Argentina - JP O`Farrell Abogados

Transcription

Country Q&A Argentina
Corporate Real Estate 2006/07
Argentina
Gonzalo Ballester and John O'Farrell, JP O'Farrell Abogados SA
www.practicallaw.com/2-204-0593
THE CORPORATE REAL ESTATE MARKET
1.
■
What have been the main trends in the real estate market in
your jurisdiction over the last 12 months? What have been
the most significant deals?
Repsol YPF SA is building its new corporate headquarters in
Puerto Madero. The investment totals around US$134 million (about EUR105 million) and the building is scheduled
to be finished by 2008.
CORPORATE REAL ESTATE INVESTMENT
The main trends in the real estate market in Argentina over the
last 12 months have been the following:
■
■
Higher rents charged for premium offices (prices rose about
50% in the last two years) due to the lack of offices for rent.
This has increased interest in recycling buildings. In spite of
this, the construction of new office buildings has begun to
attract investors' interest in projects in Puerto Madero,
Greater Buenos Aires (specifically in Pilar and San Isidro)
and Tigre.
■
The real estate industry in rural locations has been very
active since the devaluation, but has lately declined due to
government intervention restricting meat exports and affecting wheat prices.
■
There is a huge interest in the development of hotels all
around Argentina. The largest projects are located in Buenos
Aires (three new five-star hotels) and in the main tourist destinations.
The most significant deals have been:
■
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Adeco Agropecuaria (a group with several investors such as
George Soros, Halderman Farm, HBK and Argentinean
investors) paid US$90 million (about EUR71 million) for the
agriculture business of the Pilagá Group. This manages
around 170,000 hectares, 93,000 hectares of which belong
to the Pilagá Group, while the rest are rented or managed.
Forum, a development of TGLT Real State, is building a
45,000 square metre residential building in Dock IV of
Puerto Madero. The investment in this project is around
US$50 million (about EUR39 million).
Please briefly outline the opportunities for investing in real
estate in your jurisdiction. In particular, consider:
■
The structures commonly used (for example, property companies and partnerships).
■
Are real estate investment trusts (REITs) and real estate
derivatives available? If so, are they commonly used?
■
The role of institutional investors.
■
The role of private investors.
The main opportunities for investing in real estate are in the
residential, rural (agricultural and forestry), hotels and commercial office sectors (see Question 1).
There are different business structures available for investing in
real estate. The most commonly used structures are direct
ownership by individuals and through private companies. Another
option is to invest through the Buenos Aires Stock Exchange, as
there are several listed companies that focus on different real
estate sectors. For example, Cresud SA, Carlos Casado SA and
Agroamerican Group SA in the rural real estate market and Alto
Palermo SA in the real estate retail market.
There are few REITs in the Argentine market as there are no tax
advantages for this type of company. Real estate derivatives are
not available.
There are some institutional investors (trust managers and investment companies) involved in the real estate market, mainly as
developers of residential and office buildings and in rural areas.
The role of private investors is very common both in residential
and office real estate. They usually purchase several apartments
or offices when the developer launches the project and so help to
finance the construction with their payments.
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29
© This chapter was first published in PLC Cross-border Corporate Real Estate Handbook 2006/07 and is reproduced with the permission of the publisher,
Practical Law Company. For further information or to obtain copies please contact [email protected], or visit www.practicallaw.com/realestatehandbook.
Country Q&A
Larger commercial real estate returns (mainly from shopping
centres) have exceeded rent values since devaluation of the
Argentinian Peso in 2002, generating the development of
several new shopping centres that had been dormant for
some years. Many of them will soon be put up and others are
being planned in Buenos Aires and its surroundings, and in
other cities.
2.
SOURCES OF LAW
5.
If there is a public register of title:
3.
■
Is there a state guarantee of title?
■
What categories of documents and information are registered?
■
Can confidential information or documents be protected
from disclosure?
What are the main sources of real estate law?
The main sources of real estate law are the:
■
National Constitution 1853.
■
Civil Code 1869.
■
Condominium Property Act (Act 13,512).
State guarantee
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Registration of Condominium Property Act (Act 19,724).
■
Act relating to Trusts (Act 24,441).
■
Building codes, which differ for each region.
There is no specific state guarantee relating to the accuracy of
records made by officers based on public deeds or other
documents. However, third parties can contract with the
registered owner of the property, based on data recorded in the
Real Estate Register. Any party incurring loss due to a registration
mistake can sue the state for damages caused by the mistake.
