Real Estate updates


Contributed by Santamarina y Steta SC
Title insurance and indigenous rights
  • Mexico
  • 02 November 2018

Procuring title insurance has become common practice in real estate transactions for both lenders and owners. As title insurance is a type of indemnity insurance which covers financial loss from title defects, it protects policyholders from past events which could affect the property's transfer. However, certain aspects of real estate development which are unique to Mexico must be taken into account in this regard.

Prior consultation with indigenous communities: key requirement for real estate developers
  • Mexico
  • 31 August 2018

Convention 169 – Indigenous and Tribal Peoples Convention establishes that indigenous peoples or communities must be consulted on any legislative or administrative act that may directly affect them. Companies that intend to develop or invest in real estate projects in Mexico should therefore consider community consultation as part of their feasibility criteria.

How to acquire real estate in Mexico: alternate investment vehicles
  • Mexico
  • 20 July 2018

Acquiring real estate in Mexico can be cumbersome and time consuming, particularly for foreign investors. The Constitution forbids foreign individuals and entities from holding direct ownership of land or waters in the geographic area known as the 'restricted zone'. However, Mexican law allows foreign individuals and entities to use a foreign trust to acquire beneficial interests in real estate that is located in the restricted zone where it is intended to be used for residential or commercial purposes.

How to make sure that your real estate project succeeds
  • Mexico
  • 15 June 2018

In determining the feasibility of a real estate project, an evaluation of the relevant financial and statistical analyses is not enough. Due to the complex and extensive legislative scope that developers now face, they must also consider the legal factors that will affect a project's implementation and operation, including with regard to the authorised use of a property, environmental zoning and ownership requirements, as well as the rights of indigenous communities.

South Africa

Residential property developers face cash-flow crunch due to VAT on temporary letting of units
  • South Africa
  • 06 April 2018

Many residential property developers will begin 2018 with a major cash-flow challenge, as they may be faced with a substantial value added tax (VAT) liability in respect of the temporary letting of residential units which have been developed for resale. It is hoped that the South African Revenue Service and the National Treasury will urgently address the problems with regard to the VAT rules concerning the change-in-use adjustments for property developers.


Contributed by Pestalozzi Attorneys at Law Ltd
Federal Supreme Court decision on compensation due to limitation of secondary homes
  • Switzerland
  • 16 November 2018

The Federal Supreme Court recently addressed for the first time whether the prohibition to build secondary homes on private property entitles landowners to compensation. The court ruled on the consequences of the withdrawal of a previously established right through an amendment of the law and clarified that the concept of private property is not a fixed notion inaccessible to change. There is no entitlement to a permanent definition of the concept of private property.

Federal government drops plan to tighten rules on foreign real property investments
  • Switzerland
  • 29 June 2018

In March 2017 the federal government submitted to public consultation several proposals to amend the legal regime governing foreign investments in Swiss real property. The vast majority of the comments received rejected the proposed amendments. While the government subsequently dropped its plan to amend the Lex Koller and a related ordinance, certain pending parliamentary motions may impact the Lex Koller regime in the medium term.

Levy on added value of land resulting from planning measures
  • Switzerland
  • 27 April 2018

Swiss legislation provides for adequate compensation for considerable advantages and disadvantages resulting from spatial planning measures. In particular, land that is newly allocated to a building zone substantially increases in value. Owners of such land will benefit from spatial planning activities without any contribution on their part. For reasons of fairness, these benefits are subject to a levy which is supposed to 'skim off' part of the added value.

Legislative developments in land-use planning
  • Switzerland
  • 24 November 2017

The proposed second part of the Spatial Planning Act revision will give the cantons more flexibility with regard to construction activities outside building zones so that they can consider their individual needs more appropriately. An initiative to stop uncontrolled urban sprawl will oblige the federation, cantons and communities to freeze the present size of building zones and ensure that the zones grow no further.

Federal Supreme Court stops property sale between foreigners
  • Switzerland
  • 14 July 2017

Foreign investments in Swiss real estate are governed by a federal law known as the 'Lex Koller' and additional cantonal rules. The law restricts the acquisition of residential real property by non-Swiss residents. In a recent decision, the Federal Supreme Court decided for the first time that the sale of a vacation home between two non-Swiss residents is allowed only in designated communities. The decision stops a long-standing practice of the cantonal authorities.


