• Preliminary or precontract agreement (purchase option, purchase-sale promise, etc.)

These preliminary agreements are used when the parties cannot or do not wish to make a contract at that time but do wish and undertake to enter into it in the future. It must contain the term within which they undertake to execute the final agreement, the conditions and terms that will govern the final agreement (sales price, form of payment), the amount delivered as earnest payment (if any) and the amount of the indemnity to be paid by the contracting party that defaults on the obligation to enter into the final agreement.

• Purchase and sale agreement

This agreement must contain the description of the real property, the price and other terms and conditions of the transaction.

• Due diligence

Before closing the transaction, a review should be made with the competent Real Estate Registry Office regarding the title to the property and the encumbrances and other matters that may be imposed on the same. This research may be made by the interested party or through its representatives. A certificate of encumbrances may also be requested from the real estate registrar, including a title chain to the property, upon payment of the relevant fees. In addition, before entering into the transaction, it is advisable to check the permits and/or national and municipal authorizations related to compliance with environmental and health legislation provided by the seller or reviewed at public offices.

Environmental technical assessments and reports on the condition of the real property must be made by the interested party and are advisable in some cases. The buyer’s attorney will also provide an opinion on the title to the property or will obtain insurance for the title for the buyer (in which case, the lawyers will provide an opinion on the title to the property to the insurance company). In addition, it is advisable that the buyer’s lawyer provide an opinion on the status of the permits and national and municipal authorizations related to the observance of the environmental and health legislation provided by the seller or reviewed at public offices.

The seller is responsible for the buyer’s quiet possession of the real property and any hidden defects. That is, the seller is liable if the buyer is disrupted in the possession or dispossession of the property because a third party has a superior right and is also liable for the hidden defects of the property that render it inadequate for the intended use. However, the contracting parties may increase or reduce these liabilities and even agree that the seller is released from liability.

A sale of real property is a consensual agreement. Therefore, the sale is binding from the moment one of the parties accepts the offer made by the other party. Three conditions must be met: the identification of the real property, the price and the statement of intent to enter into the agreement. The purchase-sale document is a means of proof of having entered into the contract, but the sale may be legally binding even if the document has not been executed.

Title is transferred when the offer made by one of the contracting parties is accepted. The delivery of the property takes place upon the execution of the title deed. However, the parties may defer or accelerate the delivery of the property.

The buyer usually pays for the following:

• Fees of the buyer’s attorneys and of the attorney who prepares the sales document
• Costs of due diligence report on the condition of the building, environmental assessments, valuation report and cadastre reports
• Registration fees
• Stamp taxes from 0.45% to 0.60% on the selling price (These are due when filing the sale of real estate property at the registry office. This is not mandatory and upon agreement with the seller.)

The seller usually pays for the following:

• All fees of the real estate broker; it is commercial practice for the seller to pay the broker’s fees. However, this is not regulated by law and the parties can mutually agree on which party will pay the broker’s fees.
• An income tax advance of 0.5% of the sales price, which may be credited against the final income tax of the taxpayer in the relevant fiscal year.
• The overall income tax on any gain obtained from the sale of the property; the gain is measured by the difference between the adjusted cost of the real estate and the sales price and must be reported in the year-end income tax return of the taxpayer. The progressive income tax rate will vary from 6%-34% for individuals and 15%-34% for corporations.
• The sale of the “permanent home” will not be subject to either advanced or overall income tax.
• The urban real estate property municipal taxes are due at the moment of sale. Municipal tax must be paid to the municipality in which the real estate is located; while municipal taxes are not precisely “transfer taxes,” they must be entirely satisfied to complete and register the sale of the property at the registry office.
• Upon agreement with the buyer, the stamp tax from 0.45%-0.60% on the selling price is due at filing the sale of real estate property at the registry office.
• The sale of real estate is not subject to VAT or other specific transfer taxes.