■
Urban Leases Act (Act 23,091).
■
Rural Leases Act (Act 13,246).
■
National Real Estate Act (Executive Order 20,440/73).
Also, the law grants to buyers of real property an eviction
guarantee. According to this they can sue the seller for damages
if they lose the property due to a judicial decision supporting a
third party's claim to a better title to the property.
■
Real Estate Registers Act (Act 17,801).
Categories of documents and information
The following are registered:
Country Q&A
4.
How is title to real estate evidenced? Is there a public register?
If so, is it of title or of transactions?
■
Public deeds creating, transferring, declaring, modifying or
terminating interests in real property.
Title to real estate is evidenced by a public deed executed before
a notary public, together with the transfer of the property, that is,
the actual and voluntary surrendering of the property to the buyer.
■
Judicial decisions establishing attachments or other precautionary measures on real property, or restraining orders on
the owners preventing them from disposing of property.
On the fulfilment of these conditions, the transfer is valid between
the intervening parties, their heirs, the notary public and
witnesses. But it is only enforceable against third parties if the
deed is registered in the Real Estate Register of the jurisdiction
where the real estate is located.
■
Preliminary sales agreements of real property according to
the Registration of Condominium Property Act, or of property
divided into lots under Act 14,005.
Title to property can exceptionally consist of judicial decisions, for
example a judgment:
■
Approving the sale of property in an auction.
■
Declaring the rights of heirs.
■
Approving distribution among heirs.
■
Declaring adverse possession.
Under registration regulations, only a summary of the contents of
the documents is filed, and not the whole transcribed document.
Confidential information or documents
Documents are not wholly recorded and only the most relevant
data are filed in the Real Estate Register according to law.
Persons with a legitimate interest in finding out the legal status
of the property, documents or restraining orders can request
judicial authorisation to obtain a copy of the relevant title deed,
recorded in the Notary's College (Colegio de Escribanos) of the
jurisdiction where the deed was granted.
The Real Estate Register is of title and records the following:
In addition, interested parties can obtain the information
available on the Real Estate Register. Under law, interested
parties are the following:
■
Real estate transfers.
■
Restraining orders preventing the owners of real estate from
encumbering or disposing of it.
■
The real estate owner, either personally or through a representative.
■
Any interests in real estate.
■
Lawyers, notaries public, engineers or surveyors.
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Representatives of official credit institutions and of other
governmental entities.
■
Due diligence (including title investigation and searches of
public authorities).
Information can be obtained at the Real Estate Register or
through certificates or reports issued by it.
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Negotiation and execution of a sale contract.
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When the parties are legally bound.
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Registration.
■
When title transfers.
■
The length of the process.
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6.
Is title insurance available? If so, is it commonly used?
Title insurance is not available.
7.
How can real estate be held (that is, what types of tenure exist)?
Marketing
Tenure of real estate can be the following:
Real estate brokers are usually hired by sellers and/or buyers for
sale and purchase or lease transactions.
Real estate owner
Commercial negotiation
This is with the right to use, enjoy and dispose of the real estate.
Ownership can be:
Commercial negotiations vary according to the importance of the
real property that is being sold.
■
■
Unlimited or unconditional ownership, when it is perpetual
and the property has not been encumbered for the benefit of
other persons.
Pre-contractual arrangements
trust ownership, corresponding to the trustee under a
trust agreement with a specific subject, either to manage
or dispose of real estate under certain conditions;
❑
ownership subject to condition subsequent, that is, subject to a condition or time period;
If the conditions offered in the reserve are accepted by the seller,
the process continues with one of the following situations:
❑
divided ownership, where the owner grants an interest in
property to another person.
■
Conditional, including:
■
Acknowledgment of an interest other than ownership in
favour of a third party (for example, mortgage, use, usufruct,
habitation and right of way).
■
Acknowledgment of a personal right in favour of the real
estate holder, generally through an agreement (for example,
a lease and gratuitous use).
Between five and ten days after the seller accepts the
reserve, the parties sign a preliminary sale agreement, that
is a pre-contractual arrangement before transferring the
property. It is a private document signed by seller and buyer
that sets out the:
❑
conditions of the transaction;
❑
receipt of a deposit paid by the buyer as a down payment. Traditionally the deposit was 10% of the agreed
price but higher percentages are now requested, even
reaching 30% of the price;
❑
date when title to real property will be transferred to the
buyer, through the execution of a public deed.
