How does the repeal of the Rental Law impact and what will happen to the new contracts?
It is crucial to note that ongoing leases will continue to be governed by the law in effect at the time of signing. Only new contracts will be subject to the changes introduced in the Decree of Necessity and Urgency (DNU) since this decree does not have retroactive effect.
The new regulations establish that the term of the leases, regardless of their destination, will be the one agreed upon by the parties. In the absence of a stipulated period, temporary rentals will be governed by the uses and customs of the place where the rented property is located. For rental contracts intended for permanent housing, furnished or not, the term will be two years, and for other destinations it will be three years. Now, both the duration of the contract and the adjustments will no longer be conditional on the Rental Contract Index (ICL) or the Casa Propia index.
The possibility of registering contracts in dollars will be allowed, and it is established that judges will not be able to modify the payment method, the agreed currency or the contractual provisions, unless one of the parties requests it and the law authorizes it.
The parties will be free to determine the amounts and currency of the guarantee deposits, as well as their subsequent return. The frequency of payment may be freely agreed upon, as long as it is not less than monthly.
If the tenant wishes to terminate the contract, they must pay the landlord 10% of the remaining value of the contract.
Regarding improvements and repairs to the home, they will depend on the negotiation between both parties.
One of the most significant modifications is the elimination of the registration requirement for rental contracts in the Federal Public Revenue Administration (AFIP).
In general, this DNU provides greater autonomy, flexibility in the negotiation and drafting of rental contracts, allowing for more personalized agreements adapted to the needs of both owners and tenants.
What were the rents like with Law 27551 until October 2023?
The legal framework established a minimum validity period of three years, with annual adjustments according to the Lease Contract Index (ICL). Accordingly, the tenant had to present two viable security options to the owner so that he could select one of them.
On the other hand, the tenant did not assume the payment of extraordinary expenses or taxes associated with the property. Furthermore, the security deposit was limited to the amount corresponding to the first month’s rent.
Regarding the early termination of the contract, this power fell exclusively on the tenant. Once the first six months of the agreement had elapsed, the tenant was obliged to notify the landlord in writing of his early decision, facing a penalty of one and a half months if he terminated the contract before the first year, and one month only after that period.
Regarding emergency repairs, the owner had the power to carry out them and deduct their cost from the agreed rent amount. Also, it was a mandatory requirement to declare the contract before the Federal Public Revenue Administration (AFIP).
What were the rents like with the changes that were applied in October?
Despite maintaining the minimum term of three years for both residential and commercial contracts, significant changes were implemented. The update was now carried out through the Casa Propia coefficient instead of the Lease Contract Index (ICL) of the Central Bank.
The Casa Propia formula was based on the lowest indicator between the average annual salary variation and the average inflation during the same period. To this was added a Salary Variation Coefficient (CVS) with a capacity of 0.9, which means that only 90% of the average salary variation was considered.
In addition, contractual adjustments were made semiannually, which meant that tenants faced two price increases per year instead of one.
Another important modification was the prohibition of agreeing contracts in dollars, establishing that agreements between the parties must be exclusively in national currency.
In relation to guarantees, the provisions of Law 27551 were maintained: the tenant had the power to propose two different types of guarantees (real estate guarantee, bank guarantee, surety insurance, bail guarantee, salary receipt) and the landlord had to choose one of them.
It is essential to keep in mind that these provisions did not apply to contracts excepted from the minimum legal term, such as those intended for tourist or diplomatic purposes.
What requirements must the buyer meet in order to have priority over the rights of third parties who have imposed precautionary measures on the acquired property?
First of all, I would like to clarify that the priority of the buyer by purchase ticket over the rights of third parties who have imposed precautionary measures on the acquired property is regulated mainly by the Civil and Commercial Code of the Nation. Some key points to consider are: A) The good faith of the buyer, which is essential. If he acquired the property legitimately and in good faith, without knowledge of the existing precautionary measures, he could have priority in certain circumstances. b) In Argentina, the registration of the sales receipt can confer certain protection to the buyer. However, this registry does not provide the same security as a public deed. If the precautionary measures were not registered before the registration of the ticket, some priority could be granted to the buyer. c) Have the Public Deed. The priority of the buyer by ticket of sale over the precautionary measures may depend on the registration of the deed in the corresponding registry and the date of registration in relation to the precautionary measures. D) The buyer must have fulfilled his financial obligations as set out in the sales contract to support his position. E) Additionally, Argentine law offers certain protection to the buyer in good faith, prioritizing his rights over precautionary measures if certain legal requirements are met, such as adequate registration and acting in accordance with the law.
What limits exist for the fees that real estate agencies can charge for rental or purchase and sale contracts?
It is always important to highlight the existing regulations in Argentina on real estate agency fees in rental or purchase and sale transactions, since they vary depending on the province and are subject to specific regulations, beyond the regulation found in the Civil and Commercial Code of the Nation. In the case of buying/selling, these fees generally range between 3% and 6% of the transaction price, and their responsibility may fall on the seller, buyer or both parties, being crucial to specify it in the brokerage contract. It is important to keep in mind that many times, when signing the Purchase and Sale Ticket, you already authorize the Broker to receive their fees, which is why it is important to carefully check the conditions of the reservation.
For rental contracts, in the Autonomous City of Buenos Aires, Law 5859/2017 establishes a maximum limit of 4.15% of the total contract, assumed exclusively by the owner. On the other hand, in the Province of Buenos Aires, Law 14,085 provides that the commission (equivalent to 4% of the total contract) be shared, with each party assuming between 1% and 2%, unless otherwise agreed where one of The parties could be responsible for all fees.
These legal provisions are fundamental and must be considered when establishing the terms and conditions in the brokerage contract between the real estate agency and its clients, thus guaranteeing transparency in the intermediation and compliance with the regulations in force in each jurisdiction.
What aspects should the buyer or seller of a property take into account to avoid legal or tax problems?
As a legal advisor specialized in real estate law, there are several important tips that I could offer both the buyer and the seller of a property to avoid legal or tax problems:
- Complete documentation and legal verification: It is essential to thoroughly review all documentation related to the property. This includes deeds, property titles, plans, and any other document that supports the legality of the property.
- Debts and charges: Make sure that the property is free of debts, liens or liens. It is crucial to obtain certificates that confirm the absence of municipal debts, unpaid taxes, or any other type of charge that may affect the property. This must be previously checked by the Notary who intervenes in the operation.
- Conditions of the property: Inspect the real state of the property to avoid surprises later. It is important to verify that the property is in adequate condition and complies with local building regulations. I always suggest that when inspecting the property you are accompanied as much as possible by a professional, be it an architect or a specialized person linked to the field.
- Clear clauses in contracts: Both the buyer and the seller must fully understand the terms of the sales or rental contract. It is essential to include clear and precise clauses that address all relevant aspects, such as deadlines, payment conditions, responsibilities of each party, among others.
- Tax advice: Consult a professional on tax issues to understand the tax implications of the operation. Real estate transactions can have significant tax consequences, so it is essential to properly understand and plan for these aspects. This is a fundamental point, since many times we tend to move forward with the operation without being clear about the legal consequences.
- Written agreement: Any relevant agreement must be documented in writing. This includes any special arrangements, price negotiations, repairs or ancillary agreements, commissions, etc.
- Registration and deed: Ensure that the transfer of property is carried out correctly and is duly registered with the corresponding agencies. Proper deed is crucial to legally validate the transaction.
By following these tips and having specialized legal advice, both the buyer and the seller can minimize the risk of facing legal or tax problems in real estate transactions.
by CEDOC
