Let the property buyer beware

[jantango]

I rented a unit for three years before the owner decided to sell it. I decided to buy the unit in 2005. I went into the process blind. I obtained a CDI and transferred payment from my US bank to hers. She asked if she could reduce the purchase price represented in the title. I had no problem with it, but little did I know that she asked so she could pay less in taxes for the sale. Learned my lesson later. The title has a figure that is $6000 less than I paid for the property.

The three sisters who were heirs to their parents' unit next to mine finally sold it a few months ago. I knew that neither the real estate agent nor the heirs would offer any important information to the prospective buyers. I hoped to be able to help in some way, but it didn't come to pass. The new owners bought the unit without knowing what they are getting into. Honesty is not the policy when it comes to real estate transactions in BsAs. One needs to ask lots of questions about every detail of the building property, not only the unit for sale. Knowing the financial situation of the Consorcio (condo association of owners) is of utmost importance. If you don't ask questions, the owners or real estate agent will not offer the information. I met the new owners during a visit, but they already closed the deal. Due to poor management by several administrators, the consorcio has an enormous debt to AySA in excess of four million pesos. If we do not pay the debt in a year, they can obtain a court order to sell the units through public auction in order to pay off the debt. The young couple who will soon be my next-door neighbors knew nothing about the water bill debt. The interest on the debt is $15.000ARS a day!

Ask for a copy of the current monthly liquidation of expenses to get an idea of what is included and how much you will pay. A copy of the internal rules of the consorcio. Get a complete tour of the building in which you may be living before you sign the papers. This will give you a clear idea of whether the building is maintained with repairs, painting, etc. Any debt by the sellers must be paid before closing.

Ask questions. If you aren't fluent in the language and the sellers don't speak English, hire a translator for help. Buying property is too important to overlook any details before signing on the dotted line.

READ BEFORE BUYING PROPERTY IN ARGENTINA

Guide to buying property in Buenos Aires as a foreigner

We will tell you everything you need to know about buying property in Buenos Aires as a foreigner, from legal requirements to finding the perfect neighborhood.

thelatinvestor.com

 

[floridamedellin]

I rented a unit for three years before the owner decided to sell it. I decided to buy the unit in 2005. I went into the process blind. I obtained a CDI and transferred payment from my US bank to hers. She asked if she could reduce the purchase price represented in the title. I had no problem with it, but little did I know that she asked so she could pay less in taxes for the sale. Learned my lesson later. The title has a figure that is $6000 less than I paid for the property.

The three sisters who were heirs to their parents' unit next to mine finally sold it a few months ago. I knew that neither the real estate agent nor the heirs would offer any important information to the prospective buyers. I hoped to be able to help in some way, but it didn't come to pass. The new owners bought the unit without knowing what they are getting into. Honesty is not the policy when it comes to real estate transactions in BsAs. One needs to ask lots of questions about every detail of the building property, not only the unit for sale. Knowing the financial situation of the Consorcio (condo association of owners) is of utmost importance. If you don't ask questions, the owners or real estate agent will not offer the information. I met the new owners during a visit, but they already closed the deal. Due to poor management by several administrators, the consorcio has an enormous debt to AySA in excess of four million pesos. If we do not pay the debt in a year, they can obtain a court order to sell the units through public auction in order to pay off the debt. The young couple who will soon be my next-door neighbors knew nothing about the water bill debt. The interest on the debt is $15.000ARS a day!

Ask for a copy of the current monthly liquidation of expenses to get an idea of what is included and how much you will pay. A copy of the internal rules of the consorcio. Get a complete tour of the building in which you may be living before you sign the papers. This will give you a clear idea of whether the building is maintained with repairs, painting, etc. Any debt by the sellers must be paid before closing.

Ask questions. If you aren't fluent in the language and the sellers don't speak English, hire a translator for help. Buying property is too important to overlook any details before signing on the dotted line.

READ BEFORE BUYING PROPERTY IN ARGENTINA

Guide to buying property in Buenos Aires as a foreigner

We will tell you everything you need to know about buying property in Buenos Aires as a foreigner, from legal requirements to finding the perfect neighborhood.

thelatinvestor.com

Hi,

Thank you so much for sharing your experience. It’s been really helpful! I’ve recently made an offer on a property, and the seller mentioned they wanted to put the purchase price as $130K when I’ll actually be paying $200K. I didn’t like the sound of that, as I’m sure it’s illegal and could possibly cause issues for me down the road.

