Title & Contracts in Peru:
Deeds: Title will not transfer and ownership will not be official until a notary records a deed in the public record. (Rondinelli 1996.) Every deed must contain: (a) place and date of execution and name of notary; (b) name, age, domicile and profession of parties; (c) whether parties appear personally or are represented and in the latter case reference must be made to a power of attorney; (d) civil status and nationality of parties and statement as to whether they know Spanish; (e) state that interpreter appears for party not knowing Spanish; (f) state that notary knows parties and that minute of the document (a contract) was filed when required; (g) identification of parties by two witnesses if not known by notary; (h) insertion of minute in full; (I) statement that notary read instrument to parties in presence of two witnesses and that they ratified same; (j) signatures of persons appearing and the notary.
Deeds must be written by hand in the notary’s registry. There can be no flaws in the entry. The notary retains the original and issues certified copies which have the force of originals. Documents issued by public officials must bear the seal of their office.
When the transaction involves a mortgage, the deed must state the nature of the
mortgage, the amount of the debt, the interest, a description of the property encumbered, the value of the property, the date of the latest appraisal, if any, and the price (in the case of a sale).
In order to be a notary it is necessary: (a) to be a lawyer; (b) to be Peruvian by birth in full possession of civil rights; (c) to have no physical impediment; (d) to have a good reputation; (e) not to have criminal record. Notaries are appointed by the Superior Court of the respective province and their number is restricted. They keep records in which they enter, in chronological order, public instruments executed before them. Their records are under judicial supervision. Instruments bear ordinal numbers and must be flawless in entry.
Conveyance After death: There is no dower or curtsey in Peru. If a person dies intestate, inheritance is distributed in the following order: (1) children and other descendants, (2) parents and other ascendants, (3) spouse, (4) other relations by degree, (5) government and public charity. The surviving spouse is entitled to the same share as a child, but the share is diminished by the amount of the spouse’s interest in the marriage community property. If the parents or ascendants inherit, the spouse is entitled to the same share as received by them. A former or separated spouse has no inheritance rights.
Adverse Possession: Prescription is a manner of acquiring the ownership of property or extinguishing a right of action by the passing of time. Real property is acquired by prescription by continuous possession in capacity of owner for ten years and with legal title and in good faith, in five years.
Registry of property: There is a National System of Public Registries, which is comprised of (a) Registry of Natural Persons, (b) Registry of Juridical Persons, (c) Registry of Real Property, (d) Registry of Personal Property and (e) other registries.
Elements of a contract: In order for a contract to exist, there must be legally capable parties, a legal object, and a legal form. Contracts obtained by fraud or mistake are void. Contract are binding with respect to terms stated. Contracts must be executed and performed in accordance with rules of good faith and mutual intent of parties.
Any contract to succeed to property rights of person who has not died or whose death is not known, is prohibited. An offer is not binding if it is made to a person present without indicating any period of time for acceptance. If an offer is made to a person absent without naming a period of time for acceptance and a "sufficient period of time has elapsed"for reply, the offer is not binding. Offer is not binding if it is made to an absent person and reply is not received within stated period of time or when there is a simultaneous withdrawal of the offer made known to offeree with receipt of acceptance.
A contract is not regarded as concluded as long as parties are not in accord as to all its parts. One of the parties cannot demand performance if he himself has not complied or offered to comply. Money given by one party to the other is considered an indication of the conclusion of a contract. If the party who gives the money retracts, he loses the money. If the party who receives the money retracts, he must repay double the amount receive. The parties may mutually agree to dissolve the contract.
Generally, parties may stipulate that a contract shall be governed by foreign legislation and jurisdiction, provided there is a link with the foreign jurisdiction, e.g. nationality of parties, place of performance, location of property, etc. However, this stipulation is not valid if the contract refers to matters of exclusive jurisdiction of the Peruvian courts, e.g., property located in Peru.
Acknowledgments as generally used in the United States are unknown in Peruvian law. Contract, deeds and other documents requiring authentication are executed before a notary public, who certifies the instrument itself to the facts set forth.
Performance and Discharge: A sale is perfected when there is agreement as to the object and the price, although the object has not been delivered nor the price paid. The price may be left to the decision of a third person. In a contract of sale the period stipulated cannot exceed two years in the case of real property, if nothing is stated this period is understood. Unless otherwise stipulated each contracting party pays one-half the cost of the contract.
To avoid seeming conflicts of interest, the following persons are prohibited from purchasing property in their charge: a public administrator; an executor, a judge, lawyer, notary or expert (property involved in transaction in which they are engaged); President, Cabinet Ministers, assemblymen, congressmen, judges and Governors (national property).
If property is sold by area or contents, the buyer must pay for any measurement over the estimate in the contract or the seller must return any excess paid if the measurement is less, but if the difference exceeds one-tenth of the measurement specified in the property description, the buyer may elect to rescind the contract. Right to repurchase cannot be reserved for over two years.
In sales it is permitted to stipulate that the title shall not pass until the price is totally paid; in such event the parties must designate what part of the payments is to be considered as damages if the sale is rescinded for failure to pay the total price, but the judge may reduce the amount of the indemnity in view of all the circumstances.
A warranty is presumed even though not stipulated; the parties may agree otherwise, but such agreement is void if the defects are due to acts of the vendor. The parties may extend or restrict the ordinary rules regarding warranty.
Property Taxes:
Real estate equity tax: The base for this tax is determined by each taxpayer by applying the scales approved by the National Appraisals Council for the valuation of rural or urban areas and also the officially established nit prices for construction. (Price Waterhouse 1994.) The tax is calculated based on a rates of 2% up to 10 taxable units (U.I.T.’s), 6% up to 60 U.I.T.’s and 1% on properties’ value over 60 U.I.T.’s.
The tax may be paid in full in April or in four installments. The last three installments are subject to official interest rates. This tax is deductible for income tax purposes.
Real estate transfer tax: This tax is imposed on any sale, exchange or other transfer of real property or rights to real property at the rate of 3 percent payable by the purchaser.
Estate tax: There is no tax in Peru assessed on the estate of a deceased person.
Land Use & Control:
Peru uses some zoning and building regulations.
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