Boleto and Escritura in Argentina
Pros, Cons, Advantages, and Dangers of Boletos between Buyers and Sellers of Real Estate and Farmland in Argentina
Let’s start first by defining “Boleto” and “Escritura” in an Argentine Real Estate transaction between Buyers and Sellers of Real Property.
A “Boleto” in Argentine Real Estate is technically a “bill of sale” that obliges both buyer and seller of a real estate transaction to fulfill certain obligations in order to request their rights per the contract: Money in the case of the seller and a potential right to real property or land in the case of a buyer. A boleto is always a contract that is prior to the “Escritura” or Title Deed, which obliges the seller to transfer the promised property for sale and the buyer to pay the agreed price for it. For instance, lack of funds to pay the full price, and the taxes are outdated and are not being allowed to sell by Argentina’s tax agency. Thus, the parties are insured with a greater guarantee that the completion of the transaction will take place sooner or later.
What are the risks when signing the Boleto or Bill of Sale?
Signing the “Boleto” is always prior to the “Escritura.” The Escritura is the final deed of sale. Until the escritura hasn’t been signed there isn’t any legal and enforceable transfer of property deed that can possibly be recorded at any formal property registry. The boleto consists of a simple and private agreement between the buyer and seller. Both parties are thereby binding to complete a final deed.
However, there is no legal transfer of property, not even partially, that can be recorded at any property registry. This is the biggest danger for the buyer who only has a document and no new title which can be recorded anywhere. This boleto is a private contract which is an incomplete and partial purchase of real property that was intended to purchase land or real estate at a later moment.
Breach of Contract
In this case, the seller would be sued for breaching the agreement. The seller must accept the remainder of the payment to allow a judge to grant the buyer a final deed in exchange for any monies missing which would have to be deposited in court so that the seller can collect the funds. Many real estate professionals in the Argentine real estate industry believe that a boleto is a way to “step on any property” so that the seller cannot offer it to anybody else and so that the seller takes it off the market until all the final conditions have been met so that the escritura can be celebrated.
In this way, buyer receives keys to the property and can start enjoying actual possession of it, while the seller receives the funds that were agreed with the buyer per the boleto.
Transferring a domain
Also, another dangerous aspect of a boleto is that as long as the domain is not transferred, the property continues to belong to the seller and it can be seized by a third-party creditor to the seller.
From a seller’s perspective, the risk with a boleto is that the buyer ends up not complying with what was promised in the boleto and for example requests to pay the remainder of the amount to be paid in Argentine pesos. In case of breaching the boleto, the seller will keep the received payment until the issue is resolved.
Another risk is that the real estate broker/agent’s commission is usually due with the signing of the boleto. There have been hundreds of cases where the real estate agents have collected their fees at the signing of the boleto and later the Escritura is never signed. By law, real estate agents are obliged to reimburse these fees to both parties since the transaction did not go through.
What is important to know at the time of signing a boleto?
When signing the boleto, the real estate broker or the escribano should request a certificate of ownership of the property. Also, an inhibition of the sellers. This is to verify that the seller and his spouse (if married) are not inhibited. This guarantees that the property is not seized, nor foreclosed. The property will be delivered on the day of the deed. It should be free of intruders and without the opposition of third parties.
It is also very important to look at the price clause. In addition, in Argentina, there is restricted access to US dollars. Consequently, the ticket will say that the buyer renounces clauses such as the Argentine theory of monetary unpredictability.
Therefore, the buyer cannot hold on to the dollar restrictions to avoid paying in United States Dollars. This is to prevent the buyer from saying that he could not get the dollars.
What documents do the buyer and the Seller have to present?
The seller must submit a series of documents. For example, a domain report, inhibition report, and the property title. Co-ownership regulations are not necessary most of the time. Other documentation includes taxes and services, ID, and filiation data. Buyers should submit a valid identification document. For example, a DNI or a passport in the case of foreigners.
Where is a boleto and escritura signed?
A boleto is a private legal act as well as a private instrument. The parties can agree upon the place where to sign it. Normally, they meet at the address of either the buyer or the seller. Also, it can be at the intervening real estate agency. Otherwise, it can be at the office of the escribano or notary who drafted the boleto.
In a few words, a boleto can be signed anywhere as long as the parties agree. Upon signing a boleto, the buyer will advance as much as 30% of the agreed amount. The parties can agree to pay even 100%. If this happens, it would be the buyer fulfilling his side of the obligation. For the seller, the only thing left would be to sign over the title to the property. In cases where more than 50% of a boleto is paid, usually, the buyer will request to take possession of the property.