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Bolivia encourages foreign investment. The 1990 Investment Law and other legislation establish guarantees of equal treatment of foreign companies, repatriation of profits, currency convertibility, and the right to international arbitration. A new hydrocarbons law sharply increases taxes on oil and gas companies and abrogates current operating contracts. The legislation follows growing hostility to foreign investment by radical elements who have organized repeated strikes urging increased state control of the economy. Rights in real property are based on civil code which originated in Roman law. Ownership rights are guaranteed by the National Constitution. Foreign nationals are not allowed to own property within 50 kilometers of the national boundary except in cases of special permission by the government. Foreign corporations and individuals doing business in Bolivia will be subject to Bolivian Commercial Code. Provisional possession of an absent persons property after two years of disappearance of absentee if absentee’s heirs give a bond.

There is a national Real Property Registry. In general, all documents transferring, creating, declaring or limiting right in real property, including leases of five years or greater, must be recorded in the public registry, also documents declaring bankruptcy or the incapacity of a person, and those limiting rights to dispose of property. Other documents may also be recorded, even if they do not pertain to real estate.

Registrars are semi-judicial officers who, upon receiving public instruments, may record them, ask for any corrections to be made, or refuse them outright. After a registrars decision the only course of appeal lies in the courts. Registrars are bonded and are appointed by the President.

Transactions are recorded in the public registry (see section recordation and transfer of title). The transaction must be signed by both parties and witnessed in the presence of a notary who will then enter the transaction into the public record.

The right to ownership of property on Bolivia is solidified by the transfer of title and registration in the public record. Property may be secured through promissory sales contract, exchange, grant, inheritance, grant on will, and acquisitive prescription. Statutory estates are in place in the form of either a will or intestacy statute. Rental contracts are governed by the civil code. Government retains the right to escheat under intestacy in the absence of heirs. State holds underlying rights to all minerals regardless of surface title and may grant rights. Foreign nationals may not hold mineral rights within 50 kilometers of national border except with permission of the state.

Local rather than national real estate tax is levied by districts to provide for such things as water and sewer and can reach .8% of assessed value. Urban real estate is subject to taxation ranging from .35% to 3% of assessed value.

Expropriation may be effected for reasons of public benefit or in cases where private property does not fulfill its social purpose. All actions of eminent domain must be authorized by law and the owner of the property must be justly compensated. Nevertheless, legal protection of private property in Bolivia is weak. The U.S. Department of Commerce warns that "Property and contractual rights may be enforced in Bolivian courts, but the legal process is time-consuming at best and at worst subject to political influences and pervasive corruption. For that reason, the National Chamber of Commerce—with assistance from USAID—has established a local Arbitration Tribunal. The Investment Law provides that investors may submit their differences to arbitration in accordance with the constitution and international norms."

Foreign ownership of property within 50 kilometers of national boundaries, is not allowed except in the case of pre-approval due to national interest. Community property is created upon marriage, except in the case of property owned before the marriage of that received by succession, legacy or donation. Expropriation (Eminent Domain) may be effected for reasons of public benefit or if private property does not fulfill its social purposes. Expropriation must be authorized by law and must provide for payment of just compensation of the owner. Rights are exercised by prescription when they are not exercised during the period of time established by law. Prescriptive period begins at the time right can be enforced or at the time exercise thereof has ceased. Prescriptive period in which rights can be enforced varies according to the nature of the obligation. Property purchased after marriage is considered Community Property. Both spouses administer community property. Community Property is dissolved after death of one spouse, divorce, separation and judicial separation of property.

Title to property and property rights may be transferred either by public or private instrument. The American system of acknowledgments is not followed. Transfers of title to property must be a public instrument. It must contain a true statement of considerations, be recorded in the registry of property, and be signed by both the grantor and grantee (attorney in fact will suffice) in the presence of a notary. Formal documents must be executed before a notary who intervenes in the contract and retains the original certifying copy.

