Real Estate 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

CHAMBERS GLOBAL PRACTICE GUIDES

Real Estate 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editors John Sullivan and Matt Alshouse DLA Piper LLP

Global Practice Guides

Real Estate Contributing Editors John Sullivan and Matt Alshouse DLA Piper LLP

2025

Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by John Sullivan and Matt Alshouse, DLA Piper LLP p.6

CANADA – QUEBEC Trends and Developments p.244 Contributed by BCF LLP

ANDORRA Law and Practice p.12 Contributed by Cases & Lacambra ANGUILLA Law and Practice p.38 Contributed by Webster LP Trends and Developments p.54 Contributed by Webster LP AUSTRIA Law and Practice p.58 Contributed by Urbanek Law Trends and Developments p.84 Contributed by Urbanek Law BAHAMAS Law and Practice p.93 Contributed by Graham Thompson

CAYMAN ISLANDS Law and Practice p.251 Contributed by Appleby

CHINA Law and Practice p.274 Contributed by JunHe LLP Trends and Developments p.300 Contributed by Merits & Tree Law Offices

CYPRUS Trends and Developments p.307 Contributed by George K. Konstantinou Law Firm

DOMINICAN REPUBLIC Law and Practice p.313 Contributed by Guzmán Ariza Trends and Developments p.336 Contributed by DHOZ Abogados

BELGIUM Law and Practice p.118 Contributed by Linklaters Trends and Developments p.148 Contributed by Linklaters BERMUDA Law and Practice p.157 Contributed by Wakefield Quin Limited Contributed by Malta Advogados Trends and Developments p.211 Contributed by Campos Mello Advogados CANADA Law and Practice p.217 Contributed by Stikeman Elliott LLP BRAZIL Law and Practice p.183

GERMANY Law and Practice p.342 Contributed by Linklaters

Trends and Developments p.367 Contributed by Latham & Watkins

GREECE Law and Practice p.373

Contributed by Machas & Partners Trends and Developments p.399 Contributed by Lamnidis Law

HUNGARY Law and Practice p.408 Contributed by Lakatos, Köves & Partners

INDIA Law and Practice p.432 Contributed by JSA Trends and Developments p.457 Contributed by JSA

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Contents

IRELAND Law and Practice p.463 Contributed by Maples Group Trends and Developments p.489 Contributed by Maples Group

MOROCCO Law and Practice p.700 Contributed by Gide Loyrette Nouel NETHERLANDS Law and Practice p.726 Contributed by Greenberg Traurig, LLP Trends and Developments p.750 Contributed by Greenberg Traurig, LLP POLAND Law and Practice p.757 Contributed by act legal Poland PORTUGAL Law and Practice p.782 Contributed by CS’Associados Trends and Developments p.806 Contributed by PLMJ

ITALY Law and Practice p.496

Contributed by SI – Studio Inzaghi Trends and Developments p.522 Contributed by Legance

JAPAN Law and Practice p.528 Contributed by Mori Hamada & Matsumoto Trends and Developments p.552 Contributed by Nishimura & Asahi (Gaikokuho Kyodo Jigyo) KENYA Law and Practice p.559 Contributed by DLA Piper Africa, Kenya (IKM Advocates)

PUERTO RICO Law and Practice p.813 Contributed by Pietrantoni Mendez & Alvarez LLC

LITHUANIA Law and Practice p.588 Contributed by WALLESS LUXEMBOURG Law and Practice p.609 Contributed by Stibbe

ROMANIA Law and Practice p.834 Contributed by Mușat & Asociații

SINGAPORE Law and Practice p.860

Contributed by WongPartnership LLP Trends and Developments p.885 Contributed by WongPartnership

Trends and Developments p.635 Contributed by Norton Rose Fulbright

MALAYSIA Law and Practice p.641 Contributed by Ooi & Ooi

SLOVENIA Law and Practice p.892 Contributed by Odvetniki Šelih & partnerji, o.p., d.o.o. Trends and Developments p.918 Contributed by Odvetniki Šelih & partnerji, o.p., d.o.o.

