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Buying real estate in a foreign country can be a daunting process for first time buyers, especially if you don’t know the local language and the legal and procedural requirements. Happily, the nation of Chile has a very formal purchase process, which when followed strictly, ensures a fair outcome for the buyer, seller and real estate agent (who is providing all of the services).

Below is an “example” of how a Real Estate transaction normally works in Chile. As each individual transaction is unique, some of the steps may be different.

Step #1] Find a Real Estate Broker

You can either begin browsing the internet for properties that you might be interested in purchasing or you can contact a real estate agent (like Sur Terras) who can assist you in the search. If you find a property through an internet search, your second step will be to contact the real estate brokerage that advertised the property. Keep in mind that most properties for sale appearing online are advertised by real estate brokers, unless the advertisement says specifically that they are not (eg: FSBO, for sale by owner).

Step #2] Property Search in Conjunction with the Agent

As in the United States, when you contact a real estate agent to help you in finding a property to buy, you are asking the agent to perform a service for you and will be expected to enter into a formal legal agreement with the agent, to act on your behalf, for a stated period of time. After you enter into this contract the real estate agent will begin to show you properties (some of which you may have seen already online or other “unadvertised” properties that they are also aware of). If you already have a property in mind, you can skip the property search step and proceed to the transaction.

Step #3] Obtain RUT / RUN to transact business in Chile

All Chilean citizens have a RUT/RUN which is similar to a Social Security Number (SSN) or Individual Tax Payer Identification Number (ITIN) in the United States. In order to conduct business in Chile / or sign formal legal contracts, a RUT/RUN is a mandatory requirement. The process of obtaining a RUT/RUN is simple and very straightforward and Sur Terras can help you with the necessary paperwork. In most cases this can be done through a Chilean embassy or consulate in your home country, or in Chile itself if you prefer.  Keep in mind that you do not need to be a citizen or resident of Chile to buy property.

Step #4] Obtain a Power of Attorney (optional)

Real estate transactions in Chile can take some time to complete and a potential buyer may not have the time available to be present during each step of the transaction process. In this case arrangements can be made to conduct business through a seller’s “Power of Attorney” or “Limited Power of Attorney”, where a third-party is empowered to sign documents on the buyer’s behalf. Sur Terras can make arrangements for buyers to obtain a power of attorney in Chile, should the need require.  Other options also include working through a Chilean embassy or consulate in the buyer’s home country.

Step #5] Physical Inspection of the Property

In this phase of the transaction the buyer will want to inspect the property to discover any potential problems with it. This inspection can be done in conjunction with an expert recommended by the real estate agent (like Sur Terras), or done with an independent third-party inspector that you contract. After the physical inspection, the inspector will provide you with a report outlining their findings. If you are working in conjunction with a Chilean bank, that will be providing a mortgage, the bank will often undertake its own inspection as well.

Step #6] Title Search / Title Inspection

This step is similar to the physical property inspection, but involves the inspection of the owner’s legal title of ownership. This is usually conducted by a lawyer trained in the area of real estate. Sur Terras works with a team of lawyers trained in this field and they will ensure that your title is “clean” and free of third-party encumbrances before you purchase it. You are also free to retain an independent lawyer to do this for you, if that is what you prefer.

Step #7] Select the Property and Negotiate a Price with the Seller

In this step you negotiate the final sale price with the seller. In some cases, the seller will have a firm price, but in others, they may be willing to be more flexible with the final sale price. For example, if your physical inspection discovered a problem with the property, the owner may be willing to discount the price. This negotiation is usually done through the real estate agent in conjunction with both the buyer and seller. If you are working with a bank, that is providing a mortgage, the bank may also set limits on the final selling price (after their independent inspection).

Step #8] Sign Contract of Intent to Purchase in the Notary

This step initiates the formal transfer of the property from the seller to the buyer. This is a legal contract that obligates both the seller and buyer to honor the negotiated transaction agreement, timeline and price. It also ensures that neither can change their mind at the last minute (because of all of the work conducted on behalf of both parties by the real estate agent, lawyers and inspectors, etc.) This contract is binding, but can be legally broken; the contract will stipulate that a fine (monetary penalty) must be paid by the individual that wants to break the contract. (it is usually a percentage of the purchase price)

Step #9] Transfer of Funds

This step ensures the seller of the property that the buyer has the funds to purchase the property prior to the final closing of the sale. Arrangements can be made to directly transfer funds from the buyer’s foreign bank account to the owner; set up an “escrow account” that will be activated at the closing; or involve the buyer opening a bank account in Chile. As international laws regarding the transfer of funds overseas are complicated, this step can take some time and requires legal and accounting advice to ensure that the transfer is done in accordance with the laws of Chile and the laws of the buyer’s home country.

Step #10] Formal Property Transfer / Closing

This is  step in the transaction process and is known as the “closing” in the United States or completion or settlement in other countries. The closing date is usually set during the previous negotiation phase (Step #7), which is usually several weeks after the offer is formally accepted. On the closing date, the ownership of the property is transferred to the buyer and funds transmitted to the owner.This usually happens at the local office of the Conservador de Bienes Raices or can take place at a Chilean Embassy or consulate in your home country under rare occasions.

Step #11] Registering the Property

This is the final step of the process and involves registering the newly acquired property at the local land office  (Conservador de Bienes Raíces).  Once this is done, the seller is recognized as the new owner of the property.

Extra: Translation Services

All real estate transactions in Chile are conducted and finalized in the Spanish language. Should the need arise, Sur Terras can contract with a third-party to provide translation services of the various documents. For legal contracts, this can often be provided by the legal firm Sur Terras has partnered with, for an additional fee.

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