Transfer of Property Act at Peru
In Peru, property transactions, including the transfer of property, are primarily governed by civil law, particularly through the Civil Code and various laws related to land registration and real estate transactions. Peru does not have a specific Transfer of Property Act like some other countries (such as India or the UK). Instead, property transfers in Peru are regulated by the Peruvian Civil Code and the Real Estate Registry System, which outlines the process of transferring ownership, registering property, and ensuring legal certainty in property transactions.
Key Legal Framework for Property Transfer in Peru:
The Peruvian Civil Code (1984): The Peruvian Civil Code contains the general principles governing property law, including the transfer of property. It regulates contracts, property rights, and the process of acquiring or transferring ownership of immovable property (real estate). Some key provisions include:
Contracts for the Transfer of Property: The sale or transfer of property is regulated by the provisions on contracts in the Civil Code, which specifies that the transfer must be made through an agreement between the buyer and seller.
Requirements for Valid Transfer: For the transfer of property to be valid, it generally requires a written agreement, which must meet the formalities established by law. In certain cases, the transfer of ownership needs to be notarized or signed in front of a public official, such as a notary public.
The Real Estate Registry System (SNR - Superintendencia Nacional de Registros Públicos): In Peru, the National Superintendence of Public Registries (SNR) operates the Real Estate Registry System. This system is essential for the formalization and legal recognition of property transfers. For the transfer of property to be legally binding and enforceable, it must be registered in the public registry.
Registration Process: Once the sale agreement is executed, the transaction must be registered with the Public Registry to make the transfer official. The registration ensures that the new owner’s rights are recognized, and the property title is updated accordingly.
Title Deeds: The registration of the transfer results in the issuance of a new title deed in the buyer's name, which serves as proof of ownership.
The Notary Law (Law No. 26.859): Notaries play an important role in the formalization of property transfers in Peru. According to Peruvian law, most property transactions require the involvement of a notary public. A notary’s primary function is to authenticate and formalize the agreement between the buyer and seller, ensuring the legality of the transaction. Notarization is necessary to create an authentic instrument for the transfer.
The Land Titling and Registration Law: This law governs the process of land registration and the titling of real estate in Peru. It aims to ensure that property transactions are transparent, legally documented, and traceable. It is especially important for rural areas where land tenure issues might arise, ensuring that land rights are protected and officially recorded.
Real Estate Taxes: Property transactions in Peru are subject to various taxes and fees. Some key taxes include:
Transfer Tax: A tax on the transfer of real estate, calculated based on the property’s sale price. This is typically paid by the seller, although the parties may negotiate who is responsible.
Property Tax: Once the property is transferred, the new owner is responsible for paying annual property taxes based on the value of the property.
Notary and Registration Fees: Fees associated with notarization and registration are also part of the cost of transferring property. These are usually borne by the buyer.
Key Steps in Property Transfer in Peru:
Agreement of Sale: The first step in transferring property is for the buyer and seller to enter into a sale agreement. This contract must be in writing and may require notarization depending on the value and nature of the transaction. The agreement outlines the terms of the sale, including the purchase price, description of the property, and any conditions.
Due Diligence: Before the transaction takes place, the buyer conducts due diligence to ensure the property’s legal status. This includes verifying that the seller is the rightful owner of the property, ensuring that the property is free of encumbrances (such as mortgages or liens), and checking the property’s registration status in the Public Registry.
Notarization (if required): The sale agreement typically needs to be notarized by a notary public to make it an authentic act. The notary ensures that both parties understand the terms of the transaction and that the agreement complies with legal requirements.
Registration with the Public Registry: After the notarized sale agreement is executed, the property transfer must be registered in the Public Registry maintained by the National Superintendence of Public Registries (SNR). This step is crucial to formally recognize the transfer of ownership. The buyer submits the notarized contract, proof of payment, and other required documents to the Public Registry.
Payment of Taxes and Fees: During the registration process, the parties involved must pay the applicable transfer tax, notarial fees, and registration fees. The transfer tax is calculated based on the value of the property, and the rates can vary depending on the type of property.
Issuance of New Title: Once the transaction is registered, the Public Registry issues a new title deed in the buyer’s name, officially recognizing them as the legal owner of the property.
Foreign Ownership of Property in Peru:
Foreign Ownership: Foreigners can generally own property in Peru, including land, residential property, and commercial real estate. There are no major restrictions on foreign ownership in urban areas.
Agricultural Land: There are restrictions on foreign ownership of agricultural land. Foreigners are typically not allowed to directly own agricultural land in Peru. However, they can acquire agricultural land indirectly through Peruvian companies.
Acquisition Process: Foreigners must comply with the same registration and notarization procedures as local buyers. However, if they are acquiring agricultural land or other restricted properties, they may need to meet additional requirements.
Summary:
In Peru, the transfer of property is primarily governed by the Civil Code, the Real Estate Registry System, and the Notary Law. The process includes the execution of a written sale agreement, notarization (if required), registration of the transaction with the Public Registry, and the payment of applicable taxes and fees. Foreigners are allowed to purchase property in Peru, subject to certain restrictions, particularly on agricultural land. The formal registration of the transfer in the Public Registry is essential to ensure the legal validity of the property transfer, with a new title deed issued to the buyer upon completion.
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