The Bolivian Government approved Supreme Decree No. 4732 of 1 June 2022 to prevent abusive clauses and commercial practices in contracts for the future sale of real estate. The measure directly concerns property development and pre-sales.
Article 1 states that the decree establishes provisions to regulate and prevent abusive clauses and commercial practices in contracts involving future sales, sales with retention of title and other forms of real estate transactions, under Law No. 453 of 4 December 2013, the General Law on the Rights of Users and Consumers.
Its scope covers any contract arising from a legal relationship involving the future sale, sale with retention of title or other arrangements commonly known as pre-sales of any type of real estate, including land, homes, burial plots, parking spaces, storage units, shops and other property offered under these arrangements.
These contracts must have a certificate issued by the Ministry of Justice and Institutional Transparency, through the Vice Ministry for the Defence of User and Consumer Rights, confirming that the contract contains no abusive clauses.
Certification requirements
To obtain certification, contracts must include:
- Identification of the property owner.
- Identification of the developer, intermediary, builder or other person responsible for the sale, where applicable.
- Identification of documents establishing ownership of the property on which the project will be carried out and/or documents granting authority to dispose of the property.
- Evidence of ownership, including the property registry record, public deed and other documents for the property on which the project will be developed.
- A document granting unrestricted authority to dispose of the property and assign rights.
- A clause allowing the buyer to transfer the property or assign rights or accessories.
- An express obligation to deliver the title deed immediately once the agreed sale price has been paid, including penalties for failure to comply.
- An express provision prohibiting unilateral changes to the agreed sale price.
- Clauses that are not disproportionate for users or consumers.
- The construction start date, where applicable.
- The delivery date of the property.
- All payments forming part of the agreed sale price, as well as payments for other items.
- The property’s area and technical specifications.
- Any existing obligation affecting the property, including taxes.
- Approved plans and construction permits issued by the Municipal Autonomous Government for property development projects.
- A land administration document approved by the Municipal Autonomous Government for plots of land.
- A clause establishing the proportion of common areas.
- Any other requirements that may be requested.
Abusive commercial practices
The decree identifies eight types of abusive commercial practices under Law No. 453:
- Signing contracts without the certification required by the decree.
- Offering property through future sales, retention-of-title sales or other pre-sale arrangements without proving specific authority to dispose of the property, granted by the owner through a public instrument.
- Failure to meet the delivery deadline agreed in the contract.
- Failure to comply with the property’s technical specifications or other agreed conditions.
- Demanding any payment not provided for in the contract.
- Failure to honour offers concerning common areas, accessories and other established commitments.
- Unilaterally changing the intended use of the common areas offered.
- Selling buildings or other property without authorisation from the Municipal Autonomous Government.