I’m not sure if insisting on putting the full purchase price on the deed will scuttle the deal, but I feel like it’s the right thing to do. Have you heard of others running into similar situations?

Thanks again for your insights!

 

[jantango]

Your comment makes the post all worthwhile. Discuss the topic with your escribano who will be in charge of preparing the property title. Of course, the actual sale price should be stated correctly in the property title. If they want to have the price documented as $130K, then that is the price you should pay. The sellers will have plenty for paying the taxes.

 

[jbeas176]

20 years ago i went through the same process. i paid 100,000 he wanted the escribano to list the sale price at 70,000. it was a new building so debt on the building was a non
issue. i really didnt care. 30,000 20 years ago if i ever sell which i wont, wont mean anything. seems pretty standard with the argees

 

[jbeas176]

i would just use the same trick

 

[Ceviche]

its almost impossible to buy /sell property in BA without cash component.

Also, main thing to look is to pay at least the expected by the provincia as the base price of the property.

Also the escribano you as an buyer will hire, should ensure there are no liens on the property, and that all bills have been paid of.

Also ensure, that all building bills have been paid for and all apartment bills have been paid for - a good escribano should do this or advise you not to buy if he finds poor management.

 

[jantango]

Also ensure, that all building bills have been paid for and all apartment bills have been paid for - a good escribano should do this or advise you not to buy if he finds poor management.

Our last three administrators did not list unpaid bills on the monthly liquidations. Our current one is an accountant and provides full disclosure on all our debts. The consorcio has enormous debt that was not disclosed to the new owners. Several of the units have not paid their monthly contributions, which makes the financial situation even worse.

Buyers are focused on the unit and forget to ask the realtor for a tour the entire building which tells the complete story. If I had the opportunity, I would have told any potential buyer that the building is a disaster with enormous debts and owners who don't want to make improvements, etc.

The real estate agent that was handling the sale of the unit next to mine asked me how much is the monthly contribution for expenses last year, but the current amount much larger. Agents hope that potential buyers won't ask questions that need to be answered; they want to close the deal and collect their commission.

Again, let the buyer beware.

 

[mulderfox]

20 years ago i went through the same process. i paid 100,000 he wanted the escribano to list the sale price at 70,000. it was a new building so debt on the building was a non
issue. i really didnt care. 30,000 20 years ago if i ever sell which i wont, wont mean anything. seems pretty standard with the argees

Sometimes is not just about paying less taxes on the property. The buyer can also request the official property price to be lowered as you need to explain where you got the dollars from. And if the buyer had the dollars outside the banking system he can't explain where the dollars are coming from. Keep in mind that during the cepo times you could not just buy legal dollars, even if you had a legal income in pesos. You can't just say i bought the dollars in a cueva and be done with it. It gets tricky.

 

[jbeas176]

i did have to show a certified financial statement. i may regret that some day

 

[LuckyLuke]

its almost impossible to buy /sell property in BA without cash component.

Also, main thing to look is to pay at least the expected by the provincia as the base price of the property.

Also the escribano you as an buyer will hire, should ensure there are no liens on the property, and that all bills have been paid of.

Also ensure, that all building bills have been paid for and all apartment bills have been paid for - a good escribano should do this or advise you not to buy if he finds poor management.

Howdy Ceviche,

I'm currently mid purchase on a property and the seller, who previously agreed to 100% en blanco, is now asking that 10% of the purchase price be made in cash (a low amount considering what others have reported here). I have read that underreporting the sale price can lead to problems down the road...but I've never seen any description of what those problems could be. The only problems I can think of is

1) AFIP seeing the cash leaving my Banco Nacion USD account and not correlating to the reported purchase price.

2) In the event of a future property sale en blanco that the cost basis (being artificially low) may result in my paying a higher capital gains tax on the sale (if such a tax exists down here).

Do you have any info that I should take into account? It seems to me that there really is little advantage for the buyer to accept this request (assuming they have all their income for the purchase en blanco).

Thanks