What to Do If You Discover Unregistered Constructions on a Property You Want to Buy in Arequipa

As a licensed Peruvian real estate broker specializing in Arequipa, I often encounter properties with a common but critical issue: unregistered constructions. This situation, where the physical reality of a building doesn't match its legal description at the National Superintendency of Public Registries (S.U.N.A.R.P.), is more common than you might think in Peru. For expats and foreign investors, understanding how to navigate this challenge is paramount to a secure and profitable investment in the White City.

This article, crafted from my extensive experience in the Arequipan market, will guide you through the due diligence process, legal implications, and practical steps to take if you find unregistered additions or discrepancies on a property you're considering purchasing in Arequipa.

Understanding the Problem: The Discrepancy Between Reality and Record

In Peru, every legally recognized building or modification to a property must be registered with S.U.N.A.R.P. This registration process, often called a Declaratoria de Fábrica (Declaration of Construction), ensures that the property's legal description matches its physical state in the public records.

What constitutes an "unregistered construction"? It could be anything from a newly built second floor, an enclosed patio, an added bathroom, or even a complete remodeling that wasn't officially declared and registered. These discrepancies often arise from:

Informal Growth: Property owners adding rooms, floors, or extensions over time without formal permits or subsequent registration to save on immediate costs.
Lack of Awareness: Owners not realizing the legal requirement to register every significant structural change or addition.
Time & Cost: The formalization process (saneamiento de construcción) can be time-consuming and involve professional fees and administrative costs, leading some to postpone or avoid it entirely.

Why is this a critical issue for a buyer? Purchasing a property with unregistered constructions carries significant risks:

Legal Vulnerability: The local municipality (e.g., the Municipality of Arequipa Cercado, Yanahuara, or Cayma, depending on the district) could impose fines or even order the partial or complete demolition of the unregistered portions if they violate urban parameters or safety codes.
Difficulty with Financing: Peruvian banks will almost certainly refuse to grant mortgages or loans on properties with significant discrepancies, as their collateral value is uncertain and their legal status is compromised. This dramatically reduces your financing options.
Future Resale Problems: You will face the exact same challenges (or worse, as regulations may have tightened) when you decide to sell the property, potentially limiting your pool of buyers or forcing you to formalize the construction yourself at a later, possibly higher, cost.
Insurance Issues: Insurers may not cover unregistered portions of a property in case of damage, as these parts legally "do not exist" according to public records.
Tax Discrepancies: While property tax (impuesto predial) is assessed by the municipality based on declared construction, discrepancies can lead to issues with property valuation, especially for the Alcabala (transfer tax) when you buy or sell. An unregistered construction means its value is not accurately reflected, which can cause future complications with tax authorities.

Step-by-Step Guide: Navigating Unregistered Constructions

Should your initial due diligence reveal discrepancies, do not panic. This is a common situation, particularly in older neighborhoods of Arequipa, and with the right approach, it can often be resolved. Here’s how to proceed:

Step 1: Thorough Due Diligence – Confirming the Discrepancy

Before taking any action, you must definitively confirm the discrepancy and understand its scope.

Obtain a Copia Literal from S.U.N.A.R.P.: This is the official registry history of the property and its recorded plans, often referred to as the "property title." It will detail all registered constructions, modifications, and any gravámenes (liens or encumbrances). You can request this at any S.U.N.A.R.P. office in Arequipa, usually for a small fee (e.g., PEN 20-50, or roughly USD 5-15, depending on the number of pages).
Request a Certificado de Parámetros Urbanísticos y Edificatorios: Issued by the local municipality, this certificate outlines the building regulations specific to the property's zone (e.g., maximum height, setback requirements, land use classifications – residential, commercial, mixed-use). This document is crucial to know if the unregistered construction could even be legalized according to current urban planning codes.
Conduct a Professional Physical Inspection: Hire a reputable, licensed architect or civil engineer based in Arequipa. Their local expertise is critical:
- They will physically inspect the property, meticulously comparing its current physical state against the S.U.N.A.R.P. plans.
- They will identify and precisely measure all unregistered constructions.
- Crucially, they will assess if these constructions meet current building codes (especially critical in seismic Arequipa) and municipal urban parameters.
- Their comprehensive report will be indispensable for the saneamiento process.
Inquire with the Seller: Ask the seller for any existing municipal licenses, building permits, or prior Declaratoria de Fábrica documents they may possess. While often these won't exist for informal additions, it's always worth checking.