SALE AND PURCHASE OF CORPORATE REAL ESTATE
8.
What are the main stages in the sale and purchase of corporate real estate? In particular, consider:
■
How corporate real estate is marketed.
■
Commercial negotiation.
■
Whether pre-contractual arrangements are commonly used.
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If no preliminary sale agreement is signed, the parties agree
to directly transfer the real property on payment of the whole
price, through a public deed executed before a notary public. In these cases the reserve price (see above) is generally
increased to up to 10% of the purchase price, and the deed
is signed within a shorter term no more than 30 days.
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Country Q&A
❑
The sale and purchase process generally begins with the signing
of a reserve. Through this the buyer reserves his right to acquire
real property, subject to the conditions offered by the buyer or
those stated in the reserve, by depositing cash or a cheque with
the broker as a guarantee of the offer. The buyer loses the reserve
if he does not complete the deal and he is refunded the deposit
if the seller rejects the offer.
Due diligence
agreed conditions. If the seller is in breach, he must pay the
buyer an amount equal to twice the down payment. Either
party can withdraw from the transaction as long as there is
no "principle of contractual execution". This occurs if:
Different types of due diligence is necessary depending on the
type of the transaction or future use of the real estate. Due
diligence is undertaken in the following situations:
■
If the real estate was used in the past for industrial purposes, and consequently the transaction is subject to the
non-existence of soil pollution.
■
When the real estate is purchased to carry out commercial or
industrial activities, so the transaction is subject to there
being no restrictions on obtaining necessary approvals and
authorisations.
■
When a going concern is purchased and consequently it may
require the approval of the National Commission for the Promotion of Competition (Comisión Nacional de Defensa de la
Competencia), an entity in charge of controlling economic
concentrations.
■
When the real property belongs to a company, and the parties execute the transaction through a transfer to the buyer
of the shares of the company owning the property, or through
a corporate reorganisation process. In this case due diligence is necessary to identify any contingencies related to
the target company.
■
❑
the real property has been surrendered to the buyer;
❑
the seller has made the necessary arrangements to have
the deed executed; or
❑
in general any other act occurs that undoubtedly reflects
a desire to perform the obligations in the preliminary
sale agreement.
The parties can also agree to pay a certain amount of money
on account of the price without making any reference to the
down payment. In this case, there is principle of execution
and consequently the parties cannot withdraw from the
transaction.
Registration and when title transfers
In all these cases, due diligence is carried out with regard to
earlier ownership transfers, and debts related to taxes or services
affecting the real estate. It is generally carried out by the notary
public and lawyers appointed by the buyer.
The transfer of title to real property is made before a notary public
through a deed that is registered at the Real Estate Register in
the province where the real property is located.
Length of process
There is no specific timescale to complete a transaction. Major
corporate real estate transactions may take several months.
9.
Country Q&A
Sale contract
The commercial terms and conditions in any purchase or sale are
generally set out in the reserve, or in the preliminary sale
agreement, if any (see above, Pre-contractual arrangements).
Therefore, most negotiation occurs before the execution of the
reserve or preliminary sale agreement, except when it is advisable
to carry out due diligence (see above, Due diligence). In these
cases, the negotiation may be more complex, as it may involve a
third party keeping in escrow part of the price to cover any
eventual contingencies, and/or discussing terms related to
liability if any of the contingencies occur.
When legally bound
In general, the buyer signs the reserve before the real estate
broker, who accepts it subject to the seller's approval and as long
as the general instructions given by the seller to the broker are
fulfilled. Once the seller accepts the reserve, there are several
alternatives relating to when the parties are legally bound that
depend on the payment conditions.
■
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What are the main legal documents? Is notarisation required?
The main legal document is the purchase and sale agreement,
which is formalised through a public deed executed before a
notary public. When a preliminary sale agreement is executed
(see Question 8), it is cited and reflected in the public deed. The
public deed is only signed if:
■
The notary public verifies that the real estate has been registered in the seller's name in the relevant Real Estate Register.
■
There is no restraining order preventing the seller from disposing of his property, as reflected in certificates obtained
by the notary public from the relevant Real Estate Register.
When the real property is transferred other than through sale and
purchase or barter, for example succession due to the death of
the owner, the deed can be replaced with a certified copy of the
judicial resolution stating the names of the heirs of the deceased
owner.
When the buyer makes the deposit as a down payment on
account of the price, he loses the deposit if he does not sign
the deed transferring title or if he does not perform the
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10. What kind of warranties is a seller usually required to give a
buyer:
■
On the sale of an individual commercial property?
