The pitfalls of buying property in Lima: what a European buyer should anticipate

Buying an apartment in Lima is not an adventure. Peru is one of the most open countries in Latin America for foreign property investment, the process is regulated, the notary plays a central role, and thousands of transactions go through every year without incident. A well-prepared Swiss or European buyer purchases in Lima about as calmly as they would in Geneva or Lyon.

What costs money is not the Peruvian market. It is a handful of differences in how things work, which you cannot guess from Europe and which stay invisible for as long as nothing goes wrong. Most of the difficulties we come across stem not from bad faith but from a misunderstanding: a buyer who believes they are protected when they are not yet protected against third parties, a payment made at the right moment but to the wrong recipient, a building that looks perfect on paper whose rules forbid the intended use.

This guide covers the pitfalls that genuinely affect a foreign buyer, in the order in which they arise. It complements our 10 beginner mistakes when investing in Peru, which deals with investment strategy, whereas this guide follows the practical sequence of a transaction.

Mistaking the district for the street

This is the first pitfall, and it happens before you have even viewed anything.

From Europe, people think in districts: Miraflores, San Isidro, Barranco, Magdalena del Mar. Those names are reassuring, and rightly so, but they cover very mixed realities. A Lima district can span several square kilometres and contain quiet residential avenues as well as heavy-traffic arteries, areas in full transformation and others that are standing still. In Lima more than elsewhere, two buildings three hundred metres apart can offer a very different living experience and resale potential.

The factors behind that difference rarely show up in a listing: traffic at rush hour, proximity to a noisy avenue, exposure to coastal humidity, a neighbouring construction site that will block the view in two years, the quality of street lighting, the real walking distance to shops. These details determine whether a tenant renews their lease and whether a buyer shows up at resale.

Professional photography exists to show a property at its best, which is legitimate. It is taken at the best time of day, with a lens that widens the rooms, and it rarely frames what faces the windows. A developer's brochure presents a project, not a finished building. Neither is dishonest, but neither answers the questions that matter.

Skipping the legal checks on the property

In Peru, land registry information is public and centralised at SUNARP, the Superintendencia Nacional de los Registros Públicos. Every registered property has a partida registral, which traces the ownership history and records any charges or encumbrances: mortgage, seizure, easement, registered dispute, restriction on use.

This is a strength of the Peruvian system, which is precisely why failing to consult it is an avoidable mistake. A seller acting in good faith may not know that an old entry still sits on their property. A property may have been inherited without the estate being formally settled. A building may have gone through an incomplete construction regularisation.

What you need before committing comes down to a few documents: the full and recent partida registral, showing who the registered owner is and what weighs on the property; the property registry certificate, which gives an official summary; proof of payment of property tax (predial) and municipal charges (arbitrios), which reveal any arrears; the building's internal rules in full, not as a verbal summary; and, for a recent or altered property, the corresponding municipal permits.

Our guide on buying an apartment in Lima as a foreigner sets out these checks step by step, along with the documents each side needs to produce.

Believing you own the property before you really do

This is the least intuitive point for a European, and it deserves to be explained properly, because a good deal of misinformation circulates about it.

Peruvian law follows a consensual principle. Under article 949 of the Civil Code, the obligation to transfer a specified property makes the buyer its owner, unless the law provides otherwise or the parties agree otherwise. In other words, ownership passes in principle by agreement between the parties, without registration being required for that to happen.

One might conclude that registration is optional. That would be an expensive mistake. Because if a third party acting in good faith registers their right over the same property before you do, it is that party the registry will protect. You would be the owner under the agreement, but powerless against whoever registered. Registration does not create your right, it makes it enforceable against others, which in practice amounts to the same thing.

Reservation, arras, minuta, escritura: four different statuses

Between the agreement and final registration, several stages follow one another, each with a distinct status. A reservation agreement with a developer is not a sale. The arras, sums paid in advance, follow different regimes depending on how they are characterised: confirmatory arras mark the conclusion of the contract, whereas withdrawal arras, which are limited to preparatory contracts, create an option to pull out with specific consequences for each party. The minuta is the contract as drafted and signed, usually by a lawyer. The escritura pública is the deed authenticated by the notary. Registration at SUNARP comes afterwards.

Paying too early, or to the wrong recipient

The payment problems we come across rarely involve elaborate fraud. They almost always come from money sent before the situation was clarified, or to an account that was not the seller's.

Three precautions cover most of it. First, only pay after checking the property's registry position and the recipient's identity, never before. Second, confirm bank details through an independent channel, by calling a known number rather than replying to the email that supplied them: payment redirection fraud is an international risk, not a Peruvian speciality, and it targets property transactions precisely because the amounts are large. Third, keep a written record of every payment, clearly identifying the property, the recipient and the purpose.

When buying from a developer, one question deserves to be asked explicitly: is the payment going to a company account or a personal one? The answer belongs in the contract.

International transfers add their own layer of complexity, between bank processing times, fees on both sides and the exchange rate applied. Our guide on transferring funds from Switzerland to Peru covers this in detail.

Signing documents you do not fully understand

Peruvian property deeds are drafted in Spanish, and it is that version which governs. A courtesy translation, however careful, has no contractual value.