MEXICO Law and Practice p.666 Contributed by Cannizzo Trends and Developments p.692 Contributed by Ritch Mueller

SOUTH KOREA Law and Practice p.926 Contributed by Bae, Kim & Lee LLC

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Contents

ST KITTS & NEVIS Law and Practice p.952 Contributed by Joseph Rowe, Attorneys-at-Law

USA – IOWA Law and Practice p.1155 Contributed by Dentons Davis Brown PC Trends and Developments p.1180 Contributed by Dentons Davis Brown PC

SWITZERLAND Law and Practice p.977 Contributed by Walder Wyss Ltd THAILAND Law and Practice p.997 Contributed by Duensing Kippen, Ltd.

USA – LOUISIANA Law and Practice p.1188

Contributed by Jones Walker LLP Trends and Developments p.1216 Contributed by Jones Walker LLP USA – NEW JERSEY Law and Practice p.1224 Contributed by Greenberg Traurig LLP USA – NEW YORK Law and Practice p.1249 Contributed by Phillips Lytle LLP Trends and Developments p.1273 Contributed by Phillips Lytle LLP USA – NORTH CAROLINA Law and Practice p.1279 Contributed by Kilpatrick USA – SOUTH CAROLINA Law and Practice p.1301 Contributed by K&L Gates USA – TEXAS Law and Practice p.1325 Contributed by Cokinos | Young VIETNAM Law and Practice p.1349 Contributed by LNT & Partners

TÜRKIYE Law and Practice p.1022 Contributed by Hergüner Bilgen Üçer Attorney Partnership TURKS & CAICOS Law and Practice p.1047 Contributed by Griffiths & Partners Attorneys Trends and Developments p.1064 Contributed by Griffiths & Partners Attorneys UAE Law and Practice p.1067 Contributed by DLA Piper Middle East LLP USA Law and Practice p.1092 Contributed by Rosen Karol Salis PLLC

USA – ALABAMA Law and Practice p.1120 Contributed by Dentons Trends and Developments p.1146 Contributed by Dentons

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INTRODUCTION Contributed by: John Sullivan and Matt Alshouse, DLA Piper LLP

DLA Piper LLP has more than 995 lawyers in the real estate sector operating in more than 40 countries, including strongly established teams in the Americas, Europe, the Middle East, Africa and Asia Pacific. The firm is widely recognised as a market leader in the commercial real es - tate sector. It represents many of the world’s leading investors, owners, developers, lend - ers, asset managers, fund sponsors and in -

vestment advisers, and offers the full range of real estate services, including single asset and portfolio acquisitions and dispositions, single asset and multi-property/programmatic joint ventures, fund formation, operating company investments, cross-border investments, REITs, financing, construction and design, leasing, zoning/land use, public-private partnerships, environmental law, real estate litigation and tax. Matt Alshouse is a partner in DLA Piper’s real estate practice group in Chicago. His practice focuses on commercial real estate acquisitions, dispositions and financing, primarily on behalf of private equity and real estate asset management clients globally. He has counselled domestic and foreign private equity funds and hedge funds, investor consortiums, developers, asset-based and project lenders, and REITs on a broad range of property acquisitions, dispositions, joint ventures, and mortgage and mezzanine loans. Matt’s experience in recent years has included the representation of a variety of Korean asset management and other investor consortiums in their US real estate transactions.

Contributing Editors

John Sullivan is the co-chair of DLA Piper’s global real estate sector. He has a broad-ranging practice that encompasses all aspects of commercial real estate, with a particular

emphasis on representing public and private pension plans, opportunity funds, investment advisers and non-US investors in equity, debt, hybrid and joint venture transactions throughout North America. John has been lead counsel for many of the largest US real estate transactions. He is on the board of the Boston Chapter of the Urban Land Institute and is a member of the Pension Real Estate Association and the American College of Real Estate Lawyers. John is a guest lecturer at the MIT Real Estate Center and Columbia Business School, and is on the firm’s executive committee and policy committee.

