihc.com.mx

Association of American Chambers of Commerce in Latin
America: www.aaccla.com

Boomers are buying up Baja developments, Evelyn Iritani
Los Angeles Times, Feb. 23, 2006

Canadian national statistics: www.statcan.ca

Central America-Dominican Republic Free Trade Agreement (CAFTA)
Mike Johanns, the Secretary of Agriculture

International Monetary Fund (IMF): dsbb.imf.org/country.htm

Latin America links:
www.ozemail.com.au/~ecuapita/latam.htm
www.la.orientation.com/eg

Mexican national statistics: ags.inegi.gob.mx

Mexico Business: www.nafta.net/mexbiz/index.html

2005 World Population Data Sheet

U.S. Department of Commerce (country profiles):
www.state.gov/www/background_notes
Copyright 2006 National Association of REALTORS®
Resources-1
CIPS The Americas

U.S. Central Intelligence Agency’s World Factbook:
www.odci.gov/cia/publications/factbook

U.S. Department of Commerce (Market Access & Compliance):
www.mac.doc.gov/tcc/country.htm

World Bank reports:
www.worldbank.org/html/extdr/regions.htm
Trade and Economic Information
Andean Community: www.comunidadandina.org

Center for Global Trade Development: www.cgtd.com/global

Center for the Study of Western Hemispheric Trade:
www.lanic.utexas.edu/cswht

The Economist Intelligence Unit: www.i-trade.com/infosrc/eiu

The Economist: www.economist.com

Free Trade Area of the Americas: www.alca-ftaa.org

International Trade Center: www.intracen.org

International Trade Data System: www.itds.treas.gov

MERCOSUR: invertir.com/argentina/mercosur.html

National Center for Inter-American Trade:
www.natlaw.com/treaties.htm.

Organization of American States: www.sice.oas.org

The Trade Information Center: www.ita.doc.gov/tic

World Trade Centers Association: www.wtca.org

World Trade Centers Institute: www.wtci.org

World Trade Organization:
www.wto.org/wto/intltrad/internat.htm

Office of US Trade Representative: http://www.USTRgov/trade
Real Estate Resources
National Association of REALTORS®:
www.realtor.org/international
www.realtor.org
Resources-2

International Consortium of Real Estate Associations (ICREA):
www.worldproperties.com

Association of Foreign Investors in Real Estate (AFIRE):
www.afire.org
CIPS The Americas

Denver University Global Real Estate Project :
burns.dcb.du.edu

Ernst and Young’s Kenneth Leventhal Real Estate Group’s
Online Magazine:
www.ey.com/industry/realestate/magazine/internl

International Real Estate Network: www.realsites.com/realestate
Books

The Economist - Pocket World in Figures. The Economist Books

World Development Indicators 1998. The World Bank

World Statistics Pocketbook. United Nations, Department for
Economic and Social Information and Policy Analysis Statistical
Division. New York City, NY.

Engholm, Christopher and Scott Grimes. Doing Business in
Mexico. Prentice Hall Inc., 1997.

MacDonald, Scott B. and Georges A. Fauriol. Fast Forward:
Latin America on the Edge of the 21st Century. Transaction
Publishers, 1997.

Morrison, Terri, Wayne A. Conaway and Joseph J. Douress.
Dun & Bradstreet’s Guide to Doing Business Around the World.
Prentice Hall Inc., 1997.

Morrison, Terri, Wayne A. Conaway, George A. Borden
and Hans Koehler. Kiss, Bow or Shake Hands: How to do
Business in 60 Countries. Adams Media Corp., 1994.

Stanat, Ruth. Global Gold: Panning for Profits in Foreign
Markets. AMACOM, 1998.

Search for books by topic: amazon.com

Barnes & Noble bookstore: www.bn.com
Resources-3
CIPS The Americas
Periodicals
Resources-4

Americas Trade & Finance, Latin American Information
Services, Inc. (159 West 53rd Street, 28th Floor, New York, NY,
10019).

Business Week

Caribbean Update (52 Maple Avenue, Maplewood, NJ, 07040).

Mexico Business Monthly (52 Maple Avenue, Maplewood, NJ
07040).

Survey of Investment Climate in Latin America and the
Caribbean. PriceWaterhouseCoopers LLP (1999).

The Economist

The Wall Street Journal

Trade & Culture Magazine (7127 Harford Road, Baltimore,
MD, 21234-7741)