■
In sales of large real estate portfolios or companies holding
real estate (consider due diligence, disclosure and contractual issues)?
Individual commercial property
11. How are acquisitions of large real estate portfolios or companies holding real estate generally financed?
Most acquisitions of real estate portfolios or companies holding
real estate are paid for in cash.
In general, acquisitions of large real estate portfolios or
companies holding real estate are financed through:
■
Loans obtained abroad or in the domestic market, with or
without security. If no security is given, the shares of the
acquired company are sometimes pledged as a guarantee.
■
Issuing bonds secured by mortgages.
■
The payment of the purchase price in several instalments.
The seller must warrant that:
■
He holds perfect title to property, that is, that there are no
doubts about its validity and scope.
■
There are no liens or encumbrances that prevent the seller
from freely disposing of the property.
■
The property is free from occupants and/or tenants.
He may also warrant that under municipal zoning regulations, the
real property can be used for a specific commercial activity,
despite the requirement to obtain authorisation for a new
development.
Large real estate portfolios or companies holding real estate
In addition to the usual warranties (see above, Individual
commercial property), warranties are quite common in relation
to:
■
■
The existence and capacity of the company owning the real
property.
■
The shares or interests representing the corporate capital of
the company owning the real property.
■
Consents or approvals of governmental authorities to the
transaction.
■
Lack of liabilities in the company owning the real property.
■
Tax matters with regard to the real estate and the company.
■
Compliance with environmental law.
■
Compliance with employment regulations, and those related
to social security applicable to the company owning the real
property.
■
Permits and authorisations for the company owning the real
property.
■
The non existence of lawsuits affecting the real property.
A real estate owner can be responsible for damage caused to third
parties by defects in the property that existed before the
purchase.
The filing of a lawsuit or of a precautionary measure with the Real
Estate Register before purchase or occupation can mean that a
judgment issued in the lawsuit is enforceable against a new
owner or occupier.
Environmental law sets out the so-called "from the cradle to the
grave" principle. This means that present and past owners are
liable for environmental issues. The past owners are only liable
for contamination or environmental problems caused up to the
date they transfer the property to a third party.
13. Does a seller or occupier have any liabilities relating to the
real estate after it has disposed of it? For example, environmental liability, defects in the real estate, contractual liability to the buyer, or liability for releasing charges secured on
the real estate.
The seller warrants to the buyer that the buyer will be able to
exercise all the rights arising from being the buyer of the title to
property (see Question 10). Consequently, the seller is responsible for any damage caused by the loss of rights to real property,
due to a better title held by third parties unknown by the buyer.
The seller is also responsible to the buyer for hidden defects in
the real property, as long as they are relevant and existed before
the sale. The existence of hidden defects means the buyer can
file legal proceedings to either:
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Rescind the agreement, surrender the premises and return
the price plus interest and, if there is seller's bad faith,
claim damages.
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Country Q&A
The capacity of the seller of stock in a company owning the
real property to sell his shares.
12. Can an owner or occupier be liable for matters relating to the
real estate even if they occurred before it bought or occupied
it? For example, environmental liability, or liability under a
lease.
■
Reduce the price (and claim damages according to some
commentators) but keep the purchase in force.
The time limit on both lawsuits is three months from the date the
buyer becomes aware of the defect.
■
Taxes, fees and services to be paid with regard to the property.
REAL ESTATE TAX
The seller or occupier may have environmental liability under the
purchase contract, if the seller agrees to indemnify the buyer for
any future contingent liability from hazardous waste disposed of in
the past by the seller, or a third party during the seller's ownership.
15. Is value added tax (VAT) (or equivalent) payable on the sale
or purchase of corporate real estate? Who pays? What are the
rates? Are there any exemptions?
Any disclaimer of liability in the contract only operates between the
seller and buyer. It cannot be enforced against third parties,
including the government, since both seller and buyer may be
liable for damage caused by waste to persons, their assets or the
environment in general, according to the Hazardous Waste Law
(the seller as the generator or owner of the waste and the buyer as
its guardian).
VAT is not payable on the sale of real estate, except for the first
purchases of apartments subject to the Condominium Act.
14. What costs are usually paid by the buyer? What costs are usually paid by the seller?
However, it is payable on works made to real property, either
directly or through construction companies.
