Real estate in Paraguay

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What you should know about real estate in Paraguay

Buying real estate in Paraguay

In Paraguay, you as a foreigner can easily buy land and real estate without any hurdles or obstacles. This is not self-evident and rather rare to find in the world. You do not even need a permanent residence permit or a cedula; your passport is sufficient. Compared to other emigration countries, such as Thailand, this is a great advantage.

If you buy a plot of land, you automatically acquire everything on it – such as a house or the fence. This is a very important fact that you should keep in mind! There have been gullible newcomers who have actually built their dream house on someone else’s land!

Loosely based on the motto: “Build your dream house on our land”.

The problem comes to light when the builders suddenly realize that they have built a house for someone else with their money. In other words, it was a de facto hidden gift! So before you start investing your money in a property, the first and most important step is to make sure that the land really belongs to you. To do this, you need a so-called “Título” or land title that bears your name. A lease or right of use, especially from other people or companies (Municipalidad might be okay), is to be avoided!

Land with title

As a foreigner, you can acquire an existing land title (exception: immediately on the state border) or have a land without title surveyed first and then titled. The usual case is the purchase of land with an existing title.

What often confuses many buyers from Europe is the difference between “contrato privado” (private contract) and a transfer of title by the judiciary (“poder judicial”). The private contract establishes a legal claim against the seller, but it is not a title per se. This is decisive, for example, if the property is purchased by means of a “contrato privado” from a company, such as an S.A. (joint stock company). If this company should become insolvent, then one is only creditor with a legal claim against the mass – not however owner of its property or house! You acquire ownership only with the title, and this is transferred by the “poder judicial”; only then is there legal security, and only then should you build your dream house on the land.

As a newcomer you should NOT consider other forms of land purchase for the time being!

Terreno municipal

Now that you are warned, let’s take a look at the other forms of land that exist in Paraguay. On the one hand there is a “Terreno municipal” or simpler; a piece of land that you have leased for 99 years from the Municipalidad (=municipal administration). This land can be resold by means of a “contrato privado” (=private contract) and after approval of the Municipalidad. In addition, it is possible to get a title on this land after an accurate survey and a down payment to the municipality.

Compared to the purchase of a plot of land with an existing title, you will face additional bureaucratic hurdles and waiting times. The surveyor also does not work for free, and the down payment to the municipality can also amount to several thousand Euros, depending on the size of your land. The good news is that it usually works smoothly, patience and enough free time can be helpful though.

Terreno “INDERT” or “fiscal”

The situation is quite different with a “Terreno INDERT” or “Terreno fiscal”. The INDERT (Instituto Nacional de Desarrollo Rural y de la Tierra) is a government agency with the mission to allocate land to needy PARAGUAYANS. The purpose is to give a livelihood to landless Paraguayan farmers; in the form of a gift of land. This land is then not for sale for 10 years and, according to the law, should serve the livelihood of the family. Only after 10 years a title can be applied for – and this by the original beneficiary, not a foreigner!

But now we are in Paraguay, and laws are understood here at best as a rough guideline. It is not uncommon for these so-called “landless peasants” to have neither the knowledge nor the will to ever cultivate this land. What they want is to sell the land as quickly as possible and make a few million guaraníes. This is exactly the point where resourceful intermediaries, mostly other Paraguayans, but also Germans (!), enter the scene. They buy the land from the original “poor Paraguayan” cheaply, by private contract and completely against the law. Then they look for a buyer (that would be you), to whom they resell this land by means of a private contract.

This is common practice in Paraguay and is often done this way; but it is still not legal, violates a lot of laws and regularly leads to big problems.

Real estate agent

The almost unmanageable number of self-proclaimed real estate agents does not make it any easier for buyers to make the right choice. This is because numerous real estate agents and brokers in Paraguay usually have no training or professional experience. Particularly, if it concerns German-speaking brokers, then this has frequently only the background as plan “C” to earn nevertheless still somehow money. These want to mediate in the normal case as fast as possible an object, the long-term customer satisfaction is not interested thereby. Also the condition of the house, the building quality, neighborhood, fair price etc. are questions, which these hobby brokers rather do not ask. If there are problems after the fact, your calls may well not be returned and you are on your own.

To avoid this, it is better to work with professionals. A correct business registration with RUC number (=tax number), as well as personal (residential) circumstances (!), which indicate a certain consistency, are basic requirements. The broker you trust should also have lived in Paraguay for at least 5-7 years and ideally have already worked in the industry in Germany (or Austria/Switzerland). A company with more than one person also offers you the advantage that not everything depends on the health of one person.

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