Transfers of title to real estate can be by public or private instrument and must contain a statement of true consideration. They must be recorded in registries of property. Both grantor and grantee must sign the deed and therefore must both be present before the notary at the same time. If one is absent, he must be represented by attorney in fact. In Bolivia, original deeds stay in the files of the Bolivian notary who witnessed the signatures. Notary gives the interested parties certified copies which are the same as originals in a court.

After death, property is passed via a testamentary document (will), or by operation of law. Operation of law in Bolivia states that when a person dies intestate, property passes in the following order: to descendants, ascendants, spouse, collateral kinsmen, and state.

"Proprietary Equity" is lost if the right to enforce it is not exercised within five years.

The Registries of Property was created by law November, 15 1887; Decree 5, 1888. In general, all documents transferring, creating, declaring or limiting rights in real property, including leases for over five years must be recorded in the public registry. Registrars are semi-judicial officers who transcribe the essential details of the transfer. Records contained in the registry are considered legally binding on future transactions. Defects found within a period of one year are allowed to be cured. Redress for the decisions of registrars is had via the courts.

Sales of real property must be recorded. The cost of recordation is the responsibility of the buyer. If, after sale of the property and within two years, it is discovered that the buyer paid less than half of the market value for the property, the seller may move for rescission of the transaction, making the original transaction void. In such cases, the buyer may elect to pay the difference in price to avoid rescission.

Nature, form, objects and obligations concerning contracts are generally governed by Civil Code. Civil Code defines a contract as an agreement by which one or more persons bind themselves to another person or persons to give, to do, or not to do, something. Essential elements are the consent of the parties to contract, an object, cause, and satisfaction of formalities which may be required. Only those persons with legal capacity may enter into contracts. Civil Code specifies which contracts must be formalized. (i.e., marriages, gifts mortgages, and company formation). Under Bolivian Commercial Code, contracts are designated as either commercial or non-commercial . A commercial contract is defined as any contract that is between merchants. In the sales of real estate, rescission may be asked by the vendor within two years if it is found that the price received is less that one half of the value of the property. However, buyer can avoid rescission by paying the difference in price.

Real Estate and Vehicle Tax:

All artificial or natural persons and undivided successions, owners of real estate and registered vehicles, yachts and aircrafts. The taxable base on real estate, is determined by the fiscal evaluation carried out in each municipal jurisdiction.

The taxable base on vehicles, is determined by the post-customs value of the vehicle as determined by the State and its yearly devaluation.

Local rather than national taxes are levied varying with the region. These include sewage, water and other rates tax can reach 8 per mil of assessed value.

All urban real property is subject to tax ranging from .35% to 1.5 % of fiscal value .

Land Use & Control:

Expropriation is applicable if land is not being used for greatest public value. The government owns all mineral interests but may assign them. Foreign nationals are not allowed to own land within 50 km of the border without special permission of the government.

Mortgages may be legal, judicial, or voluntary. They can affect any private real property, regardless of what is affixed thereto including moveable assets. Mortgage must state clearly the object and amount it secures. Property located in Bolivia can be mortgaged outside of the country. A lien may be established based upon the unpaid purchase price of any real property.

Judgments constitute a lien on real property after they have been recorded in the public registry. Once an order of execution has been issued on real property, the court designates a day for foreclosure sale. The sale is made on the basis of the appraised value of the property and bids cannot be accepted for less than three-fourths of that value. If no bidders express interest at the time of sale, the appraised value is reduced by 10% and a new call for bids is issued. After three reductions in value, the creditor may purchase the property at 80% of its final value or hold the property in pledge subject to further bidding or until a buyer offers 80% of the final reduced value. There is no right of redemption.

Legal rate of interest is 6% but parties may agree on any rate. Additionally, various rates are prescribed for various lending institutions and specialized banks. Interests on bank loans or discounts may not exceed 15% per year, commission on additional services not being permissible.