Contributed by Pillsbury Winthrop Shaw Pittman LLP
Real estate firms in the digital advertising era: are you thinking about the risks?
  • USA
  • 01 June 2018

Digital advertising is an effective and efficient way to brand a property, but it is also increasingly complex and nuanced, which is why many real estate firms subcontract this work to creative agencies that specialise in digital ad strategy and development. However, engaging a third party to provide this service can introduce risk in a number of areas. Therefore, real estate firms should consider how to mitigate those risks in their contracts with digital advertising partners.

Impact of omnibus spending plan on affordable housing industry
  • USA
  • 18 May 2018

President Trump recently signed into law the Consolidated Appropriations Act 2018, a $1.3 trillion omnibus spending plan covering the remainder of the 2018 fiscal year. In addition to providing for increased appropriations for several affordable housing programmes, the spending plan adopted two key provisions from the proposed Affordable Housing Credit Improvement Act that will strengthen and expand the low-income housing credit.

Alleged government inaction did not amount to inverse condemnation and compensable taking
  • USA
  • 11 May 2018

The US Court of Appeals for the Federal Circuit recently reversed the US Court of Federal Claims decision that a constitutional compensable taking had occurred with respect to the owners of real property which had been damaged as a result of Hurricane Katrina and other recent hurricanes. This ruling could affect many thousands of Texas and Southeastern United States claims that are being filed in the court of claims in the wake of Hurricane Harvey.

Ballot initiative seeks to eliminate Proposal 13 for commercial and industrial real estate
  • USA
  • 09 March 2018

A new initiative seeks to put two significant changes to California's property tax system before voters in November 2018: the elimination of Proposition 13 protection for commercial and industrial properties in favour of reassessment at least every three years and the addition of a tangible personal property tax exemption for all taxpayers and a full tangible personal property tax exemption for taxpayers with less than 50 California employees.

Legalised marijuana resulting in real estate high
  • USA
  • 05 January 2018

With a number of states having already legalised medicinal marijuana, the demand for cannabis continues to be on the rise. With an increase in demand for the product comes an increase in the need for production facilities, including indoor marijuana cultivation space. Real estate investors have jumped on this market; however, while the resulting real estate boom is undoubtedly a positive for the real estate industry, it does not come without legal and operational risks.

United Kingdom

Contributed by Shepherd and Wedderburn LLP
Three yearly returns for LBTT leases – are you ready to review?
  • United Kingdom
  • 23 February 2018

Land and buildings transaction tax is a tax on property transactions in Scotland and applies to purchases of residential and commercial properties and leases of commercial premises. One of the components of the regime is the requirement for three yearly reviews of the tax chargeable. The government's approach is for leases to be reviewed for tax purposes on a regular basis over their lifetime so that the tax payable more accurately reflects the amount of rent actually paid over the entire lease period.

Housing land market in Scotland
  • United Kingdom
  • 26 January 2018

One of the strategic objectives of the new Scottish Land Commission is to ensure that the ownership and use of land delivers greater public benefit. It has commissioned a series of independent discussion papers on key land reform issues and has now published the first of these. The paper considers how the operation of the land market could be improved, and how the supply of land for new housing could be increased, through public sector intervention.

Private residential tenancies in rural areas
  • United Kingdom
  • 19 January 2018

All new residential property leases in Scotland are now subject to a new letting regime, under which it is no longer possible to enter into a new assured tenancy or new short assured tenancy. Instead, all new residential lets (unless exempt) will be private residential tenancies (PRTs). A number of aspects of the PRT and the model tenancy agreement may need to be modified in view of the different characteristics of residential properties in rural areas.

Land reform and community engagement update
  • United Kingdom
  • 12 January 2018

The most recent incarnations of the Scottish Parliament's land reform and community engagement policies have continued the land reform agenda regarding land ownership and furthered the empowerment of communities. The Land Reform (Scotland) Act 2016 and the Community Empowerment (Scotland) Act 2015 include proposals for regulations to create a Register of Controlling Interests in Land and extend the community right to buy in order to include a right to purchase abandoned, neglected or detrimental land.

Sporting rights: new code of practice
  • United Kingdom
  • 05 January 2018

In a bid to promote and facilitate good practice between landowners and farm tenants, Scotland's tenant farming commissioner is producing a series of codes of practice under the Land Reform (Scotland) Act 2016. The latest of these concerns sporting rights and, among other things, encourages sporting rights holders to communicate with agricultural tenants, in particular regarding access across agricultural land and when planning a shoot.