Step 2: Assess the Discrepancy and Its Implications

Once you have the architect's report and the S.U.N.A.R.P. documents, you can accurately evaluate the severity of the discrepancy:

Minor Discrepancies: A small storage shed, an enclosed balcony, or a slightly different internal layout that doesn't violate major building codes or urban parameters. These are generally easier and less costly to formalize.
Major Discrepancies: An entire additional floor, significant structural changes, or constructions that violate zoning laws, maximum allowable height, setback requirements, or safety standards. These can be complex, costly, and in some cases, impossible to legalize, potentially requiring costly demolition.

The architect's professional assessment of whether the unregistered parts are "formalizable" (i.e., meet current regulations and can be brought into compliance) is the absolute key to determining your next steps.

Step 3: Evaluate the Seller's Willingness to Formalize

This is a critical negotiation point. You generally have two main options:

Option A (Ideal): Seller Formalizes Before Sale: The most secure option for you, the buyer, is for the seller to undertake and complete the saneamiento de construcción process before the property transfer. This ensures you acquire a fully compliant property, eliminating your risk. However, this will significantly delay the purchase (potentially 3-6 months or even more, depending on complexity) and incurs costs for the seller, which they may attempt to pass on in the sales price.
Option B: Buyer Formalizes After Sale (with conditions): If the seller is unwilling or unable to formalize, you might agree to buy the property with the understanding that you will undertake the saneamiento yourself. This option is significantly riskier and should only be pursued with a substantial, documented discount on the purchase price to cover your costs and the inherent risks. This discount should meticulously factor in:
- The architect's fees for new plans and reports.
- Notary fees for the public deed.
- S.U.N.A.R.P. registration fees.
- Municipal fees for permits and updated property records.
- Potential unforeseen expenses or delays (e.g., if structural reinforcement is required).
- A premium for the risk and inconvenience you're assuming.

Never proceed with Option B without a detailed, written agreement in the purchase contract outlining the agreed-upon discount and explicitly acknowledging the unregistered constructions. This agreement should be reviewed by your Peruvian lawyer.

Step 4: The Formalization Process (Saneamiento de Construcción)

If you or the seller decide to proceed with formalization (Option A or B), here are the general steps involved:

A. Architect/Engineer Involvement:
- The architect prepares new architectural plans that accurately reflect the current physical state of the property. These plans must adhere to all current municipal building codes and urban parameters as stipulated in the Certificado de Parámetros Urbanísticos.
- If necessary, they will also obtain a Licencia de Edificación (Building License) and a Certificado de Conformidad de Obra (Certificate of Work Conformity) from the municipality for the previously unregistered works, effectively post-formalizing them.
B. Notary Involvement:
- The architect's plans and reports, along with the owner's declaration, are presented to a notario público (public notary) in Arequipa.
- The notary prepares an Escritura Pública de Declaratoria de Fábrica y, si aplica, Reglamento Interno (Public Deed of Construction Declaration and Internal Regulations, if applicable for multi-unit properties). This official document formally declares the existing construction.
- The notary legalizes all signatures and processes the deed.
C. S.U.N.A.R.P. Registration:
- The public deed from the notary is submitted to S.U.N.A.R.P. for registration in the property's ficha registral.
- S.U.N.A.R.P. registrars meticulously review the documents for legal and technical compliance. If everything is in order, they update the property's registry record to reflect the new, accurate description of the construction.
- Note on Cargas Técnicas: If some minor aspects of the construction don't fully comply with current regulations but aren't deemed a major risk or a violation that requires demolition, S.U.N.A.R.P. might register the construction but include a carga técnica (technical encumbrance or observation) on the property's record. This indicates a pending technical issue that a future buyer or the current owner might need to address, potentially impacting future sales or financing. This should be avoided if possible but may be a reality for older properties.
D. Municipal Registration:
- Finally, the updated S.U.N.A.R.P. registration needs to be reported to the local municipality. This ensures the municipal records for property tax (impuesto predial) purposes are also accurate, reflecting the true, updated value of the property.

