Экзамен зачет учебный год 2023 / 01 Argentina

Editor’s Preface

I wish to express my deep and sincere thanks to all my distinguished colleagues who have contributed to this first edition of The Real Estate Law Review. I would also like to thank Gideon Roberton and his publishing team for their tireless work in coordinating the contributions from the various countries around the world.

David Waterfield

Slaughter and May

London

February 2012

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Chapter 1

Argentina

Hernán Slemenson1

I INTRODUCTION TO THE LEGAL FRAMEWORK

Ownership of land in Argentina is generally freehold and is subject to registration with the official Land Registry of the jurisdiction where the property is located in order to perfect any right on the real property and produce effects against third parties. As Argentina has a well-developed land registry system, there is no title insurance system.

Foreign ownership is unrestricted except in certain areas of national security, such as frontier zones and now also by the provisions of a recently passed law limiting the ownership or possession of rural land by foreign individuals or legal entities.2 A foreign investor who wishes to acquire or create certain other rights over immoveable property in an area regarded as a frontier zone (or a controlling interest in a company owning such immoveable property) must seek the prior consent of the National Commission of Security Zones. The Commission has complete discretion as regards granting its approval for the purchase to be made by a foreign investor, although this consent has generally been granted in practice.

Transactions involving real property are governed by Argentine law.

i Joint or common ownership of immoveable property

Immoveable property may be owned by more than one person at any one time. Joint ownership of buildings is very common in urban residential and office buildings, where such interests are registered in the same way and have the same legal force as absolute freehold interests. Rights relating to joint or common ownership are by their very nature

1Hernán Slemenson is a partner at Marval, O’Farrell & Mairal.

2Law No. 26,737, recently passed by Congress, imposes limits on the ownership or possession of rural land by foreign individuals or legal entities.

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more restricted than sole ownership and are explained more fully below. There are two main forms of joint or common ownership: condominio and propiedad horizontal.

Condominio

Condominio is a form of common ownership that exists where a particular piece of property is owned jointly by more than one person (the co-owners). Under the Civil Code a condominio of a property involves the ownership by each co-owner of a share or undivided fraction of such property.

In the case of an ordinary condominio, each co-owner has, with respect to its undivided share, full ownership rights, which can be exercised without the consent of the other co-owners. These ownership rights include the right to sell or otherwise transfer the owner’s interest in the property or to create a mortgage or otherwise encumber such interest in the property.

All co-owners have equal rights to use and enjoy the whole of the property, limited only by the analogous rights the other co-owners have over the property. In turn, each co-owner must contribute to the necessary expenses of maintenance in proportion to its respective share in the property. Where an ordinary condominio is concerned, each co owner has a right to demand the partition of the common property at any time.

The management and administration of the common property is governed by the principle that all co-owners have the right to administer the common property, a right that each co-owner may exercise individually whether by agreement of the co owners or in the absence or inactivity of the other co-owners. Where, however, there is disagreement between the co-owners, the decision of the majority prevails, and it is for the majority to determine who shall administer the property.

Propiedad horizontal

Propiedad horizontal is a form of common ownership over a building owned by a number of persons, where the property is divided into several distinct and separate units, conferring an exclusive right of ownership to each unit while the rights to the common areas such as the building structure, corridors, lobby, elevators, gardens, are owned jointly by all the owners of the units under the common ownership regime of propiedad horizontal.

The propiedad horizontal regime is set up by the owners of a building by way of public deed executed before a notary public describing the building and its constituent parts, declaring the division of the property into separate units under the horizontal property regime as well as setting up the scheme of administration of the building (setting up of an owners’ association and designation of an administrator), which together are known as the joint ownership and management agreement, and which is filed with the Land Registry to produce effects against third parties.

In the absence of any contrary provision in the joint ownership and management agreement, co-owners have equal rights to use the common areas. The co-owners must contribute to the expenses of maintenance and administration of the property in the proportions that their units bear in the total property, unless otherwise provided.

Management of the common areas is regulated by the law and the joint ownership and management agreement and is carried out by the owners’ association and the administrator.