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INTRODUCTION Contributed by: John Sullivan and Matt Alshouse, DLA Piper LLP

DLA Piper LLP 33 Arch Street, 26th Floor Boston MA 02110-1447 444 West Lake Street, Suite 900

Chicago IL 60606 USA

Tel: +1 617 406 6029 Fax: +1 617 406 6129 Email: john.sullivan@dlapiper.com

matthew.alshouse@dlapiper.com

Web: www.dlapiper.com

Real Estate: A Global Introduction Overview: high hopes to start the year, followed by uncertainty As we have previously noted in this introduc - tion, real estate is by far the world’s largest store of wealth, eclipsing the value of global equities and debt securities combined, and comprising almost four times global GDP. While the world’s population, and thus the need for the develop - ment and construction of real estate is ever growing, quite famously, no additional land can be produced. So, at a macro level, the future of global demand for real estate remains bright. Nonetheless, as readers of this guide know, macro forces can also disrupt the property mar - kets. One such macro force disruption was the COVID 19 global pandemic, which lead to a virtual freeze on real estate investment and lending activities, a general reduction in value across most asset types, an increase in loan and covenant defaults, and general stress and uncertainty. Just as the markets were starting to find a new equilibrium, COVID-era economic stimulus policies teamed up with pent up demand to bring us increased

inflation and a dramatic upswing in interest rates. The result was another significant slow - down in real estate transactional activity as high inflation and interest rates stressed valuations and financing activities. Following the challenges created by the pan - demic, high inflation and rising rates, at the start of this year we appeared to be headed back into a more stable real estate landscape marked by higher transaction volumes. CBRE reports that 70% of the investors it surveyed in January of 2025 intended to buy more real estate in 2025 than in 2024, and close to half plan to sell more property, as well. PERE indicated similar feed - back from institutional investors, noting that the proportion of their investor respondents seek - ing to reduce capital commitments to real estate markets declined to the lowest level since 2022. In other words, many are looking to turn the taps back on. After several years of muted transac - tion activity, this came as welcome news. Now, however, recently announced tariffs and concerns about possible trade wars are creating new uncertainty both with respect to property

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INTRODUCTION Contributed by: John Sullivan and Matt Alshouse, DLA Piper LLP

markets and global markets generally. Whether the nascent tariff disputes continue, and what their effects on real estate might be, remains to be seen, but for the time being what was a fairly optimistic outlook for 2025 has been tempered. 2024 global trends and results In the post-COVID inflationary landscape, central bankers aggressively raised interest rates in most major economic zones. The resulting increase in the cost of debt led to some unbridgeable bid ask spreads, as owners of property needed time to adjust to the lowered market value of their assets. These elevated interest rates also presented many property owners with a Hob - son’s choice: sell their property now as long as they could get enough to repay their debt, or hold on in the hopes of a recovery, lower inter - est rates and/or the willingness of the lender to extend/restructure upon maturity. Much of the activity in global real estate markets over the course of 2022 and early 2023 centred around loan restructurings. MSCI Real Capital Analytics estimated that real estate sales decreased by 51% from 2022 to 2023, and the Urban Land Institute reported that global transaction activity within commercial real estate was lower in 2023 than in any year since 2012. In the second half of 2024, the real estate mar - kets benefited from the easing of interest rates. After raising interest rates to combat inflation nearly a dozen times between March, 2022 and July, 2023, leading to a 23-year high in rates, the US Federal Reserve made three consecutive rate cuts. The European Central Bank reduced rates four times in 2024. Other central banks reduced rates from their COVID-inflation fighting highs (with the exception of Japan, which had a negative interest rate for unique macroeconomic reasons going into last year and finally moved back into positive territory).

Although long-term interest rates did not nec - essarily fall as short term rates decreased, the easing of inflation and reduction in benchmark interest rates were welcome developments for the real estate market and, when combined with record amounts of capital available for invest - ment and solid or improving fundamentals in many asset classes, the start of 2025 brought a general sense of optimism and a feeling that the adage “stay alive till 25” may have been presci - ent. The results, at a macro level, are as follows. I) Markets continued to find the bottom The latter part of 2023 and 2024 saw some of the foreclosures, deed-in-lieu transactions and fire sales that were necessary to unclog the market. ATTOM, a leading property transac - tions data aggregator, noted that there were 625 commercial mortgage foreclosures in the United States in March 2024, the highest since 2014. By contrast, May 2020 saw just 141 commercial foreclosures. The Wall Street Journal reported in July of last year that over USD20 billion of retail, apartment and office loans had been foreclosed on in the United States in just the second quar - ter. At the same time, deed-in-lieu turnovers and distressed sales increased in regularity. Many of the world’s largest real estate investors hand - ed over the keys to over-leveraged properties. German commercial property values dropped another 5.4% in 2024, after a 10.2% plunge in 2023, according to the vdp (a German bank - ing association). Promisingly, however, prices actually increased half a percentage point in the fourth quarter last year. These signs of the mar - ket bottoming out were seen across the globe, if not as dramatically.