As an exception, VAT is not payable on works carried out by
construction companies when, during a continuous or interrupted
term of three years before the date of the purchase deed or of
taking possession, they have been the object of leases or interests
such as usufruct, use, habitation or antichresis (possession and
enjoyment of mortgaged property by a mortgagee in lieu of
interest payments).
The buyer usually pays:
Country Q&A
The VAT rate is 21%.
■
The costs of title research carried out by the notary public.
■
Fees paid to the notary public, as he is appointed by the buyer
(unless it is the first sale of the real estate). When the buyer
registers the real property in his name before full payment of
the price, and guarantees payment of the balance with a mortgage, the notary public involved in the mortgage creation is
appointed by the seller. In these cases, it is possible to have
two notaries public: the one in the purchase is appointed and
its fees are paid by the buyer, whereas the notary public for
the mortgage is appointed by the seller, but its fees are paid
by the buyer.
■
50% of the stamp tax (see Question 16).
■
Between 1% and 6%, as agreed in each case, of the price
paid as commission to the relevant real estate brokers. In purchases of urban real property, this percentage is generally
between 1.5% and 3%, while in rural estates it varies
between 1% and 2%.
16. Is stamp duty/transfer tax (or equivalent) payable on the sale
or purchase? Who pays? What are the rates? Are there any exemptions?
All public deeds or any other document that transfer ownership
or deliver possession of real estate for valuable consideration are
subject to stamp tax.
There are regional jurisdictions where stamp tax paid on preliminary sale agreements is paid on account of the stamp tax paid on
the document evidencing transfer of ownership.
Rates vary according to the jurisdiction. The buyer and seller
usually each pay 50% of the stamp tax (see Question 14).
17. Are any methods commonly used to mitigate real estate tax
liability on acquisitions of large real estate portfolios?
The seller usually pays:
Apart from tax due diligence to asses tax liabilities, the most
common methods used to mitigate real estate tax liabilities are:
■
50% of the stamp tax.
■
Between 1% and 6%, as agreed in each case, of the price
paid as commission to the real estate brokers (see above).
■
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The cost of the certificates of title to property, and those
reflecting that there are no restraining orders preventing the
owner from disposing of the property. These are small
amounts.
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■
The creation of an escrow account to cover any tax liabilities.
■
To follow the "Transfer of business and Going Concern" procedure established by Act 11,867. This option is possible if
the large real estate portfolio qualifies as a business or a
going concern.
18. Is it common for companies to manage their real estate portfolios and their accommodation needs by using third parties,
for example through outsourcing transactions?
■
Filing of expropriation judicial proceedings.
■
Price appraisal of the property determined by the Court of
Appraisals (Tribunal de Tasaciones).
It is not common in Argentina for companies to manage their real
estate portfolio through third parties.
■
Court order for the expropriation (and also determining the
compensation).
■
Property being taken from the owner, after previous payment
of the compensation.
19. Are there restrictions on foreign ownership or occupation of
real estate, or on foreign guarantees or security for real estate ownership or occupation?
In Buenos Aires, where most foreign companies have set up
domicile, the Inspection Board of Legal Entities in charge of the
Public Registry of Commerce has recently issued stricter regulations. These regulate foreign companies directly purchasing real
estate and foreigners holding guarantees or security over
Argentine real estate. If the foreign company carries out habitual
business, it will need to register as a branch with this body, or to
establish a local subsidiary.
There are rules related to Security Zones (Executive Order
15,385/44), that is, an area on land and sea frontiers and around
military or civil facilities for national defence. Prior approval of
the Home Office (Ministerio del Interior) must be obtained to
register a property located in a Security Zone in the name of a
foreign person. This requires complying with certain criteria. If
none of these requirements are fulfilled, an alternative is to
submit an investment project meeting certain criteria. The
procedure to request prior approval requires various forms and
affidavits, and some visits to the Home Office.
Argentine provinces have their own regulations for compulsory
purchase, mainly according to the NEA.
Compensation must be determined by a court order, considering
the value at the time of the taking of the property, and at the time
of the actual payment.
According to the NEA the compensation must consider the
property's market value and damages that are a direct
consequence of the expropriation, but excludes any lost profits
(this seems contradictory).
22. Are municipal taxes paid on the occupation of business
premises, for example business rates? Are there any exemptions?
There are certain municipal taxes that are not directly related to
the real estate business but which indirectly affect the properties
that are within their jurisdiction.
For example, some of the taxes in Buenos Aires are:
Change of control of a company does not affect its holdings of
real estate, unless it relates to Security Zone real estate (see
Question 19).
