A FOREIGNER’S GUIDE FOR BUYING FARMLAND IN CHILE
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A FOREIGNERS GUIDE FOR BUYING FARMLAND IN CHILE
Maybe you visited Chile as a tourist and fell in love with the country, or perhaps you are aware of its strategies to become a global food supplier. Now you are considering buying some farmland there. Congratulations! Apart from mining, Chile has unique soil and climate advantages for agricultural exploitation and food production.
Spread along 2500+ miles on the Southwestern Pacific Coast of South America, Chile encompasses all climate zones from desert to ice. The almost 18 million population has more migrants lured in every year by political and economic stability, direct foreign investment encouragement and free trade arrangements with over sixty countries that position the country among the 20 largest recipients of direct foreign investments in the world. Chile also boasts modern facilities and logistics, state of the art production and processing technologies and an impressive range of agriculture produce in reverse seasons relative to the Northern Hemisphere.
Reasons to invest in Chile at this is Chile
WHERE TO BUY
Where depends, of course on what you want to farm and the landscape you prefer, but it helps to study the infographic published by the United Nations Food and Agriculture Organization (FAO) for the seven major economic regions and their main agricultural uses:
Another approach is the ratio between potential productivity and land price and the performance of the diverse food sectors. Reading the Pro Chile report on food, the dairy sector stands as the one with the highest growth in exports from 2009 to 2013, an impressive 56%. Much points to the vast well-watered grasslands in the south (River and Lakes regions) where small to medium sized farms with significant investments in systems and technologies milk three quarts total production from natural pasture cows. The dairy processing industry is well established in the region with mega factories such as Nestlé and Soprole (a subsidiary of New Zealand Fonterra) producing powdered and condensed milk, and numerous cheese factories.
Foods from Chile report at ProChile
LEGAL STRUCTURES: WHO CAN BUY PROPERTY
There are no restrictions for foreigners to buy property in Chile, either as individuals or as corporations. Tourists need to designate a representative who lives in Chile to get the tax identification number (RUT, Rol Único Tributario) required for buying and – if the property is to generate revenues – be responsible for the associated tributary obligations. However, farmlands being long term business, it makes good sense to get residency. The steps:
- Get a long term visa. Business people and investors may get a renewable 1 year temporary residency (visa temporaria para inversionistas y comerciantes) describing their project and proving to have the money needed for it, in Chile or abroad. These visas may be extended to their family (though they will not be allowed to work).
After receiving temporary residency they may apply for a permanent visa to remain indefinitely in Chile and have any licit activity and in five years may apply for nationality.
Information on visas at Department of Foreign Affairs
- Get a civil identification number (cédula de identidad para extranjeros). In the 30 days after your resident visa is stamped, you must get your foreigner identification number. This is the document you will use for all dealings with public or private institutions in the country.
Information on civil identification at Civil Register
- Register as a taxpayer. With the civil identification number you must register in the Internal Taxes Service (SII, Servicio de Impuestos Internos). RUT number identifies you in all commercial and social security matters and should be the same as your civil identification.
Information on identification at Internal Tax Service
- Register your corporation. If buying or exploiting the farmland as a company, you will need another RUT number. Four types can be used as a vehicle for foreign investment: individual limited liability company (empresa individual de responsabilidad limitada), limited liability partnership (sociedad de responsabilidad limitada), corporation (sociedad anónima), and share company (sociedad por acciones). The one chosen will depend on factors such as business strategy and the amount of capital to be brought in.
Information on choosing a company structure at Foreign Investment Committee
THE BUYING PROCESS
Once the region is defined, the type of farmland and the price to pay, you can start the search. It is best to work with a real estate agent to represent you (not the seller) in negotiations with sellers or their agents. There is no realtor license in Chile, so ask for references and choose one knowledgeable of farmland transactions, experienced in the region and who makes you comfortable.
You will mandatorily need a qualified and experienced attorney and public notary to conduct the title search and registration.
List of law firms by language spoken at Foreign Investment Committee
With an accepted offer, the attorney will draft a provisory agreement (promesa de compraventa). This contract must be registered at the regional title registry, which gives you precedence towards any other such agreements the seller may privately sign before domain is transferred. It usually includes a penalty clause (cláusula penal) where the parties agree on fines or compensations in case of non compliance and a time frame for controls. Some money may be deposited with the notary as escrow.
Then, your attorney will conduct a full title search to check ownership history, debts and leans, property line disputes, building permits, water rights, etc. Ask for copies of all official documents related to the title search, and written explanation of their significance. In the case of farmlands, it is advisable to have an independent land survey checked against the registered one, as there are often vague descriptions of limits or downright errors. If there are homestead or production facilities, you may want a home inspection by an architect.
Detailed description of title searches in Spencer Global.
If all goes well with the title search, both parties sign the sales agreement (escritura pública) before a public notary, the escrow funds are released and the rest of the money transferred. The notary inscribes the contract in the Real Estate Land Registry. The domain is fully transferred once you receive the contract stamped by the Registry and the ownership certificate (Certificado de Dominio Vigente).
Now, get to business!
Researcher for GTSA – Alice Bonet
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.