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INTRODUCTION Contributed by: John Sullivan and Matt Alshouse, DLA Piper LLP

II) Transactional volume increased across markets By and large, investors got back to it in 2024. JLL reported that global investment volume in Q4 of 2024 was up by 37% year-over-year, and full-year activity reached USD704 billion, up almost USD90 billion from 2023. Asian commercial property transactions last year were up by almost a quarter from 2023, to USD131 billion. As importantly, this increase in activity occurred across asset types, and across most markets. Office sector investment was strong, led by trades of multiple larger buildings in South Korea. Despite years of worry about the long-term prospects of retail property, vol - ume was up more than a quarter in Asia in 2024, and Australian logistics properties were also a leading source of deals. Foreign investment in the Asian property markets was robust again, as well: cross-border investment volume in Asian reached USD23.8 billion in 2024, nearly doubling what was seen the prior year. In Europe, a slow recovery has begun, focused primarily on the UK and southern markets with France and Germany lagging. In those latter two markets, according to Savills, investment volume in 2024 was still well under 50% of where it was in 2019, while investment in the UK was closer to 90% of pre-COVID figures. The consensus is that investors and lenders found the bottom of the market, particularly in London, much faster than in the continental markets. In the United States, loan activity increased, leading to some stability returning to markets. CBRE’s lending momentum index was up 37% in the fourth quarter year-over-year, and enter - ing 2025 was at levels not seen since late 2022. This was largely driven by traditional bank lend - ers and life insurance companies re-emerging

and taking away some of the market share they had given up to alternative lenders in the prior few years. As a result of lending costs settling into relative stasis compared to the prior several years, cap rates fluctuated very little, as well, holding at 7% all year, indicating that both sellers and buyers were aligned on pricing fundamen - tals for the first time since 2019. III) Geographic segmentation in asset classes The recent trend of disparate sub-market trends continued across global markets in 2024. In Europe, for instance, logistics was the darling last year, with Cushman & Wakefield reporting price increases across 11 prime European mar - kets in logistics properties in 2024. Office leas - ing prices also increased throughout the region, leading to positive pricing changes. A Savills investor sentiment survey from early this year identified big box logistics and urban logistics as the top two sectors for intended property investments in 2025, ahead of office, multifamily, hospitality, retail and every other asset class, an extraordinary finding. In North America, data centres continue to lead the way, attracting an extraordinary amount of capital. From 2020 through 2022, the pre-leasing rate of under construction data centres in the United States hovered around 50%, meaning most development was on spec. In 2023 and 2024, however, about 80% of under construc - tion data centre space had already been leased. Demand for this type of asset is only expected to grow, with the most important headwind to developers and investors being whether (and where) power supply and infrastructure can keep up. The United States is also seeing an increased focus on medical outpatient build - ings (MOBs), both new construction and trades. Before the pandemic, vacancy rates in this sec - tor were nearly identical to those in the office

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INTRODUCTION Contributed by: John Sullivan and Matt Alshouse, DLA Piper LLP

sector, but have diverged significantly. At the end of 2024, according to Nuveen, nearly 14% of US office space was unoccupied, compared with just over half that in MOB’s. In part, hybrid and work-from-home practices, which have lin - gered and become semi-permanent features of the American employment landscape, are to blame for the continued weakness in the office sector. Not so in Asia. As noted above and in previous editions of this guide, the Asian office market has shown a resiliency lacking in Western markets, due to greater continuity in traditional working and occupancy expectations from employers. Asian development has also diverged from that of the rest of the world, as demographics (read: shrinking populations) have not led to the same acute demand for senior and student housing that has spurred investment in Europe and the Americas. Instead, as noted above, office uptake has remained strong through the struggles of the pandemic and its aftermath, and is expected to continue to attract a higher share of investor funding. 2025 outlook: high hopes, now tempered As we entered 2025, there was a widespread consensus among market watchers and indus - try analysts that the upward trajectories seen in the latter stages of 2024 would continue, if not accelerate. With approximately USD600 billion of dry powder allocated for real estate at the end of last year, this was not a surprise. A Deloitte survey of commercial real estate holders showed that nearly nine in ten respondents expected increased revenue from property allocations this year, a remarkable turnaround from just a year prior, when six in ten anticipated losses. This sunnier outlook was also based on solid GDP growth throughout most of the globe, and pre - dictions of more interest rate cuts as economies