■
Contribution for lighting, sweeping and cleaning of streets
and sidewalks.
■
Tax on the use and employment of the surface, airspace and
underground space of public thoroughfares. Its amount
depends on the kind of use, the extent of the area, the activity carried out, the length of time that it is occupied, and so
on.
■
Contribution to advertising on public thoroughfares or that
can be seen from public thoroughfares.
21. In what circumstances can local or state authorities purchase business premises compulsorily? Is the purchase
price market value?
Article 17 of the National Constitution grants the government the
power of eminent ownership (or compulsory purchase of property)
for public use. Public use must be determined according to law
and compensation must be paid before the actual taking of
ownership.
Some local jurisdictions tax the ownership or possession of real
estate, taking only into account the value of the property.
The following are taxpayers:
According to the National Expropriation Act (Act 21,499) (NEA),
public use is any activity for public welfare (for example,
construction of a new highway). The NEA also sets out the
following steps needed for compulsory purchase:
■
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Declaration of public use by law.
■
Holders of ownership.
■
Beneficial occupants.
■
Holders as owners (individuals that have the economic availability of the property).
35
Country Q&A
20. Does change of control of a company affect its holdings of
real estate?
The expropriator can be the state (including its decentralised
entities), the city of Buenos Aires, and also individuals authorised
by law or by administrative act (Article 2, NEA).
Rates vary in the different jurisdictions, based on a percentage of
the real estate value. In general, there are three scale categories,
depending if the real estate is constructed urban real estate,
vacant urban real estate or rural.
25. What are the typical terms of a lease (whether contractual or
regulated) of business premises relating to:
■
Length of lease term?
■
Rent review?
■
Disposal?
■
Repair?
■
Insurance?
REAL ESTATE FINANCE
23. How can corporate real estate be used to finance a business?
In particular through:
■
Secured lending.
■
Sale and leasebacks.
■
Other financing such as real estate securitisation.
Lease term
Real estate is used as security in many commercial loans,
through mortgages secured on the real estate in favour of the
financial institution to guarantee payment of principal and
interest.
There have been few sale and leasebacks. The main reason is
because the main tax cost is stamp tax, which has to be paid
twice in a sale and leaseback. This means that a sale and
leaseback has an extra 3% cost compared to a mortgaged loan in
Buenos Aires.
Country Q&A
Also, commercial paper can be issued and secured by mortgage
on one or more real estate properties.
In residential and office construction projects, a way of obtaining
financing is through a guarantee trust, in which the real estate is
transferred to a trustee. The trustee will collect payments from
investors and use the money to pay the land and the construction
cost. On completion of the construction, the trustee will transfer
the real estate to the investors.
CORPORATE REAL ESTATE LEASES
24. Are rents or lease terms regulated, subject to a voluntary
code, or freely negotiable?
There is an act, with national scope, which cannot be set aside
in an agreement between parties, that governs some aspects of
the urban lease of real estate for homes or commercial use (Act
23,091 1984).
Rural leases are also governed by national rules that cannot be
replaced by private agreements between parties (Act 13,246).
For general leasing, a national act has been recently passed with
similar characteristics (Act 25,248).
In business leases, the minimum term is three years. However,
the tenant can terminate the agreement after the first six months,
paying the landlord compensation that may be equivalent to one
month's rent or one month and a half.
In the business sector, usual negotiated lease terms can reach
five years. In important commercial businesses, a term of up to
ten years is agreed, which is the maximum legal term.
The minimum rural lease agreement term is three years.
However, an accidental lease agreement can be entered for up to
two harvests (in general one year). The renewal of the accidental
agreement may qualify it as a common rural lease, subject to the
mentioned minimum three-year term.
The standard term of rural lease agreements is variable.
Presently, as agricultural activity is profitable in Argentina,
owners of real estate prefer to lease fields under accidental
agreements, which allow them to negotiate better prices.
Rent review
In leases for commercial purposes, it is normal to agree an annual
review system of the lease price. There are different provisions for
this purpose. One of the most common, even though it may imply
legal risks in its implementation and enforceability, is that the
new price will be the average of valuations by two well known real
estate brokers, chosen by each party.
In leases of premises in shopping malls it is common for the rent
review to have different components that include a minimum
fixed amount, and a variable one according to turnover.
