How to sell a house in Lima, Peru—from the U.S?
June 24, 2013 7:36 PM Subscribe
A close relative has been made the executor of a will that basically leaves a house to her and three siblings in Lima, Peru. Basically there is a house that must be sold and then the proceeds divided among the various children (my relative/the executor and her siblings). (More inside.)
She and all her siblings live in the U.S. and it is very unlikely that she will be able to go to Peru. Even if she could, she is very confused about the best way to approach the situation. She is scrambling to find a good Lima-based lawyer to speak to, but is trying to get a sense of what sorts of issues to expect and how to most efficiently get through this. Ideally, she could give an unbiased professional (i.e., somebody outside of the family) power of attorney and they could sort the whole thing out. Broken down into steps, it seems like she needs to at least:
-get an attorney to advise on the distribution of the property (according to the will)
-get the house appraised
-put the house on the market and find somebody to manage the sale
What are we missing? It seems like there are many pitfalls so far unanticipated. Any tips/advice regarding these types of transactions in Lima, referrals to other reputable resources, or from people who have had similar experiences (maybe in other countries) would be very much appreciated. She feels like she is in very far over her head.
Also, it bears mentioning that the family does not get along. This is part of the reason that it is greatly preferred that a third party handle as much of the transaction as possible.
She and all her siblings live in the U.S. and it is very unlikely that she will be able to go to Peru. Even if she could, she is very confused about the best way to approach the situation. She is scrambling to find a good Lima-based lawyer to speak to, but is trying to get a sense of what sorts of issues to expect and how to most efficiently get through this. Ideally, she could give an unbiased professional (i.e., somebody outside of the family) power of attorney and they could sort the whole thing out. Broken down into steps, it seems like she needs to at least:
-get an attorney to advise on the distribution of the property (according to the will)
-get the house appraised
-put the house on the market and find somebody to manage the sale
What are we missing? It seems like there are many pitfalls so far unanticipated. Any tips/advice regarding these types of transactions in Lima, referrals to other reputable resources, or from people who have had similar experiences (maybe in other countries) would be very much appreciated. She feels like she is in very far over her head.
Also, it bears mentioning that the family does not get along. This is part of the reason that it is greatly preferred that a third party handle as much of the transaction as possible.
Best answer: The most important thing to keep in mind is to manage your expectations. Nothing will happen the way it says on the website, the consulate may tell you on Monday that you need two copies of a document and then on Tuesday, they tell you three. That's just the way it is and getting frustrated is only going to make it worse for you. This will be painful and take a lot of time and better to just realize that upfront and not expect otherwise. I've done a sale by power of attorney in Peru before BUT the property was already in my name and I was in Peru to establish the power of attorney.
the process should look something like this:
1. if a US will, you'll need to get it translated, legalized (basically a consular seal saying the original document is in correct format). If I were you, I would try to find an attorney in the NY or NJ area (there are a lot of Peruvians there) who has experience with these type of remote will validations. That would be preferable to calling up a Peruvian attorney.
2. getting the will recognized by a Peruvian court (never done that, sorry)
3. Get the executor recognized by the Central Peruvian property registry (Registros Publicos) (hugely important and nothing can happen until that takes place--that's at least 3 weeks). That requires a visit to a notary (not our kind of notary but a senior, trusted lawyer whose word is trusted) who will certify the process is taking place correctly.
4. If you go with power of attorney, you'll now need to establish this (can't do it until the property is in your name). The consulate (or preferably the US based attorney familiar with Peru) can give you advice on this.
5. Sell the place--this probably won't be tough. There are two steps to selling. You first sign a contract to sell the place (the compra/venta) and then you later go to the notary and sign the minuta--which is kind of like the US closing. Between those two, you'll need to show that the municipal taxes (los arbitrios) and the property transfer tax are paid (the acabala). You need to do those separately from the closing--they're not built in to the process like they are in the US.
6. There's a lot of fraud in real estate in Peru so the system is based on a lot of documents. That sucks for remote selling.
7. Capital gains taxes. A non-resident pays something like 30% in capital gains taxes to Peru--a resident or citizen pays either 5% or 10% (I think it's 5%). If there is someone in the family who is trustworthy and a Peruvian citizen it can be advantageous to transfer the property to them, although that can have US tax consequences.
People to use in Lima. If the property is located in an upscale area, then I can recommend these guys (http://www.cmi-peru.com/) I've used them before and they're honest. They're used to working with foreigners and can help guide through the selling process. They can probably also recommend an attorney/notary who can help you. They only deal with higher end properties so if this is a smaller place or less desirable location, then they won't handle it but will probably be able to give you advice.
The notary/attorney we used is http://www.notariagutierrezadrianzen.com/. I can recommend their services in drafting documents but I don't know them well enough to say that I'd give them a power of attorney.
