Sale of shares and rights in land: what they really are and the serious legal problems they entail

You browse the internet and suddenly it appears: a beautiful piece of land in the south, at an incredibly cheap price, ideal for building the cabin or house of your dreams. You get excited, you contact the seller and everything seems perfect until, upon reading the fine print of the advertisement or arriving at the notary's office, you find a lapidary phrase: "shares and rights are for sale". At that precise moment, all alarms should go off.

Unfortunately, thousands of Chileans fall into this real estate trap year after year, motivated by the illusion of owning their own home and legal ignorance. They firmly believe that they are buying a physical and exclusive piece of land, when in reality they are entering into a true legal nightmare. Buying rights is, in the vast majority of cases of irregular subdivisions, buying a problem of gigantic proportions that will prevent you from enjoying your investment in peace.

What does it really mean to buy "stocks and rights"?

To understand the danger, we must go to the legal concept. When you buy shares and rights, you are entering into what the Chilean Civil Code calls a Community (or quasi-community contract). You are not buying a polygon of land delimited by fences.

Let's use a very clear citizen analogy: Imagine that you buy 10% of the shares and rights of a total land of 1 hectare (10,000 square meters). The unscrupulous seller will tell you and show you an unofficial plan stating that you are the "owner of 1,000 fenced square meters." This is legally false. What it really means is that you own 10% of every millimeter and centimeter of the total land, sharing ownership with all other buyers and the original owner. You are not the exclusive owner of anything physical, you are co-owner of an undivided whole.

The serious legal problems of not being the exclusive owner

The consequences of entering an irregular subdivision and not having a domain title with your own appraisal role are devastating for your assets. Below, we detail the most serious risks:

• Impossibility of building legally: The Municipal Works Department (DOM) will never grant you a Building Permit nor, much less, the Final Reception of your house, since the land does not have its own Roll in your name. You will be building "in the air" or clandestinely.
• No access to basic services: Formal electricity and drinking water companies (and even Rural Drinking Water Committees, APR) require exclusive domain title in your name and an individual Role to install meters or connections. You will be condemned to irregular connections or to depend on generators.
• Zero bank financing: No bank or financial institution will grant you a mortgage loan to buy rights, nor will it give you loans to build on land that legally does not exclusively belong to you.
• The risk of joint embargo: This is the worst nightmare. Since you share the property, if one of the other community members (owners of rights) has serious debts and is sued, their rights to the entire land can be seized, dragging the entire community into a judicial dispute and directly affecting your peace of mind.
• The crime of witch lots: Selling rural land of less than 5,000 m² under the simulated figure of shares and rights, forming streets and creating urban centers outside the law, constitutes a crime punishable by the General Law of Urban Planning and Construction (Art. 136). You are financing an illegal activity.

Is there a solution if i have already purchased shares and rights?

Despite this gloomy outlook, there is hope. If you have already been a victim of this system, there are legal solutions that will depend strictly on your particular situation:

1. Sanitation for National Assets (D.L. 2695): If you have been living on the land for more than 5 years, you have well-defined fences, you are paying basic services or contributions in your name, and you are in peaceful and uninterrupted possession, you can request regularization from the State. This procedure allows you to transform this "irregular possession" of rights into a perfect domain title with its own Role.

2. Subdivision or Legal Partition:If the mother land meets the required legal minimums (for example, 5,000 m² in a rural area), the entire community can be legally organized to legally subdivide before the SAG and the Conservator, assigning a Role to each owner.

Frequently asked questions about rights transfers

Does the notary warn me if i am purchasing only rights?

It is falsely believed that signing at a notary office gives guarantees. The notary only certifies that the signatures are authentic, he does not have the duty to advise you or defend your commercial interests. That is why it is vital to hire an expert lawyer before stepping into the notary's office.

Can i sell my rights to someone else if i regret it?

Yes, legally you can assign those rights again to a third party, but you will be transferring exactly the same problem to them. Furthermore, given the legal risk and the impossibility of bank financing, the commercial value of these rights will be very low and it will be very difficult for you to find a willing buyer.

Is it legal for them to sell me 500 meters in the field with shares and rights?

Selling shares and rights in itself is legal. However, deceiving you by saying that this purchase corresponds to an "exclusive site" and delimited of 500 meters in a rural area borders on scam and violates the law that prohibits subdivisions smaller than half a hectare in the countryside.

Don't risk your savings: get advice before signing

As the saying goes, cheap is expensive. Buying rights without understanding the very serious limitations they entail is, without a doubt, the worst real estate mistake you can make. Don't put the money you've worked so hard to save at risk to save on preventive counseling fees.

At Terreno en Regla, we are absolute experts in protecting your investment. If you are about to buy, we offer you an exhaustive "Title Study" to immediately detect if you are being sold an irregular lot. And if unfortunately you have already purchased shares and rights, and you want to finally have your deed in your name to sleep peacefully, our team is in charge of the entire regularization and sanitation process.

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