In rural leases, as the most common agreements are on an annual
basis, the price is usually not subject to review. In agreements
exceeding a one-year term, the lease rent is determined in a
currency traditionally strong in Argentina, such as the US Dollar,
or determined by the market value of an amount of certain cereal.
Disposal
An older act is useful as a framework to establish some compulsory provisions that must be followed when leasing to going
concerns (Act 11,867).
36
PLC
As regards a rural lease and a residential lease, it is usually
expressly agreed that the lessee/tenant will not be able to sublet
the real estate, or assign his rights under the lease agreement,
without the express agreement in writing of the landlord. In the
absence of express agreement, the tenant can sublet the real
estate.
In business real estate leased to well-known companies, it is
common to allow the right to sublet or assign the agreement. This
right allows the tenant to sublet real estate to distributors or
holders of franchises.
28. What events typically give the landlord and the tenant a right
to terminate the lease (under general contract terms and any
applicable legislation)?
Both the landlord and the tenant can terminate the lease due to:
■
An act of God (for example, a fire that destroys the real
estate).
■
Total or partial eviction from the real estate.
In leases to going concerns, subletting is rarely allowed.
Repair
In addition, the landlord can terminate the lease due to:
It is generally agreed that the owner pays for large repairs
necessary in the real estate for it to be used by the tenant, unless
the large repairs are due to the tenant's fault or negligence, in
which case the tenant pays these costs. The tenant makes the
necessary repairs to the real estate due to its regular use.
■
Non-payment of two consecutive due rents.
■
Performance of harmful works or unauthorised improvements to the premises.
■
Changes to the agreed use.
■
Abandonment or damage of the real estate.
Improvements in the real estate cannot be made without the
express agreement of the landlord. It is usual to agree that the
improvements must not be removed by the tenant at the termination of the lease but must remain for the benefit of the real
estate.
In addition, the tenant can terminate the lease due to:
Insurance
■
A unilateral decision to terminate the agreement in advance.
In general, the landlord takes out general fire and civil liability
insurance, covering damages that may occur in the leased real
estate.
■
Existing defects in the real estate that hinder its use.
However, the landlord may also add a term in the lease
agreement obliging the tenant to take out this insurance, or to
pay the premium.
Insolvency rules are mandatory, so agreements between parties
cannot modify them. Two situations can be distinguished (Act
24,522).
Preventive proceedings before tenant bankruptcy
VAT is payable on real estate leases, subject to certain
exemptions mainly relating to residential, agricultural and
governmental use. The rate is 21%.
27. Can named tenants usually share their business premises
with companies in the same corporate group? If so, on what
terms?
A tenant can usually share the leased premises with another
company of the same group if this is requested while negotiating
the agreement and if the tenant is a well-known company, or if
there is a personal guarantee satisfactory to the landlord.
If it is accepted, it is formalised through a term authorising the
subletting of all or part of the premises to such companies of the
same group.
PLC
These are similar to Chapter 11 of the US Bankruptcy Code.
There is no specific regulation established by law. But the
preventive proceedings are subject to general bankruptcy rules,
under which they can continue after the filing of bankruptcy
proceedings until the declaration of the tenant's bankruptcy, if
the tenant requests this within a certain time. In this case, the
debtor tenant will continue performing his obligations under the
lease agreement.
Tenant's bankruptcy
If the real estate is for commercial use, the lease agreement is
suspended on the tenant's bankruptcy until the judge makes a
final order, unless the judge orders the immediate continuation
of the lease after the bankruptcy.
The landlord must appear before the bankruptcy judge and state
his desire to continue or terminate the agreement. If the court
does not decide within a certain term established by law, the
lease will terminate.
37
Country Q&A
26. Is VAT (or equivalent) payable on rent?
29. What is the effect of the tenant's insolvency (under general
contract terms and insolvency legislation)?
30. Do tenants of business premises have security of occupation
or rights to renew the lease at the end of the contractual lease
term? If so, please give details.
■
Approved Use Certificate (180 days duration).
■
Conditional Use Certificate (365 days duration).
■
Authorisation (it sets out the activity that will be developed).
Continuing to hold the premises, paying a monthly rent, is not a
renewal of the lease term, and the tenant can at any moment
request to vacate the real estate.
■
Environmental Aptitude Certificate (it establishes the categorisation of the activity and if it has a relevant effect on the
environment).
PLANNING LAW/ZONING
33. If planning permission is required:
31. What is the institutional framework of planning control?
■
To which body or bodies are initial planning applications
made?
The following refer to Buenos Aires. In some provinces there are
similar rules. There are no national planning rules, just local ones.