Fraud is high in Peru and this is going to be a very tempting target for anyone involved. You have to make sure that you only give a "limited" power of attorney--and have a US, spanish speaking lawyer review it to make sure that you're not authorizing someone to take out a mortgage on your behalf or similar.
The combined fees for the above are not cheap and the whole process will realistically take months.
Feel free to mail me with other specific questions.
posted by limagringo at 9:10 AM on June 25, 2013 [1 favorite]
the process should look something like this:
1. if a US will, you'll need to get it translated, legalized (basically a consular seal saying the original document is in correct format). If I were you, I would try to find an attorney in the NY or NJ area (there are a lot of Peruvians there) who has experience with these type of remote will validations. That would be preferable to calling up a Peruvian attorney.
2. getting the will recognized by a Peruvian court (never done that, sorry)
3. Get the executor recognized by the Central Peruvian property registry (Registros Publicos) (hugely important and nothing can happen until that takes place--that's at least 3 weeks). That requires a visit to a notary (not our kind of notary but a senior, trusted lawyer whose word is trusted) who will certify the process is taking place correctly.
4. If you go with power of attorney, you'll now need to establish this (can't do it until the property is in your name). The consulate (or preferably the US based attorney familiar with Peru) can give you advice on this.
5. Sell the place--this probably won't be tough. There are two steps to selling. You first sign a contract to sell the place (the compra/venta) and then you later go to the notary and sign the minuta--which is kind of like the US closing. Between those two, you'll need to show that the municipal taxes (los arbitrios) and the property transfer tax are paid (the acabala). You need to do those separately from the closing--they're not built in to the process like they are in the US.
6. There's a lot of fraud in real estate in Peru so the system is based on a lot of documents. That sucks for remote selling.
7. Capital gains taxes. A non-resident pays something like 30% in capital gains taxes to Peru--a resident or citizen pays either 5% or 10% (I think it's 5%). If there is someone in the family who is trustworthy and a Peruvian citizen it can be advantageous to transfer the property to them, although that can have US tax consequences.
People to use in Lima. If the property is located in an upscale area, then I can recommend these guys (http://www.cmi-peru.com/) I've used them before and they're honest. They're used to working with foreigners and can help guide through the selling process. They can probably also recommend an attorney/notary who can help you. They only deal with higher end properties so if this is a smaller place or less desirable location, then they won't handle it but will probably be able to give you advice.
The notary/attorney we used is http://www.notariagutierrezadrianzen.com/. I can recommend their services in drafting documents but I don't know them well enough to say that I'd give them a power of attorney.
Fraud is high in Peru and this is going to be a very tempting target for anyone involved. You have to make sure that you only give a "limited" power of attorney--and have a US, spanish speaking lawyer review it to make sure that you're not authorizing someone to take out a mortgage on your behalf or similar.
The combined fees for the above are not cheap and the whole process will realistically take months.
Feel free to mail me with other specific questions.
posted by limagringo at 9:10 AM on June 25, 2013 [1 favorite]
Response by poster: Thank you for the replies. It seems like she has her work cut out for her. I am not sure, but I believe the will was drafted in Peru, so hopefully that part will not be as complicated. It is definitely not a high end area, but nor is it a "sketchy" area of the city. We are trying to get a ballpark sense of the property value right now, with little luck. Is there such thing as a Zillow-type website in Peru? Thanks again.
posted by AwkwardPause at 6:13 PM on June 25, 2013
posted by AwkwardPause at 6:13 PM on June 25, 2013
That's great that the will was drafted in Peru. That should make the process significantly less painful.
There is no zillow type site, but you can look at the classifieds in El Comercio (http://urbania.clasificados.pe/venta/casas-departamentos-en-peru-1) to get a general sense of what things are listed at in different areas. Listing prices are often very different from selling prices. I don't know if sales prices are publicly available or not but "official" selling prices are often semi-fictitious (people mark them down to reduce tax burdens) so I wouldn't see them as very informative.
Good luck. I'd still give CMI a call (they deal mostly in Miraflores, San Isidro and Santiago de Surco) but I'd think they would still be willing to give you some advice/guidance.
posted by limagringo at 7:25 AM on June 26, 2013
There is no zillow type site, but you can look at the classifieds in El Comercio (http://urbania.clasificados.pe/venta/casas-departamentos-en-peru-1) to get a general sense of what things are listed at in different areas. Listing prices are often very different from selling prices. I don't know if sales prices are publicly available or not but "official" selling prices are often semi-fictitious (people mark them down to reduce tax burdens) so I wouldn't see them as very informative.
Good luck. I'd still give CMI a call (they deal mostly in Miraflores, San Isidro and Santiago de Surco) but I'd think they would still be willing to give you some advice/guidance.
posted by limagringo at 7:25 AM on June 26, 2013
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posted by 1adam12 at 3:48 AM on June 25, 2013