Ownership is acquired in one of the following ways: occupation, taking possession of something that has no owner; accession, the acquisition of something produced by the thing itself or naturally or artificially incorporated with it; transfer or delivery; succession by reason of death; and prescription, when something has been possessed for a length of time and with the requirements established by law.
All inhabitants of Uruguay have the right to be protected in the enjoyment of their property, and that ownership of property is an inviolable right but subject to whatever the law may prescribe for reasons of general interest. If property is taken away, the court decides on compensation. The lease may not exceed 15 years and but may be renewed.
Property and property ownership are governed for the most part by Civil Code, based largely on Roman Law.
Foreign investment corporations (holding companies) are subject to a special regime, establishing tax benefits and operational advantages. These corporation's main activity is to invest abroad in real estate, securities, bonds, shares and other assets, on its own account or on behalf of others.
Several forms of company ownership exist in Uruguay including: Stock Holding Corporation, Limited Liability
Partnership, Cooperative Society, Capital and Industry Partnership, and Sole Proprietorship. Limited liability
partnerships (S.R.L. or Ltd.) are based on an agreement between a minimum of two partners, either individuals or business firms, including corporations, whose liabilities are limited to amounts equal to each particular capital subscribed, except in the case of debts of the partnership with its personnel. These companies are also authorized to develop off-shore trading operations, being able to possess shares and claims, as well as open bank accounts. Banks and financial companies are not authorized to integrate these partnerships. The Partnership Agreement must be registered at the Public Register of Commerce and a summary of its articles published in the Official Gazette and in one other local newspaper.
Title & Contracts in Uruguay
Instruments executed before a public notary are written in his protocol; they may be written by hand with indelible ink or by typewriter. They begin by stating the date and place. No abbreviations or initials may be used to designate names or places and all amounts must be written out. Parties are identified by stating their business, their residence, whether they are single, married or widowed and latter cases name of spouse and other date. Amendments and corrections in the body of the instrument are not permitted but must be indicated by notary before signature. Notary retains original signed copy in his protocol and delivers certified copy to parties requesting same. For further certified copies judicial order is required. Certified copies may be typewritten or printed but indelible ink must be used. In court, notarial copies have the same effect as originals.
The estate of the decedent goes to his legitimate or natural decedents, without prejudice to the marital portion pertaining to the surviving spouse. If there are no legitimate or natural decedents the estate goes to legitimate ascendants of nearest degree and to spouse; in this case it is divided into two parts. If there is only one of these two classes, such class receives entire estate. If their are no such heirs, one half of the estate goes to the legitimate or natural brothers and sisters and one half to adopted children. If one or the other of these two classes is lacking, the other receives the entire estate. If none of the above exists the estate goes to the adopting father or mother and to the legitimate or natural collateral from third and fourth degree. If there is a total lack of legal heirs, the estate goes to public treasury.
Adverse possession may occur without just title and without good faith but possession of the property must continue for thirty years.
In order for the transfer of property to occur, it must be registered in the appropriate area where the property is located.
The following is required to make a contract: valid consent, capable parties, licit object, lawful cause, licit form, and twenty one years of age. Oral contract is without effect unless offeror wishes to maintain the offer. In a contract of sale transfer of ownership is effected by actual or implied delivery of object only; as long as this transfer has not happened, the vendor continues as owner. Nullification of a contract must be declared by a judge.
A debtor is in default in the following instances: when damages occur; not fulfilling contract; and the mere expiration of the term.
Property Taxes:
There is a state tax on real estate transfers - both parties involved in the transfer of real estate are subject to this tax at a rate of 4% each on the property tax value (generally below market value).
Local Taxes include a residence tax that is paid by the owner of a property and is approximately $25 a month. A local property tax is paid once a year by the owner of the property of about 1% of market value. There are also taxes on rents, for elementary education; tax on rural landlords; tax on non rural rents and registration fees for recordings and notations in the public registers.
The Uruguayan legislation considers a mortgage as a pledge of real property which remains in possession of the debtor until the mortgage is paid off. The Mortgage Bank of Uruguay has a monopoly in the issuance of mortgage bonds and securities on the property of third parties, but does not have a monopoly over mortgage contracts which are generally 30 year terms. A Common Pledge Contract is made with the pledge creditor.
The pledge creditor has a real right in the pledged property to collect his debt with priority over other creditors in the event of default provided the property is in his possession and the contract is in writing as of a date shown.
If the mortgagee does not make payments, the mortgagor will foreclose and put the property up for private auction. The sale is made on 2/3 of the properties’ value or to the highest bidder. If there is no bidder, the property is assigned to another public auction at 50% of its value. If still not a bidder, the property is assigned to the plaintiff.
Loans are generally 30 years and the government establishes maximum interest rates. About one third of the bank’s lending has been channeled into the construction of low-income public housing under contractual arrangements with municipalities and various central government agencies. The remaining two-thirds is provided to the private sector, chiefly to builders for the construction of housing for middle-income families and individuals.
The Mortgage Bank of Uruguay has a monopoly in the issuance of mortgage bonds and securities on the property of third parties, but it does not have a monopoly over mortgage contracts. The Bank of Hipotecario del Uruguay is the only mortgage bank in Uruguay and the principal intermediary of medium - and long-term funds for housing in the country.
The constitution provides for the establishment of a central bank and a social security bank, other state banks (the Bank of the Republic off Uruguay, the State Insurance Bank, and the Mortgage Bank of Uruguay) as well as private banks.
Administaror