Even though buying property in Chile is a fairly straightforward process once you've done it a few times, making your very first purchase in the country can be intimidating.
Most of the steps involved with closing on a property here are very similar to those in other countries around the world, but there are a few things that work a little differently, which you'll want to be well aware of.
Having a trustworthy and knowledgeable lawyer to help you through the process makes things a lot easier, but it's not bad to have a basic understanding of how things work before getting started.
The shorthand version of how you buy property in Chile is:
- Locate a desirable property
- Obtain a RUT number
- Make an offer and agree on price
- Title search
- Transfer of funds
- Sign at the notary, and
- Inscribe the property
To give you a more thorough idea of what to expect, though, let's walk through a couple of purchase scenarios.
Buying a Condo or Home in Santiago
Say you arrive in Santiago and decide you want to buy a condo or home. You start looking at places for sale. If you're interested in finding “for sale by owner” properties, you can check newspapers or see listings on local websites, such as portalinmobiliario.com, olx.cl, or yapo.cl.
If you're going to work with a realtor, you should know that most realtors in Chile cover relatively small areas. So, if you want to get an idea of several neighborhoods, you're probably going to have to use several of them. Standard realty commissions in Chile are between 2% and 3%, paid partially by the buyer and partially by the seller.
If you're not a Spanish speaker, it'll be relatively slow going, because there aren't yet a lot of real estate services aimed at foreigners here. Hiring a translator for some of these steps can be helpful.
If you're serious about buying something, while you are still looking around, you should get a RUT number (Chilean tax number) for yourself or the entity you are using to buy the property. You can get a personal RUT number immediately upon applying at any of the tax offices in the country, using just your passport and a local address used for mail correspondence. If you're applying for a RUT for an entity, first, you need to have the articles of incorporation, bylaws, and documentation of the representative(s) legalized by the Chilean consulate in that jurisdiction and then stamped by the Ministry of Foreign Affairs in Chile.
After you find a property you like, you'll need to make an offer and negotiate a price. In Chile, it's not rather common to see a wide range of prices for similar properties, especially outside of the capital, so being an informed buyer is very important.
There is far less property market analysis in Chile as there is in some places in Europe, North America, or Asia, so developing a grasp of average market prices will help you recognize deals when you come across them.
Once the terms are settled, you'll want to conduct a title search. Your lawyer will need the property's tax number and the last name of the owner, or a copy of the current title, in order to start reviewing the property's history. The title search process verifies that there are no liens or prohibitions on the property, no tax debt, and that it's clear to be sold. Total costs for title searches vary from flat fees of between $500 USD and $1,000 USD to a percentage of the purchase price (up to 1%).
If everything checks out and the property is clean, then you need to arrange for the transfer of funds. Unless you already have permanent residency in Chile, you normally won't be allowed to open a personal bank account.
Lawyer's will sometimes assist with receiving funds from outside the country and placing them into an escrow account, but the money has to be approved by the Chilean Central Bank, which will usually request documentation for the source of funds that are being invested in Chile. Banks charge approximately 1% for the transfer and currency exchange, but the larger brokerages usually have a better conversion rate.
Once you're got the transfer of funds sorted, you can then set the date with the seller for signing the deed at the notary. It's customary these days to leave the funds for the purchase in “custody” or escrow with the notary until the new title is recorded. After both parties sign, you need to pay the notary fee (usually between $200 USD and $400 USD), and then you can pick up the stamped copies of the deed the following day.
Once you have the stamped deed from the notary, the last step is having it inscribed (or recorded) at the inscription office which is known as the Conservador de Bienes Raices. The fee for inscribing or recording the property usually works out to a little under 0.5% of the purchase price. After anywhere from 5 to 25 days, the new title will be recorded, and you are the official new owner of the property.
Buying Agricultural Land in Chile
The process for buying rural or agricultural land in Chile is very similar to buying something in Santiago; however, agricultural properties in Chile oftentimes come with water rights, which requires a separate title search.
If the water rights are clear and you proceed with the transaction, you'll need to inscribe the water rights as well as the property at the inscription office after the sale takes place. Aside from property taxes, agricultural properties usually have to pay “contributions” for their water rights, which go toward the maintenance of canals and administration for the local water office. These “contributions” are paid twice a year, usually in May or June and then again in August or September.
Buying property in Chile is likely to be a longer process than buying property in your home country, and it will definitely be more stressful the first time. However, the peace of mind that comes with owning income-producing property in a country that has almost no debt, an abundance of minerals and agricultural land, and a respect for foreigners and their assets will probably make it well worth the extra effort in the long run.
Editor’s Note: Things can change quickly. New options emerge, while others disappear. This is why it's so important to have the most up-to-date and accurate information possible. That's where International Man comes in. Be sure to get the free IM Communiqué to keep up with the latest on the best options in Chile and other attractive diversification opportunities.
Darren Kaiser is an American expatriate and current resident of Chile. He is an expert in Chilean real estate and offers property tours at popular locations around the country. He is also the author of the Chile Property Investment Guide, which you can find here.