Transfer of Property Act at Chile
In Chile, property law, including the transfer of property, is primarily governed by the Civil Code of Chile (Código Civil de Chile), which was enacted in 1855 and has been amended over time. The transfer of property, both movable and immovable (real estate), follows the general principles set out in the Civil Code, and specific aspects of property law are also regulated by other legislation.
Key Legal Framework for Property Transfers in Chile:
Civil Code of Chile (Código Civil de Chile):
The Civil Code is the foundational legal document governing property rights, contracts, and the transfer of property in Chile. It establishes rules for the transfer of both movable property (personal property) and immovable property (real estate).
The Civil Code outlines the rules for sale contracts, donations, mortgages, and inheritance, among other aspects of property transfer.
Notarial Law (Ley Notarial):
For the transfer of immovable property, notarial acts are required. A notarial deed, executed by a notary public, is necessary for the sale and transfer of real estate, ensuring that the transaction is legal and binding.
Notaries are responsible for ensuring that the transaction complies with legal requirements and is properly documented.
Real Estate Registration System (Conservador de Bienes Raíces):
Real estate transactions in Chile must be registered with the Real Estate Registry (Conservador de Bienes Raíces). This registration provides public notice of property ownership, mortgages, and other rights related to the property.
The registration system ensures the legal certainty of property transactions by protecting the rights of both parties (buyers and sellers) and third parties.
Taxation (Impuesto de Transferencia de Propiedades):
Property transfers are subject to taxes in Chile, particularly the Property Transfer Tax (Impuesto de Transferencia de Bienes Raíces). This tax is paid by the buyer and is calculated as a percentage of the property's sale price or its market value.
Additionally, transactions involving real estate may be subject to stamp duty or other taxes, which are generally paid at the time of the transfer.
Key Aspects of Property Transfer in Chile:
1. Types of Property Transfer
Sale (Compraventa): The most common method of transferring property in Chile is through sale contracts (compraventa). The seller transfers ownership to the buyer in exchange for a price.
Gift (Donación): Property can also be transferred through a donation. This requires a deed of donation and, like a sale, must be executed before a notary public and registered at the real estate registry.
Mortgage (Hipoteca): When property is transferred as collateral for a loan, a mortgage is created. The mortgage must be notarized and registered with the Real Estate Registry to be valid.
Inheritance (Sucesión): Property can be transferred through inheritance upon the death of the owner, governed by the rules of intestate succession or the provisions of a will.
2. Formalities for Property Transfer
Written Agreement: For both movable and immovable property transfers, a written agreement is required. In the case of immovable property, a notarial deed must be prepared, signed by both parties, and notarized.
Notarial Act: Real estate transactions, such as the sale or donation of property, must be executed through a notarial act (escritura pública). The notarial act formalizes the transfer and makes the transaction legally binding.
Real Estate Registration: After the notarial act, the transaction must be registered with the Real Estate Registry (Conservador de Bienes Raíces). This public registry guarantees the security of property ownership and protects the rights of the new owner against third parties.
Tax Payment: Property transfers are subject to various taxes, such as the Property Transfer Tax and stamp duties, which must be paid before the transfer is officially completed.
3. Foreign Ownership of Property
Foreigners can own property in Chile, and there are no specific restrictions preventing foreign individuals or entities from purchasing real estate. However, certain restrictions may apply in specific areas, such as near national borders or coastal zones, where the government may impose special regulations to protect national interests.
Foreigners wishing to buy property in Chile generally need to obtain a Chilean Tax Identification Number (RUT), and the property transaction must comply with all local legal requirements, including registration and payment of taxes.
4. Dispute Resolution
Property disputes in Chile, such as those involving title issues, breaches of contract, or ownership conflicts, are generally resolved through the Chilean courts.
Civil actions for property disputes are brought before the Civil Court or other relevant jurisdictions, and remedies may include specific performance, compensation, or rescission of contracts.
5. Adverse Possession (Usucapión)
In Chile, the principle of adverse possession (usucapión) allows a person to claim ownership of property after occupying it for a specified period without the consent of the original owner.
The period of adverse possession can vary, but generally, if the property has been possessed continuously and openly for five years (in good faith) or 10 years (without good faith), the possessor may be able to claim ownership.
6. Succession and Inheritance
Intestate succession in Chile follows the provisions of the Civil Code. If a person dies without a will, their property will be distributed according to the statutory rules of inheritance.
A will can be used to direct how the deceased’s property should be distributed, and a notarial deed is required for the will to be legally recognized.
Conclusion
In Chile, property transfer is primarily governed by the Civil Code, which sets out the rules for the transfer of both movable and immovable property. The process typically involves the execution of a written agreement, the use of notarial deeds, and registration of the transaction with the Real Estate Registry to ensure legal validity and public notice. The Property Transfer Tax and other taxes must be paid before the transfer can be finalized. Foreigners can own property in Chile, subject to compliance with local laws.
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