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II OVERVIEW OF REAL ESTATE ACTIVITY

During the second half of the 1990s several new types of projects were introduced to the Argentine real estate market. City and suburban areas grew at a great pace and new areas in Buenos Aires were developed and consolidated districts also strengthened. The construction of new roads and motorways encouraged the development of suburban areas where new infrastructure, such as hospitals, schools, universities and hotels, was also being established. The most successful projects during the 1990s were residential towers, which generally offered private security, gym facilities, swimming pools and tennis courts, among other amenities, together with gated communities and shopping centres.

Within the real estate market, there has been strong growth in the hypermarket and shopping centre sectors, with most of Argentina’s shopping centres (approximately 100) having been constructed during the past 15 years, and many new projects (particularly in smaller cities) currently under construction. At the start of the 1990s, the city of Buenos Aires also suffered from a shortage of world-class hotels, a situation that has considerably improved since then, and a number of projects are now underway for the construction of hotels, both in Buenos Aires and in the country’s interior.

Throughout the first half of 2002, and during the worst part of the Argentine economic crisis, prices of lots and parcels in suburban Buenos Aires dropped dramatically driven by uncertainty creating opportunities for long-term investors. By 2003, however, prices of well-located properties increased by 100 per cent compared with pre-crisis values and construction in upper-middle class districts of Buenos Aires increased. There was more construction in the first quarter of 2003 than in any year in the 1990s. Currently, property prices stand at more than double the 2003 figures, mostly because of higher demand and, more recently, also because of an increase in construction costs.

During the period between 2004 and 2011, the yearly growth of the construction sector was considerable due to several factors such as the consolidation of real estate investments to safeguard private savings (as a consequence of the loss of confidence in the banking system after the 2001/2002 crisis), the recovery of lease prices and an increase in property prices – that have surpassed pre-devaluation prices – all of which served as a profit indicator. It is expected that for 2012 the activity in the sector will be similar to that seen in 2011.3 It is worth noting that the burst of the real estate bubble that hit the international markets in 2007/2008 did not affect the Argentine market, basically due to the lack of a spread mortgage market.

The crisis and devaluation of the Argentine currency, together with the increase in the prices of commodities had a significant impact on the price of farmland and agribusiness activity; during the past 10 years, farmland prices in Argentina’s core production region have increased by an average of 14.3 per cent per annum.4 Notwithstanding the foregoing, the passing of Law No. 26,737, which imposes limits to the ownership of rural land by foreigners, will probably have an impact on the activity and prices of farmland that is still to be seen.

3Instituto Nacional de Estadística y Censos (INDEC), ‘Indicadores de coyuntura de la actividad de la construcción (Construction Activity Indicator)’, 29 December 2011.

4According to data published by Márgenes Agropecuarios.

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III DEVELOPMENTS IN PRACTICE

The most important recent developments in law and practice in Argentina may affect foreign investment in the sector in the country. Such developments are the limits imposed on rural land ownership by non-Argentines and certain new foreign-exchange regulations that may require the compliance with certain requirements for a non-Argentine resident to transfer the proceeds of the liquidation of an investment (direct or indirect) in real property in Argentina.

i Limits imposed on rural land ownership by foreigners

Law No. 26,737, recently passed by the Federal Congress, imposes limits on the ownership or possession of rural land by foreign individuals or legal entities.

The main provisions of the law are as follows:

aThe law shall be enforced throughout the territory of the Argentine Republic as a ‘public policy’ regulation.

bAny piece of land located outside urban areas is defined as ‘rural land’.

cAny acquisition, transfer or assignment of rights over rural land is deemed to constitute foreign ownership if it is performed in favour of any:

iforeign individuals, except those who:

•have held residence in the country for 10 years;

•have Argentine children and have held residence in the country for five years; or

•have been married to Argentine nationals for five years prior to the date of transfer of rights over rural lands, and have held residence in the country for five years;

iilegal entities where more than 51 per cent of the stock is directly owned by foreign individuals or entities;

iiilegal entities that are indirectly linked to or controlled by foreign entities or individuals through ownership of:

•25 per cent or more of their stock; or

•a number of votes sufficient to prevail in the local entity’s decision- making process;

ivany foreign legal entity or individual operating as de facto shareholder;

vcompanies that issue bonds:

•convertible in stock representing 25 per cent or more of the company’s stock; and

•whose holders are foreign individuals or entities;

vitrusts where the beneficiaries are foreign individuals or entities, as defined pursuant to (ii), (iii), (iv) or (v) above;

viijoint ventures in which foreign entities or individuals hold a participating interest higher than those set out in the law (51 per cent under (ii) or 25 per cent under (iii), (iv), (v) or (vi) above);

viiiforeign public law-governed legal entities; and

ixsimple associations or de facto corporations in which foreigners hold shares in the percentage set out by the new law in relation to corporations or which are controlled by foreigners.