Step 5: Cost and Time Estimation

Formalizing unregistered constructions involves various fees and can be lengthy:

Architect/Engineer Fees: Varies based on the complexity and size of the construction to be formalized, often calculated as a percentage of the declared construction value (e.g., 1-3%). For a modest addition in Arequipa, expect fees ranging from PEN 1,500 - 5,000 (approx. USD 400-1,300) or more, not including potential structural analysis.
Notary Fees: For the Declaratoria de Fábrica deed, expect PEN 500 - 2,000 (approx. USD 130-500), depending on the notary's rates and the complexity of the declaration.
S.U.N.A.R.P. Fees: Registration fees are relatively minor, typically PEN 100-300 (approx. USD 25-80), but can vary based on the value of the declared construction.
Municipal Fees: For licenses, permits, and administrative costs, these vary significantly by municipality (e.g., between Yanahuara and Miraflores) and the scale of work being formalized.
Timeframe: From obtaining necessary municipal permits to final S.U.N.A.R.P. registration, this process can take anywhere from 3 to 9 months, or even longer, especially if complex municipal permits are required, or if the property is located in a protected historical zone.

Step 6: Renegotiate or Walk Away

After understanding the full scope of the problem, the costs, and the time involved, you have a crucial decision to make:

Renegotiate: If the saneamiento is feasible, and the seller is willing to either complete it (Option A) or offer a substantial, justified discount that fully covers your anticipated costs and risks (Option B), renegotiate the terms of sale. Ensure the revised agreement is legally binding and explicitly clear on who bears what responsibility and timeline.
Walk Away: If the discrepancies are too severe, the costs prohibitive, the seller uncooperative, or the risks too high (e.g., constructions that cannot be legalized and face demolition), be prepared to walk away from the deal. There are many other excellent properties in Arequipa, and a bad investment can be far more costly in the long run than the time spent searching for a better one.

Local Context & Critical Warnings for Arequipa

Arequipa presents unique considerations for property purchases, which my clients and I navigate daily:

Historic Center Properties: If the property is within Arequipa's UNESCO World Heritage historic center, any unregistered construction or proposed modification is subject to extremely strict regulations from the Ministerio de Cultura and the local municipality. The saneamiento process here is significantly more complex, lengthy, and expensive, often requiring specialized architects who deeply understand colonial architecture, heritage preservation guidelines, and restoration techniques. Demolition orders are not uncommon for unauthorized work in these protected areas. Proceed with extreme caution and secure specialized legal and architectural advice.
Earthquake Regulations: Arequipa is located in a highly seismic zone. Unregistered constructions, particularly older ones or those built informally without proper engineering, may not adhere to modern anti-seismic building codes (e.g., Norma E.030 Diseño Sismorresistente). Formalizing such structures might require costly structural reinforcement work to meet current safety standards, adding significantly to the saneamiento budget and potentially uncovering deeper structural issues.
Variations by Municipality: While S.U.N.A.R.P. is a national entity, municipal regulations (urban parameters, permitting processes) can vary slightly between districts like Yanahuara, Cayma, Cerro Colorado, Miraflores, or Arequipa Cercado. Always confirm the specific municipal requirements applicable to the property's precise location.
Common Informal Additions: Be particularly vigilant for common informal additions such as enclosed rooftop terraces (azoteas), conversion of patios or lightwells into living spaces, or additional rooms built onto existing structures without proper permits. These are frequent but must still be legalized.

Key Takeaways for Investors

Investing in Arequipa can be incredibly rewarding, offering beautiful properties, a vibrant culture, and a growing economy. However, like any foreign real estate market, it requires careful navigation of local laws and customs. Unregistered constructions are a significant hurdle, but with professional guidance and thorough due diligence, you can make informed decisions that protect your investment and secure your piece of the White City.

Due Diligence is Non-Negotiable: Never skip the crucial steps of obtaining the Copia Literal, Certificado de Parámetros Urbanísticos, and commissioning a professional inspection by a licensed Arequipan architect or engineer. This is your primary defense against future problems.
Factor in Time and Cost: Saneamiento is not a quick or free process. Budget realistically for both financial expenditure (professional fees, administrative costs, taxes) and significant delays (several months) if you decide to proceed with a property requiring formalization.
A Discount is Essential (If You Proceed): If you, the buyer, assume the risk and cost of saneamiento, ensure the purchase price reflects a substantial, justifiable discount that accounts for all potential expenses, delays, and the opportunity cost involved.
Prioritize Legal Clarity: A property with fully registered constructions offers peace of mind, ease of future transactions, better access to financing, and generally holds its value more securely. It's almost always the safer and more stable investment in the long term.

⚠️ Legal Notice: Consult a Local Lawyer. This article provides general information and should not be considered legal advice. Peruvian real estate law is complex and constantly evolving. It is imperative that you engage a qualified and experienced Peruvian real estate lawyer and a reputable architect/engineer to represent your interests, conduct specific due diligence, and guide you through any property transaction in Arequipa.