Friday, August 25, 2006

Buyer Beware for Argentine Patagonia property

I have been living as an expat in Northern Patagonia, in Argentina, for almost two years. I've been taking time to evaluate the area and the situation. I like it here and decided I wanted to buy here and build a house.

However, about February 2006 I read an article in an ezine stating that there were problems with Americans buying land in Argentine Patagonia. I truly did not want to believe it as I had my heart set on settling down here.

After some time, and some frustrating research through very ambigous information (which is normal in Argentina), I can confirm the warning in the ezine.

In a nutshell: YOU AS A GRINGO OR EUROPEAN CAN'T GET TITLE TO PROPERTY YOU BUY IN ARGENTINE PATAGONIA. (This information does not apply to CHILE.)

I won't be updating this blog or answering questions. This is a one-time post. You'll have to do your own digging I'm only going to tell you that I verified the information.

From what I can tell, when the current president of Argentine became elected there was a reverse in both the policy and the law concerning foreigners buying near the Chilean Border.

This area is called the Zona de Seguridad. It extends roughly 60 kilometers inward from any foreign border with Argentina. There are laws saying who can and cannot buy here, and what the process is to apply to buy here, what the application process is, and what the requirements are.

The law was written some time ago to prevent Chileans or Brazilians from buying and taking over Argentina land next to their borders with Argentina. (Argentina has had many border disputes with Chile over the years.)

However, like many laws in Argentina any given law may or may not be strictly enforced. In the past this law was not strictly enforced and it was relatively easy for an expat to get approval to buy land here.

From what I can tell, in late 2004 the law was changed, likely under the directive of the new Argentine president, not only to make the requirement much stricter, but also to enforce the law to the letter.

What it appears is that now the law was changed so that a foreigner must be a PERMANENT RESIDENT for two years before they can get approval by the Ministry of the Interior in Buenos Aires to get title to the land.

The thing is, a person can BUY land in the ZdS (Zona de Seguridad), but he cannot get TITLE to it. After the money is exchanged, the buyer gets a written and signed (by the owner) sales contract. Then because the buyer is not an Argentine citizen, the "escribano", the real estate lawyer handling the purchase, must submit an application to the Ministry of the Interior in Buenos Aires for approval. Approval by the Ministry of the Interior is required before the local municipality or province will issue title to the land.

(At this time persons with two years of permanent residency are treated as though they have citizenship, and the application process is reported to be fast and without problem. For now.)

So now the buyer has spent his money and has a paper contract, but no title to the land. The realtors are happy because they collect their fees (3% each from buyer and seller), and the seller is happy (he has the money). But the buyer is not. He only has a sales agreement and is unable to get title.

So, it would be a mistake to extrapolate your experience with buying property in the US or Europe to buying property in Argentina.

Don't expect the realtor or even the escribano to volunteer any information. They are more than glad to transact the deal and take the commission. Either they are truly ignorant, which some are, or they simply do because it is not illegal to withold information. In my research I found even a well referred lawyer in Buenos Aires who should know this information, but either declined to tell me in our conversation, or he did not know.(When it should be his job to know). You may find out too late, that a professional has witheld vital information like this. In Argentina, this behavior seems to be OK, and likely considered normal.

I looked into buying land through an Argetine based trust. Not a good idea. From what I can tell The Ministry of the Interior considers this a fraudulant action, an attempt to bypass the law. Whether or not it is actually legally fraudulant is a question. However, given the intent of the President of Argentina and the Ministry of the Interior to stop all foreign buyers in the ZdS, I believe it would be very unwise for any foreigner to contemplate methods of getting around the residence requirement. You could loose your property and even spend time in jail, if the law was abruptly changed. It could change overnight, in the blink of an eye, and how would you know? In this case, knowing the intent of those in power is important. And, their intent is to prevent foreign ownership of Patagonia, most likely so they can buy here themselves. No, you can't eve hide in Patagonia, anymore.

One of my points of verification was to talk with a local escribano. This person told me that no applications have been approved since February 2005. She said that at least 180 local applications are "stuck" in Buenos Aires at the Ministry, and even though they have hired a lawyer to speed the process up, at this time (August 2006) not one application has been successfully approved.

Another reference was the manager of a large land trust here in Argentina. He said the number was much higher than 180 properties when considering Patagonia.

So, there is no solution. If you want to buy land here, close to the border in Patagonia, or even perhaps Mendoza (who knows?), you need to go through the long process of immigration, wait two or three years as a temporary resident, then wait two more years as a permanent resident to qualify to buy property.

The other thing is....you can buy title insurance. But, since you never get title the policy does not go into effect, and there is no refund.

Is it worth it? You decide.

If you don't believe this, then do your own research. Find out how many applications have been approved since Feb. 2005 in the area you are looking at. Sorry, I am not available for any work or consultation on this matter.

DISCLAIMER: This information does not apply to Chile. And, although this law is actively being enforced for Northern Argentine Patagonia (Esquel, El Bolson, Bariloche, Villa la Angostura, Villa Traful, San Martin, et cetera) I have no information what is happening more North around Mendoza, or more South.

Good luck. Be careful.

7 Comments:

Blogger Giorgio said...

THAT's a FAKE POST!..Benetton (of Italian Benetton group) bought a land large as Italy in Patagonia...so...at least if you don't want to buy all Patagonia you can buy a land there (Except in Calafate). He had just a few problems with the natives over there and he gave them back a piece of land but you consider that he bought around 250.000 Sq Kilometers of land ofer there!!!!

4:28 AM  
Blogger juanca said...

Giorgio is right: this is an stupid fake & lie post.

As a local, for many years I receive foreigners in Buenos Aires, and some of them where interested to buy land. So I was helping there to get info and there is nothing of the "problems and risks" this silly person wrote in this post.

3:42 AM  
Blogger Abby said...

this was true in 07, but "As of March, 2009, Resolución 166-2009 has relaxed it requirements for foreigners buying property. Now title is automatically approved so long as the property is under 5,000 square meters of land (or 1.25 acres), located in a suburban or urban area and not used for commercial purposes (rental property is allowed)"

8:25 PM  
Blogger Carla said...

I didn´t know that. That is so sad, I was getting excited about the idea of buying a place in Argentina. Though I realized it is better to buy apartments in Buenos Aires since tourists mainly go there and then they may go to patagonia for 4 or 5 days! In the capital, you can rent a place for 2 weeks for USD 800!

1:31 PM  
Blogger Raqui said...

No fake-no lie post.
Patagonia native,I promise to do a thorough study of the subject, and write a new post.
Today I can say that I completely agree with the blog owner.

11:06 AM  
Blogger Dario Baguena said...

Now I'm wondering who is making this up or being honest.

4:10 PM  
Blogger Gabriela Gonzalez said...

Hi! Can somebody tell me how much does it cost the acres there in Patagonia?

3:28 PM  

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