An English-speaking buyer with conversational Spanish will read the property description and the price without difficulty. They will find it far harder to read the clauses that bind them: conditions precedent, deadlines and penalties, allocation of costs, termination provisions, floor area tolerances in an off-plan purchase. Yet those are the clauses that decide what happens when something does not go to plan.

Having the contract reviewed by an independent lawyer before signing costs little relative to the sum at stake. The important word is independent: a professional whose interests are tied neither to the seller nor to the developer.

Price is not cost, and gross yield is not return

Two confusions come up regularly, and both are easy to correct once you have them in mind.

The first is to reason from the asking price. On top of it come the Alcabala where it applies, notary fees, registration costs, any legal support, international transfer charges and the effect of the exchange rate, then furnishing and works if the property is not ready to use. This is not bad news, it is a budget line to plan for from the outset. Our guide on the total cost of buying in Lima puts a figure on each item.

The second confusion concerns yield. A gross yield divides annual rent by the purchase price, which ignores vacancy, management fees, service charges, maintenance, tax and, in furnished lettings, the depreciation of the furniture. The gap between gross and net is substantial. We never present a guaranteed yield, and we would treat with caution any projection that promises one. Our comparison of long-term and short-term letting sets out both models with their assumptions.

A low price per square metre is not in itself a good deal. There is usually a reason: a low floor without a lift, unfavourable orientation, a poorly maintained building, heavy service charges, a layout that is hard to re-let, an unappealing street. The right instinct is to find out why the price sits below the market, and to accept the answer.

Off-plan and short-let plans: two checks not to skip

Both subjects have their own guides, but each conceals a pitfall worth naming here.

With an off-plan purchase, attention naturally goes to the price, often lower than for completed new-build. It should go first to the developer and the contract: track record and completed projects, permits obtained, contractual timetable and the consequences of delay, a precise description of what is included, and the tolerances allowed between the project presented and the finished result. A show apartment does not necessarily bind the developer on finishes. Our guide on buying off-plan sets out these checks.

With a short-let project, the pitfall is to reason as though the decision were yours. In practice, no Peruvian national law currently regulates this activity specifically, and legislative proposals are under discussion, which makes the position a moving one. What decides matters in practice, building by building, is the internal rules of the condominium and the decisions of the owners' assembly, within the horizontal property regime set out in law 27157. Silent rules do not amount to permission: they may simply never have been updated, and the assembly remains free to rule on the question. Our guide on Airbnb in Lima covers this in detail.

Buying remotely without organising the checks

Buying from Europe is entirely feasible, and it is what most of our clients do. What does not work is buying remotely while relying on whatever a seller volunteers.

Distance poses no particular legal problem: a notarised power of attorney allows a deed to be signed in your name, and documentary checks can be carried out just as well from Geneva as from Lima. It poses an information problem. A video viewing narrated by someone who answers your questions is not the same as a pre-recorded walkthrough. Street noise at the end of the day, the real condition of the common areas, the feel of the neighbourhood on a Sunday: none of that travels in a file.

A power of attorney also needs to be drafted with care. It defines precisely what the representative may do and within what limits, and there is no reason to grant broader powers than necessary.

Not thinking about resale on the day you buy

A property you like is not necessarily a property that resells well. The two questions are distinct, and the second one arises at the moment of purchase, not eight years later.

The features that make resale easier are fairly consistent: a layout that is sought after in that particular district, a floor area matching local demand, a parking space where the district expects one, a sensible layout, a well-maintained building and controlled service charges. Conversely, a heavily personalised property, unusual in size, or sitting in a building that has let its upkeep slide, takes longer to find a buyer.

Liquidity varies considerably from one district to another, and it deserves as much attention as yield.

Checklist before paying a deposit or signing

1. The partida registral is recent and complete, and the registered owner is the person signing.
2. The charges and encumbrances on the register have been read and understood, including older entries.
3. Payments of predial and arbitrios are up to date, with no transferable arrears.
4. The condominium's internal rules have been obtained in full, not summarised verbally.
5. If short-term letting is intended, those rules have been checked specifically on that point.
6. The total amount has been costed: taxes, notary fees, registration, transfer and exchange included.
7. The exact nature of the document being signed is clear: reservation, arras, minuta or notarial deed.
8. The characterisation of any arras paid appears in the contract, along with what happens if either side withdraws.
9. Bank details have been confirmed through an independent channel, and every payment is documented.
10. The contract has been reviewed by a professional independent of both seller and developer.
11. The question of the bloqueo registral has been put to the notary, and follow-up through to final registration is organised.
12. The property has been assessed at street level, not just district level, and at a different time from the initial viewing.

What we check with you

Most of these pitfalls share one feature: they close when a decision is taken faster than the checks. An ocean view, a well-kept rooftop, a nicely staged show apartment or a discount valid until the end of the week create an urgency that does not exist. A properly valued property will still be properly valued in ten days, and a serious seller understands that a foreign buyer takes time to verify.

Our work is precisely to put these checks back in the right order and at the right moment: reviewing the registry position before any payment, reading the condominium rules before approving a letting plan, costing the purchase in full before committing to a price, coordinating with the notary and, where useful, with an independent lawyer.

If you are preparing a purchase in Lima, a first conversation is often enough to identify, within minutes, the points that deserve attention in your particular case.