stabilised. It is worth noting that, even with cen - tral bank monetary easing beginning in earnest last year, kick-starting the markets, only about 20% of the prior two years’ rate increases have been reversed to date globally. Investors see a present landscape with more attractive debt pricing, but also a future with even lower borrow - ing costs as there is more than adequate room for continued central bank rate cuts. This gives investors the ability to see values increasing in coming years, rather than a future of struggling to refinance properties or sell to buyers who can - not make pricing models work due to the high cost of debt. In the aggregate, Savills projected toward the end of last year that global real estate invest - ment would eclipse USD950 billion this year, a substantial increase over 2024 (which, of course, saw significantly more activity than 2023). Regionally, CBRE’s APAC market outlook for this year included an investment volume increase of 5-10%, resulting from growth centred in the Korean, Australian and Singaporean markets, and to a lesser degree, Japan and India. Its regional investor intent survey indicated that continued interest rate cuts and better asset prices had more than doubled net purchasing intentions from a year prior, with steady growth expected to be led by strong office lease uptake and improved retail rental activity. In Europe, there was widespread anticipation of continued growth in logistics space, with CBRE projecting that demand for sector space would be increasing by around 12.5% on average throughout the region, led by a short term need for over 20% more square footage than currently exists in Spain.

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INTRODUCTION Contributed by: John Sullivan and Matt Alshouse, DLA Piper LLP

Not surprisingly, data centres were again seen as driving the entire US commercial real estate market forward, along with renewed optimism around continued interest rate improvements and lower vacancy levels. This is not just a US phenomenon, of course: JLL’s global real estate outlook from last December projected another nearly 20% increase in new inventory coming online around the world this year, which still does not come near to satisfying user demand. Potential limiting factors: the maturity wall, climate change and US immigration concerns Views are not entirely rosy, of course. There are a number of factors with the potential to limit growth in market activity and prices in 2025. Although we have climbed over the peak of the so-called “maturity wall” there is still loan maturi - ty risk in the markets as we head down the other side. In the United States, for instance, upwards of 30% of the office loans maturing this year are collateralised by properties valued at less than loan principal. Continuing concerns about the impacts of cli - mate change are also a drag on market opti - mism. Long-term prognostications about where populations will want to live have become more difficult, making development decisions com - plicated. There are also short-term impacts, with extreme weather events happening more and more frequently. Intermittent supply disrup - tions, questions about whether certain loca - tions are becoming less and less attractive, and, more immediately impactful in real estate markets, skyrocketing insurance costs. Accord - ing to Deloitte, average commercial property insurance premiums have nearly doubled in the last decade, and are predicted to increase by almost 9% per year through at least 2030. In extreme weather areas, these increases will be even higher and some markets may even see a

complete lack of third-party insurers in the fore - seeable future. In the United States, it remains to be seen whether inflationary pressures from restrictive immigration policy, and aggressive deportation activity, materialise, and whether those pres - sures hamper real estate markets. At a mini - mum, it could lead to relevant labour shortages and construction cost increases. Most experts have concerns over restaurant and agricultural operations viability, which could of course have secondary effects on property markets. Conclusion As the calendar turned from 2024 to 2025, there was a general sense of optimism in the real estate sector. Inflation appeared to be cool - ing, interest rates had reduced from their post- COVID peaks, and there were record amounts of available investment capital. Transaction flow had started to pick up and lenders were becom - ing more active. Construction was beginning to pick up steam. The recently announced tariffs have, however, injected uncertainty into the picture. The Eco - nomic Policy Uncertainty website, a joint pro - ject of researchers at the University of Chicago, Northwestern, and Stanford, has a series of Eco - nomic Policy Uncertainty Indexes, showing eco - nomic policy uncertainty for various countries. In February 2025, the US index hit 334.51. Going back to 1985, that is the highest level outside the worst of the pandemic. Although the long-term impacts of the recently announced tariffs are difficult to predict, many investors, developers, lenders and other mar - ket participants are pausing – or at least slow - ing down – their new investment and capital improvement activities until there is more clarity.