■
Do third parties have the right to object?
■
In what circumstances is there a public inquiry?
■
After how long from the application does an initial decision
take?
■
Is there a right of appeal?
■
About how long does the whole procedure take?
Unless expressly agreed, the tenant does not have the right to
renew the term of the agreement at its termination.
Zoning is a way of conditioning the use of real estate according to
urban distribution, given the volume of construction, land occupation, and so on.
There are different rules for construction or the use of properties,
and the relevant ones are the:
■
■
Country Q&A
There are the following different certificates:
■
■
■
■
Urban Planning Code (Act 449). This includes administrative
rules related to the Approved Use Certificate, zoning evidence, general rules on urban construction (buildings height,
perimeters, adjourning buildings, district zoning, and so on).
■
❑
Building Code. This mainly states construction definitions,
governs projects and their execution and regulates different
uses, such as services, stores, industries, and so on.
General Management of Works Control and Cadastre
(Dirección General de Fiscalización de Obras y Catastro).
❑
General Management of Authorisations and Permits
(Dirección General de Habilitaciones y Permisos).
Act 1,749 (amending the Urban Planning and Building
Codes).
❑
General Management of Environmental Policy and Evaluation (Dirección General de Política y Evaluación Ambiental).
Authorisation Code. This establishes the legal and technical
requirements to authorise stores, industries, warehouses and
services.
Environmental Impact Act. This requires an Environmental
Impact Report for certain activities or works, to establish the
environmental impact they may produce. It considers whether
the type of activity or works has important effects on the environment.
■
Third party rights. In the case of certain works requiring categorisation of activity and an Environmental Aptitude Certificate, interested parties and potentially affected parties can
file complaints.
■
Public inquiries. After the identification of activities,
projects, programmes or businesses categorised as having
relevant environmental effect, and once a decision is
adopted, a public hearing is called within ten working days.
■
Initial decision. An Environmental Aptitude Certificate
should be issued in about 180 days, although this deadline
is not usually met.
■
Appeals. Although there is no specific appeal system, if an
application for an Environmental Aptitude Certificate is
rejected, so that works cannot be carried out, remedies can
be used as set out in the Administrative Procedures Act of
the City of Buenos Aires.
Internal regulations for buildings subject to the Condominium
Property Act.
32. When is planning permission required?
A zoning analysis is always required to carry out certain work or
activity. Also, an Approved Use Certificate is required to start any
work, facility or activity subject to authorisation.
38
Application. Applications are made to the:
PLC
■
Duration. Duration varies according to the specific case and
location, but is usually about 180 working days, excluding
the time needed to prepare documents to be submitted.
REFORM
34. Please summarise any proposals for reform and state whether they are likely to come into force and, if so, when.
Presently, there are several bills in the House of Representatives
and the Senate of the Nation. None of them are likely to become
law in the short term.
They relate to issues such as the regulation of the purchase of
rural real estate by foreigners. There is also a project to modify
the condominium legal system.
CORPORATE REAL ESTATE WEBSITES
35. Please list a maximum of five website addresses for government authorities and industry bodies relevant to corporate
real estate.
Argentine Real Estate Chamber (Cámara Inmobiliaria Argentina).
This body was founded in 1980 by a real estate broker who felt
the need to create an entity that would represent the industry. It
has a direct link to the Government and helps to preserve the
common interest of the sector.
W www.cia.org.ar
Argentine Construction Chamber (Cámara Argentina de la
Construcción). This institution offers a web service related to the
sector.
W www.camarco.org.ar
Ministry of Social Development and Environment - Secretariat of
Environment and Sustainable Development (Ministerio de
Desarrollo Social y Medio Ambiente -Secretaría de Ambiente y
Desarrollo Sustentable). This body regulates environmental
issues.
W www.desarrollosocial.gov.ar
Undersecretariat of Urban Development and Housing (Subsecretaria de Desarrollo Urbano y Vivienda). This body assists urban
construction projects, including supervision and co-ordination. It
participates in the development of construction projects and the
commitment to develop urban and housing programmes in
public, national and provincial areas.
W www.vivienda.gov.ar
Argentine Condominium and Real Estate Chamber (Cámara
Argentina de Propiedad Horizontal y Actividades Inmobiliarias).
This body offers advice and information to promote good real
estate development.
W www.caphai.com.ar
Country Q&A
PLC
39

Argentina - JP O`Farrell Abogados

Transcription

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