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dForeign ownership of rural land may not exceed 15 per cent of the total amount of ‘rural lands’ in the Argentine territory. This percentage is also to be calculated in relation to the territory of the province or municipality where the relevant lands are located.

eForeign entities or individuals of the same nationality may not own more than 4.5 per cent of rural lands in Argentina.

fOwnership by the same foreign owner may not exceed 1,000 hectares in the ‘core area’ or the ‘equivalent surface’ determined according to the location of the lands. The Interministerial Council of Rural Lands must define the location of the core area and the equivalent surface to 1,000 hectares in the different regions of the country, taking into consideration (1) the location of the lands, (2) the percentage of the surface they occupy in the relevant province, department or municipality, and (3) the quality of the lands for use and exploitation.

gForeign legal entities or individuals may not be owners of rural lands that comprise or are located beside permanent and significant bodies of water.

hThe law creates a National Registry for Rural Lands, which, as the enforcement authority of the new law, shall be charged with the tasks, inter alia, of: (1) granting the authorisation certificates to approve any act by which ownership or possession over rural lands is transferred; and (2) controlling compliance of the new law, with standing to act before administrative and judicial authorities.

iForeign owners of rural land must report their ownership to the Argentine government within a 180-day period of the law’s entering into force.

jAcquisition of rural land shall not be deemed as an ‘investment’ under bilateral investment treaties (‘BITs’) signed by the Argentine Republic, since rural land is deemed ‘a non-renewable natural resource’.

kThe law provides expressly that it ‘does not affect any vested rights’.

Both politicians and academics have questioned the constitutionality of the law, as well as the reasonableness and effectiveness of some of the restrictions provided therein. Some provisions of the law also raise questions over their precise meaning.

The main issues raised as regards the constitutionality of the law are as follows:

aThe law may be inconsistent with the constitutional provisions that grant to foreigners (without distinguishing between residents and non-residents) equal rights with respect to Argentine nationals. Pursuant to Sections 20 and 25 of the Constitution, restrictions on foreign ownership of rural land that may have been imposed in other countries may not automatically be imposed in Argentina.

bPursuant to Section 124 of the Constitution, Congress may not have jurisdiction to regulate rural lands under the assumption that they are ‘natural resources’. From this perspective, it has been suggested that the law be enforced only within the territory of each of the provinces that expressly adheres to the law passed by Congress. Furthermore, it has been proposed that each province assess the size of the ‘economic unit’5 within its territory.

5 Section 2,326 of the Civil Code.

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cThe law may breach international agreements currently in force entered into by the Argentine Republic by means of BITs in which Argentina has not made any reservation as regards rural lands.

With respect to the reasonableness and effectiveness of the law, it has been noted that it could, for example, have provided some flexibility in order to promote ‘productive projects’ with potential social and economics benefits, similar to those provided by the legislation of neighbouring countries (e.g., Uruguay). Also, despite some provisions of the law raising questions over their precise meaning, it is expected that the implementing regulations will bring more clarity to the law so a more precise assessment may be made of the impact on foreign investment in real estate.

ii Foreign exchange matters

Beginning in 2002, the government reinstated exchange controls, mainly affecting the inflow and outflow of funds to and from Argentina. Argentine and non-Argentine residents can only transfer, purchase or sell foreign currency through the single foreign exchange market (‘the FX Market’) provided by Argentine financial entities and licensed exchange entities under transactions authorised by foreign exchange regulations.

The exchange rate fluctuates freely in the FX Market, but the Central Bank of Argentina (‘the Central Bank’) participates by buying and selling US dollars on a daily basis, consistent with the government’s monetary policy.