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ANDORRA

France

Andorra

Andorra La Vella

Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós Cases & Lacambra

Spain

Contents 1. General p.17 1.1 Main Sources of Law p.17 1.2 Main Market Trends and Deals p.17

1.3 Proposals for Reform p.18 2. Sale and Purchase p.18 2.1 Categories of Property Rights p.18 2.2 Laws Applicable to Transfer of Title p.18 2.3 Effecting Lawful and Proper Transfer of Title p.19 2.4 Real Estate Due Diligence p.19 2.5 Typical Representations and Warranties p.19 2.6 Important Areas of Law for Investors p.20 2.7 Soil Pollution or Environmental Contamination p.20

2.8 Permitted Uses of Real Estate Under Zoning or Planning Law p.20 2.9 Condemnation, Expropriation or Compulsory Purchase p.20 2.10 Taxes Applicable to a Transaction p.21 2.11 Legal Restrictions on Foreign Investors p.21 3. Real Estate Finance p.22 3.1 Financing Acquisitions of Commercial Real Estate p.22 3.2 Typical Security Created by Commercial Investors p.22 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders p.23 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security p.23 3.5 Legal Requirements Before an Entity Can Give Valid Security p.23 3.6 Formalities When a Borrower Is in Default p.24 3.7 Subordinating Existing Debt to Newly Created Debt p.24

3.8 Lenders’ Liability Under Environmental Laws p.24 3.9 Effects of a Borrower Becoming Insolvent p.24 3.10 Taxes on Loans p.25

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ANDORRA CONTENTS

4. Planning and Zoning p.25 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning p.25 4.2 Legislative and Governmental Controls Applicable to Design, Appearance and Method of Construction p.25 4.3 Regulatory Authorities p.25

4.4 Obtaining Entitlements to Develop a New Project p.26 4.5 Right of Appeal Against an Authority’s Decision p.26 4.6 Agreements With Local or Governmental Authorities p.26 4.7 Enforcement of Restrictions on Development and Designated Use p.26 5. Investment Vehicles p.27 5.1 Types of Entities Available to Investors to Hold Real Estate Assets p.27 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity p.27 5.3 REITs p.28 5.4 Minimum Capital Requirement p.28 5.5 Applicable Governance Requirements p.28 5.6 Annual Entity Maintenance and Accounting Compliance p.29 6. Commercial Leases p.29 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time p.29 6.2 Types of Commercial Leases p.29 6.3 Regulation of Rents or Lease Terms p.30 6.4 Typical Terms of a Lease p.30 6.5 Rent Variation p.30 6.6 Determination of New Rent p.30 6.7 Payment of VAT p.30 6.8 Costs Payable by a Tenant at the Start of a Lease p.31 6.9 Payment of Maintenance and Repair p.31 6.10 Payment of Utilities and Telecommunications p.31 6.11 Payment of Property Taxes p.31 6.12 Insurance Issues p.32 6.13 Restrictions on the Use of Real Estate p.32 6.14 Tenant’s Ability to Alter and Improve Real Estate p.32 6.15 Specific Regulations p.32 6.16 Effect of the Tenant’s Insolvency p.33 6.17 Right to Occupy After Termination or Expiry of a Lease p.33 6.18 Right to Assign a Leasehold Interest p.33

6.19 Right to Terminate a Lease p.33 6.20 Registration Requirements p.34 6.21 Forced Eviction p.34 6.22 Termination by a Third Party p.34 6.23 Remedies/Damages for Breach p.34

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ANDORRA CONTENTS

7. Construction p.34 7.1 Common Structures Used to Price Construction Projects p.34 7.2 Assigning Responsibility for the Design and Construction of a Project p.35 7.3 Management of Construction Risk p.35 7.4 Management of Schedule-Related Risk p.35 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance p.35 7.6 Liens or Encumbrances in the Event of Non-Payment p.35 7.7 Requirements Before Use or Inhabitation p.36 8. Tax p.36 8.1 VAT and Sales Tax p.36 8.2 Mitigation of Tax Liability p.36 8.3 Municipal Taxes p.36 8.4 Income Tax Withholding for Foreign Investors p.36 8.5 Tax Benefits p.36

