The TerraLex Cross-Border Real Estate Guide provides crucial insights into international real estate law, aiding TerraLex members and clients in understanding the regulatory and operational environments across various jurisdictions. This concise guide covers ownership and registration processes, investment vehicles, taxation, leasing terms, and construction regulations, making it an essential resource for those involved in global real estate transactions.
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The Uruguayan land registration system is characterized for being “in rem” (over the thing), based on the Principle of Publicity.
The land registration system is ruled by Law No. 16,871. The administration of the system is carried out by the Ministry of Education and Culture - General Registries Directorate (“Ministerio de Educación y Cultura – Dirección Nacional de Registros”).
In Uruguay the acquisition and possession of real estate is subject to registration procedures.
The following main transactions should be registered before the Real Estate Section of the National Registry of Property:
The answer to this question may vary on a case-by-case basis, but in general terms the legal steps in order to obtain ownership of a property as a foreign investor are:
A) Notary Public Due Diligence:
In the acquisition of real estate, Public Notary services are required in order to carry out a prior Due Diligence process:
Analysis of the land history (prior owners);
Analysis of information available at public registries;
Analysis of ownership, liens and encumbrances;
Tax analysis; and
AML analysis.
B) Execution of Relevant Agreements:
The most common way to obtain the ownership of real estate is through a Sale and Purchase Agreement. This Agreement should be executed in a notary deed (“escritura pública”) before a Notary Public.
However, according to the structure of the transaction, other ancillary agreements may be needed:
C) Taxes: Payment of taxes arising from the real estate transaction.
D) Registration: Registration of the transaction before the Real Estate Section of the National Registry of Property.
As a preliminary remark, please bear in mind that -in general terms- there are no restrictions to own real estate in our jurisdiction. All foreign investor (individuals and legal entities) may own and occupy real estate in Uruguay.
The forms of entity in which foreign investors customarily us in Uruguay may vary based on several grounds, for instance, tax matters (tax incentive regimens), etc. Notwithstanding the above, the most popular vehicle are the stock corporations (“sociedad anónima”).
All the agreements that were registered before the Real Estate Section of the National Registry of Property at the time of the acquisition (for instance, lease agreement) shall be automatically binding for the new owner.
Moreover, all taxes applicable to ownership of real estate are automatically transferred to the new owner.
The main liability an owner of real estate face refers to tax obligations as well as payment in due time of common expenses (if applicable).
We highly recommend conducting a thorough analysis of the transaction's tax implications, considering any applicable tax break or other incentives.
No.
No. All Sale and Purchase Agreements concerning real estate shall be registered before the Real Estate Section of the National Registry of Property. This Registry is publicly accessible, and therefore, anyone can search for information on registered transactions.
Yes.
No. However, in the last years the real estate trust (“fideicomisos inmobiliarios”) have become very popular as a flexible tool for investors to execute their investment.
Yes.
No. However, the registration grants the transaction over real estate enforceability ("oponibilidad") against third parties.
Yes. Our system is based on the the Principle of Publicity.
In generala terms, the main taxes associated with real estate ownership and transfer are:
A) Transfer Tax:
Base: Levied on the cadastral value of real estate.
Taxpayer: Purchaser and seller.
Rate: 2% (each)
B) Net Worth Tax:
Base: Levied on the possession/ownership of real estate.
Taxpayer: Legal entities (national or foreign), Trusts (except for Guarantee Trusts), Individuals.
Rate: 1.5% for Legal Entities and Trusts; Individuals may pay upon a progressive rate.
In Uruguay there is an appropriate regulatory framework that benefits investors. Some regulations are common to all sectors and others are specific to the real estate sector. The main regime for the promotion of investments is provided under Law 16,906, which declares of national interest the promotion and protection of investments made by national and foreign investors in national territory.
Regarding real estate projects, Law 18,795 promotes private investment in affordable housing as of the granting of tax exemptions for housing construction, renovations, remodeling, or extensions in some pre-established areas of Montevideo and the rest of the country.
Moreover, Decree 248/023 regulates Large-scale Economic Projects (including, construction for sale or lease of real estate intended for offices, construction for sale or lease of real estate intended for housing and development of private initiatives for residential developments using rural or suburban lands). This Large-scale Economic Projects involves tax benefits for promotors, such us: (i) Exemptions of the Corporate Income Tax; (ii) Exemption of the Wealth Tax; (iii) VAT refunds; and (iv) certain tax exemptions on the import of equipment, machines and materials for the project.
There are no specific taxes for financing real estate projects; general taxes are applicable.
Commercial leases in Uruguay are nominated contracts regulated by the Civil Code and Law 14,219. In general terms, parties to the lease agreement have the autonomy of will to establish the provisions they wish in the commercial lease. In the lease contract for industry and commerce purposes, the minimum term is 5 (five) years.
Personal leases in Uruguay are nominated contracts regulated by the Civil Code and Law 14,219. In general terms, parties to the lease agreement have the autonomy of will to establish the provisions they wish in the lease contract for housing puposes. In the lease agreement for housing purposes, the minimum term is 2 (two) years. In the eviction process, if it is due to expiration of the term, the tenant is granted a term of 1 (one) year to vacate the property. If the eviction is because the tenant is a bad payer, the term is 20 (twenty) days.
If the termination of the lease is grounded on a breach of contract, the corresponding provisions of Law 14,219 and the Civil Code (as applicable) will apply. Damages and eviction of the tenant may be claimed. Rules may vary depending on the purpose of the lease agreement (industry/commerce or housing).
The tenant is liable for payment in due time of the monthly rent and expenses (if applicable), as well as for the consumption and municipal taxes. Moreover, tentant undertakes a duty of care over the leased property.
In Uruguay there is no specific regulatory body focused on overseeing the terms of leases. The Uruguayan judiciary system -specifically the Civil Courts- has the capacity to resolve and review all disputes arising from or related to leases.
No.
Yes. In general terms, parties may agree on rent adjustments in the lease agreement. This ensures that both parties understand how the rent will be adjusted over time and provides legal clarity in case of a dispute.
Lease agreements over rural real estate must be registered before the Real Estate Section of the National Registry of Property. Lease agreements over urban real estate may be registered (registration is not mandatory).
Yes, there are taxes applicable to both personal (housing) and commercial property rentals in Uruguay. Landlords will be subjet to Rental Income Tax (Individuals) and Corporate Income Tax (Legal Entities).
No.
Yes.
The Uruguayan Civil Code sets a maximum term for lease agreements (even though there are some specific exemptions). In general terms, the maximum duration of a lease is 15 years.
Yes, Law 20,352 set forth a general framework for real estate to be rented for tourism.
No.
In Uruguay, the structures used to price construction projects are typically based on contractual arrangements that define the scope, payment terms, and risk allocation between the developer/land owner and the contractor, for instance: Fixed-Price Contract ("Precio Global o por Ajuste Alzado"), Unit-Price Contract ("Unidad de Medida"), Construction Management Contract ("Por Administración"), etc.
In general terms, parties are free to negotiate and agree upon the terms and provisions of construction agreements. However, the most common provisions over construction risk refer to unforeseen events (force majeure), penalties for delays, insurance requirements, performance bonds and subcontractors liability.
There is a wide range of regulation related to construction such as the Civil Code, Law No. 10.751, Law No. 17.250 (Consumer Protection Law); as well as municipal regulations.
Yes.
Yes.
Yes.
No. However, parties are free to negotiate and agree on insurance policies under the construction agreement.
Disclaimer: This guide contains summaries of general principles of law. It is not a substitute for specific legal advice and should not be relied upon in relation to the application of the law or subject matter covered.