As a general rule, since September 2002, Argentine residents must transfer to Argentina and sell for pesos in the FX Market within 365 days of disbursement the foreign currency proceeds disbursed under financings granted by non-Argentine residents. Unless they qualify for an exemption, foreign financings are subject to a 365-day mandatory deposit in US dollars with a local financial entity equal to 30 per cent of the financing proceeds sold in the FX Market (‘the mandatory deposit’). Those exemptions include, inter alia, loans granted by multilateral credit agencies and official credit institutions approved by the Central Bank, international trade financings, initial public offerings of debt securities listed on self-regulated markets and certain loans granted to finance investments in non-financial assets. The principal can only be repaid 365 days after the proceeds have been sold on the FX Market (‘the mandatory waiting period’), unless a qualifying exemption applies.

Subject to the foregoing and to compliance with certain other formal requirements, principal and interest payments of foreign financings can be paid without prior Central Bank approval.

Direct investments, such as acquisitions of real property, from non-Argentine residents are not subject to the mandatory deposit, but must comply with the mandatory waiting period.

Communication ‘A’ 5237 (‘the Communication’) of the Central Bank, issued on 25 October 2011,6 added a new requirement for non-Argentine direct investors to repatriate Argentine pesos collected in Argentina as a consequence of a sale or liquidation

6 Published in the Official Gazette on 28 October 2011.

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of a direct investment (i.e., sale of real property, sale of equity holdings in an Argentine company), capital reduction and reimbursement of capital contributions in Argentina. Under current foreign-exchange regulations, non-Argentine residents require prior Central Bank approval to purchase foreign currency in the FX Market, unless the trade qualifies for an exemption. The Central Bank has now established certain exemptions to the above requirement, particularly relating to the sale and liquidation of foreign investments. Accordingly, the circumstances under which non-Argentine residents will not require prior approval from the Central Bank to purchase foreign currency in the FX Market and transfer it abroad include:

awhen the total amounts collected in Argentina are as a result of the sale and liquidation of direct investments, without limitation on the amount;7 and

bwhen the amounts are collected under portfolio investments (including interest) or result from the sale of such portfolio investments (i.e., stock portfolio and stockholdings in local companies,8 investment in mutual investment funds and local trusts, purchases of bank credit portfolios, investment in local bonds issued in Argentine pesos and purchases of other local credits), up to the amount of $500,000 per calendar month.

These exemptions are subject to compliance with certain requirements, including the following: (1) in the case of sale of portfolio investment, non-Argentine residents must each file a certificate issued by a financial entity or exchange agency stating the amount of the investment and the date on which the funds paid for such investment were transferred to Argentina and, if applicable, sold in the FX Market; and (2) in the case of sale of direct investments, among other requirements, prior to the Communication, non-Argentine investors did not need to demonstrate that the funds paid for their investment or disbursement for their capital contributions were transferred and sold in the FX Market (i.e., brought to Argentina and sold for Argentine pesos) in order to be allowed to repatriate (i.e., have access to the FX Market to purchase foreign currency with Argentine pesos and transfer it abroad) the funds collected in Argentina as a consequence of subsequent sales or liquidations of such investments, or capital reduction or reimbursement.

Pursuant to the Communication, in order for non-Argentine investors to be allowed to have access to the FX Market to purchase foreign currency with Argentine pesos collected in Argentina and transfer them abroad as a result of a subsequent sale or liquidation of an investment or capital reduction or reimbursement, they must show that the funds originally paid for such investments or disbursements for the capital

7Through Communication ‘A’ 4,237 (which creates an information regime on direct and real estate investments in Argentina and abroad) the Central Bank has clarified that the concept ‘direct investment’ includes (1) any participation of 10 per cent or more in the capital stock of a company, which reflects a long-term interest in the company and its activities, and (2) real estate properties. This concept seems to follow the guidelines and concepts of the International Monetary Fund’s Balance of Payments Manual, fifth edition.

8Any participation of less than 10 per cent in the capital stock of a company.

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contribution, as applicable, were transferred to Argentina and sold in the FX Market (‘the transfer requirement’). All direct investments made before 28 October 2011 (when the Communication became effective) are exempt from the transfer requirement.

The Communication sets a ‘burden’ to be met by any non-Argentine resident who eventually needs to purchase foreign currency in the FX Market to repatriate Argentine peso-denominated funds collected as the result of sales or liquidation of investments. Conversely, if the foreign investors believe that they will not need to repatriate, the transfer requirement need not be complied with and, therefore, the purchase price of such investment and any capital contributions may be kept abroad.