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

Cases & Lacambra is a client-focused inter - national law firm with a cornerstone financial services practice. With a presence in Europe and America, the firm has a tested track record in complex transactions involving the financial sector, special situations, financial markets regulations, cross-border disputes and trans - actions with relevant tax aspects. Its financial

services group comprises three partners, two counsels, one senior associate and five associ - ates, and most of the members of the team have extensive knowledge of banking and finance regulations and capital markets transactions. The firm’s practice extends to capital markets, derivatives and structured finance matters.

Authors

Elena Redondo leads the public and environmental law practice of Cases & Lacambra and heads the Andorran office. Her practice is focused on administrative law matters, including real estate

Albert Hinojosa is a partner at Cases & Lacambra, where his practice is focused on tax advice. Albert spent more than 20 years developing an extensive public sector career,

transactions and urban planning, where she has extensive experience advising private clients and public administrations. Her specialisation in urban planning, real estate, construction, public procurement and environment leads her to actively participate in the drafting of regulatory projects in such areas. Her professional practice includes due diligences processes prior to the acquisition of real estate assets of the tourism, commercial, industrial and energy sectors, as well as in the preparation and execution of all phases of the transaction.

which included time spent as head of the Department of Customs’ legal service and as director of the Department of Economy within the Ministry of Economy and Industry. From 2013 to 2021 he was head of the Andorran government’s Department of Taxation and Borders, where he introduced the current direct and indirect tax system and promoted the international network of double taxation agreements. Prior to joining Cases & Lacambra, he was President of the State Agency for the Resolution of Banking Institutions (AREB).

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

Marc Ambrós leads the corporate and foreign

investment practice of Cases & Lacambra in the Principality of Andorra. He has a great deal of experience in corporate and

commercial matters. Marc has advised in mergers, acquisitions, joint ventures, private equity, corporate restructuring, and refinancing, representing both Andorran and foreign clients in international transactions with Andorran interests. He advises throughout the entire transaction process, from both buy-side and sell-side perspectives, using different legal structures. He also advises companies about the project and corporate finance issues. Marc is the author of multiple articles in specialised publications about the legal environment in the Principality of Andorra.

Cases & Lacambra Manuel Cerqueda i Escaler, 3-5 AD700 Escaldes-Engordany Andorra Tel: +376 728 001 Email: andorra@caseslacambra.com Web: www.caseslacambra.com

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

1. General 1.1 Main Sources of Law

changes, real estate investments have been affected. In this respect, foreign investment authorisation was mandatory for foreign inves - tors to acquire ownership rights and other in rem rights in respect of real estate located in Andorra, subject to these limits: • two residential units, including apartments or studios, along with their annexes; • a single-family home or a plot of land for its construction; or • six parking slots. However, the Act introduces some exemptions to the application for prior administrative author - isation as follows: • if the acquisition is either due to death or due to the liquidation of the matrimonial economic regime; • for administrative concessions, the applicable regime is established in the corresponding terms and conditions; and • for acquisitions of real estate carried out by the entities operating in the Andorran finan - cial system or by legal persons of Andorran nationality with foreign participation in its capital or in its voting rights of more than 50%, and holders of security rights, under the conditions set forth in the Act. In any case, Andorran companies with direct or indirect foreign equity participation equal to or greater than 50% in its share capital or its voting rights and natural persons with less than three years of uninterrupted residence in Andorra may purchase real estate for the purpose of conduct - ing their own business activity. In addition, the Act banned foreign investment aimed at urban or real estate development, except for real estate developments involving

