The term “real estate” includes the following:
- Land
- Any buildings or structures on it
- The use that will be assigned to the land and buildings (including regulatory matters)
- The guarantees regarding land
- Any agreement regarding any operation over this concept (acquisitions, use, guarantees, financing, etc.)
Real estate transactions are governed primarily by the Peruvian Civil Code.
For instance, Legislative Decree No. 1568, Legislative Decree of the Horizontal Property Regime (Régimen de Propiedad Horizontal) establishes a regime for exclusively owned real estate units characterized by the sharing of common goods and services. In addition, Law No. 27157 establishes the rules for building regularization and factory declaration. Law No. 29090, or the Law of Urban Renovation and Construction, regulates the requirements and legal procedures to obtain an urban renovation license and the resolution before the corresponding municipality.
Another example is Law No. 28976 or the Master Law of Functioning Licenses (whose unified text was approved by Article 1 of Supreme Decree No. 163-2020-PCM), which, jointly with its regulation, establishes the criteria for municipalities to grant functioning licenses for each business. Law No. 28611, or the Environment Act, was approved in 2005 and established the legal framework that governs environmental affairs in Peru. This law regulates a series of well-known environmental principles and acknowledges environmental rights.
The National Superintendence of Public Registry (Superintendencia Nacional de los Registros Publicos (Sunarp)) is the centralized public entity in charge of Peruvian public registry and has nearly 60 offices in the whole Peruvian territory. Sunarp maintains a public land title registration system where ownership can be verified and where registration of deeds records can be found. In addition, registered in this system are all the relevant real estate matters of the land, such as the rights of use granted to third parties, guarantees and liens.
There is one register entry for each registered land.
As mentioned in “What is the land registration system?”, Sunarp manages all registration matters.
By general rule, rights are not required to be registered, because according to Peruvian legislation, the public registry only declares rights; it does not constitute them. The same applies to real estate rights, except mortgages (where for the creation of the security interest, the mortgage needs to be registered). However, third parties in good faith who do not have notice because the right is not registered are not bound by unregistered interests over property. Article 2014 of the Civil Code requires parties to review not only the entries of a property file (asientos registrales) but all the documents recorded in Sunarp, to be covered by this good faith principle.
Except for mortgages (which must be registered to be valid), owners usually register any document creating or evidencing an interest in real estate. This includes the following:
- Transfers
- Mortgages
- Easements
- Restrictive covenants
- Leases
- Trusts
- Injunctions
- Seizures and lawsuits filed regarding the land
- Judicial decisions and arbitrators’ awards
- Leases
- Agreements of reserve of property
- Co-ownership agreements
- Options to purchase
Sunarp can issue the Certificate of Land Registry (Certificado Registral Inmobiliario), for which administrative officers perform a title search to determine ownership of the land. However, this document does not guarantee any rights to the applicant because of the possibility of errors, as it is only a secondary service provided by Sunarp. A title search by a separate law firm is always recommended.
Yes, but not all registered records are available to the public online. Sometimes, records need to be obtained physically at the Sunarp offices. There may be a charge for some of the available online records.
According to Article No. 71 of the Peruvian Constitution, foreigners are treated the same as Peruvians in regard to property ownership, except that foreigners cannot, directly or indirectly, acquire or possess title, mines, land, forests, water, fuel or energy sources within 50 kilometers of the country’s borders.
According to Article No. 70 of the current Peruvian Constitution, expropriation can be done if it is required due to reasons of national security or public need that are legally declared and there is compensation in cash paid to the owner. The paid amount can be challenged in Peruvian courts.
Legislative Decree No. 1192, which approves the Framework Law for the Acquisition and Expropriation of Real Estate, the transfer of state-owned real estate, release of interferences and other measures for the execution of infrastructure works, seeks to standardize expropriation proceedings to make it easier and encourage the development of infrastructure projects.
Generally, an interest is held through any of the following means:
- Freehold
- Condominium/co-ownership
- Adverse possession (usucapio)
- Leasehold or any other title that grants the use
- Corporations
- Co-ownership or co-tenancy
- Partnership
- Trusts
Most real estate financing is arranged through institutional lenders such as banks, trust companies, pension funds, investment funds and insurance companies. Applicable interest rates are agreed as fixed or variable and are set by the lending institution. Financing institutions are generally exonerated from observing the maximum interest rate limit set by the Peruvian Reserve Central Bank (i.e., this maximum rate applies to persons or entities not part of the Peruvian financing system). Typically, the borrower is responsible for paying for all of the lender’s legal and other costs, such as commitment and processing fees, in arranging actual property financing. Interest rates are usually expressed as an annual rate.
Lending institutions typically take collateral security over real estate property and other related assets, cash flows, and assignment of leases, and rents. Typical security includes a mortgage or the transferring of assets to a trust as security.
Generally, the buyer’s lawyer will prepare the initial draft of the purchase agreement.
The general rule in the law of torts in Peru is that whoever causes damage is liable for it. However, there are some exceptions regarding unpaid sums: (i) for tax duties over lands, the current owner or occupier, depending on the tax nature, has to pay the unpaid amounts from previous owners/occupiers; and (ii) for unpaid public services, the current owner has to pay the unpaid amounts from previous owners.