The Communication does not restrict the purchase of foreign currency to pay dividends to non-Argentine residents.

The Communication sets out that in case of a transfer of rights of foreign direct investment between non-Argentine residents, the transfer requirement will be deemed complied with by the transferor if the investor (‘the prior investor’) that sold the investment to the transferor complied with the transfer requirement, as long as this was done by the prior investor because its investment had been made since the effective date. Therefore, the Communication allows repatriation to selling investors if the investors that originally sold the investments had already complied with the transfer requirement.

IV FOREIGN INVESTMENT

The law states, as a general principle, that foreign investors investing in economic activities in Argentina enjoy the same status and treatment as those enjoyed by local investors. In principle, there are no restrictions upon foreign investors wishing to invest in Argentina either by starting up new businesses or by acquiring existing businesses, real property or companies. No prior government approval is needed for the direct or indirect acquisition of real estate except in certain exceptions to this general rule (see Sections I and III, supra) in connection with the prior consent of the National Commission of Security Zones required for the acquisition of real property in areas of national security, such as frontier zones and the limitations on foreign ownership of rural land imposed by Law No. 26,737.

V STRUCTURING THE INVESTMENT

In order to conduct business in Argentina on a permanent basis, a foreign company may either appoint a representative or set up a branch, or incorporate a local corporate entity (subsidiary).

The main types of investment vehicle utilised by non-resident individuals and foreign companies are the corporation (SA) and the branch. Formation procedures for both vehicles are comparable; however, corporate governance procedures for a corporation are more onerous than for a branch. The Argentine Companies’ Law also provides for another type of company that may be adopted as an investment vehicle: limited liability company (SRL).

Law No. 24,441 of 1995 introduced the concept of a trust into Argentine law. This has been instrumental in permitting innovative financial techniques to be introduced into Argentine financing, including real estate financing. Since this law was passed, a

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number of major projects have been started using the trust as part of the legal structure. This allows the intervening partners (whether developers, financiers or constructors) to insulate the trust property from other assets and creditors, and ensures that the project is not jeopardised by extraneous factors. The trust concept also allows securitisation of the funds flowing from the project, thus opening up access to the capital markets for financing purposes.

Law No. 24,441 establishes that a trust will be created upon the transfer of certain assets by one person (the settlor) to another person (the trustee), who undertakes to exercise the rights attributable to ownership of such assets for the benefit of a person designated in the relevant agreement as the beneficiary (the beneficiary) and to transfer the assets, upon the expiry of the trust term (which shall not exceed 30 years) or upon fulfilment of a certain condition, to the settlor or any beneficiary as designated in the applicable trust agreement.

Any individual or legal entity may be appointed as trustee; however, only financial entities duly authorised to act as such under the respective laws, and corporations authorised by the Argentine Securities Commission may publicly offer their services as trustees.

If the property transferred in trust is recorded in a public registry, the relevant public registrars will record the assets in the trustee’s name as trustee of the applicable trust.

Pursuant to Argentine law, assets held in trust form a separate estate from the estate of the trustee and the settlor. They will therefore not be affected by any individual or joint actions brought by the trustee’s or settlor’s creditors, except in a case of fraud by the settlor. The beneficiary’s creditors may exercise their rights over the proceeds of sale of the assets held in trust and be subrogated in the beneficiary’s rights.

VI REAL ESTATE OWNERSHIP

i Planning

Argentina is organised as a federal system consisting of 23 provinces and one autonomous city, and 2,252 municipalities. Urban development in Argentina is basically governed by municipal zoning regulations and local building codes, which vary according to each jurisdiction.

Section 2,611 of the Civil Code provides for administrative law to regulate the restrictions imposed upon private property. The administrative regulations applicable to land use (zoning, building permits and other restrictions) are not provided at a national level, but rather at a provincial and municipal level.

Provinces and municipalities thus enact their own statutes regulating the zoning, land use, building codes and other restrictions. It is therefore not possible to refer to comprehensive legislation applicable to all jurisdictions because there may be as many regulations as there are municipal jurisdictions in the country. These codes do, however, share some basic characteristics, which include:

aprovisions governing any and all matters related directly or indirectly to the use of the land, buildings, infrastructure and public facilities (structures and installations);

bthe opening of roads to the public and the widening of public roads;

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