As a preliminary consideration, Andorra has nei - ther a civil code nor any regulation based on civil law, to the extent that there was no codi - fication process as in other neighbouring civil law countries that are members of the European Union. Consequently, generic provisions in real estate are based on the applicable Roman Law or Digest, as are guarantee rights. Notwithstanding this, the pace of change in the Andorran society has led to the need to develop specific regulations governing land and urban planning ( Llei General d’Ordenació del Territori i Urbanisme ), real estate building, condominiums, urban leasing and emphyteutic census. Additionally, the following normative provisions are relevant in the housing sector: planning instruments, guidelines and specific regula - tions on urban planning and real estate build - ing, as well as projects of national interest and sectorial plans ( Projectes d’interès nacionals i plans sectorials ) and the Plan and the Master Plan of Urban Planning and Development ( Pla d’Ordenació i Urbanisme Parroquial – POUP) issued by the respective town halls ( Comuns ). 1.2 Main Market Trends and Deals On 26 March 2025, the Act 5/2025 for sustain - able growth and the right to housing ( Llei 5/2025, del 6 de març, per al creixement sostenible i el dret a l’habitatge ) was published in the official gazette of the Principality of Andorra. The Act entered into force 15 days after its publication. The Act repealed the vast majority of the exist - ing Foreign Investment Act (Act 10/2012) and replaced it with a new set of provisions that introduces significant changes. Among these

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

residential rental properties intended for habit - ual and permanent residence, provided that the ownership was maintained for a minimum of ten years. The Act introduces two exceptions: • real estate developments that are entirely intended for rental housing for habitual and permanent residence (including common areas, car parks and storage rooms assigned to the rent), provided that at least 50% is at an affordable price, and that the ownership of the lease is maintained for a minimum of ten years; and • real estate developments that are required to be adapted to the conclusions of the study of maximum parish load capacity. Finally, concerning the penalty regime estab - lished by the Act for non-compliance with its provisions, among the penalties provided for in the Act, unauthorised foreign investments may incur fines ranging from EUR10,000 to EUR20,000 and may also result in the nullity of both the investment and the entity through which it was conducted. 1.3 Proposals for Reform The Andorran government is working on a law proposal to modify the current regulations regarding urban planning and development to substitute the current Act and adapt it to the actual circumstances of the country and the sec - tor. The actual regulation is from the early 2000s.

• an absolute freehold, permanent and absolute tenure of land or property, with the freedom to dispose of it at will; • a co-ownership, which is the right owned by more than one person over real estate; or • in a condominium ( propietat horitzontal ), the ownership of common premises is shared by the plurality of owners of each unit that makes up the apartments. On the other hand, the property right could be understood as a limited right. Therefore, in Andorran law, the following rights are recognised as limited property rights: • leasehold, which is the temporary right that includes the ability to build on the ground or in the subsoil, and the right to overhang, with the right to appropriate what has been built for a specific period; • beneficial interest, which is the right by which a person can use the property of another and enjoy its benefits, with the obligation to preserve and take care of it; and • emphyteutic lease, which is the right by which the useful domain of a real estate property is given for a period by the payment of an annual pension, whereby the assignment is made as recognition of the useful domain of the property. 2.2 Laws Applicable to Transfer of Title Titles are transmitted by the theory of the title and mode. This theory is a system of transmis - sion of ownership that requires the conclusion of an agreement, the subsequent delivery of the real estate to be transmitted, and proof before a public notary, without any aspect being enough separately. Depending on the activity to be carried out with the real estate, attention should be paid to

2. Sale and Purchase 2.1 Categories of Property Rights

The right of property can be understood as a full right or a limited right. In Andorra, the right of property understood as a full right could be:

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

2.5 Typical Representations and Warranties

administrative regulations. Depending on the economic sector (residential, industrial, offices, retail and hotels), different types of real estate would have specific regulations, but the theory of the title and mode would apply to any sector. 2.3 Effecting Lawful and Proper Transfer of Title The lawful and proper transfer of title to real estate occurs when the conclusion of an agree - ment and the subsequent delivery of the real estate has been made before a public notary. There is no land registry in Andorra, but each town hall has its own real estate registry for tax purposes. The transfer of title is recorded in the Andorran chamber of notaries. The public notaries record all the public deeds granted in reference to a real estate, including the encum - brances, modifications and other duly recorded vicissitudes of the real estate. Title insurance is not used in Andorra. 2.4 Real Estate Due Diligence Buyers usually carry out due diligence on a real estate property, undertaking an exhaustive investigation of the ownership and main charac - teristics of the real estate. The red flag aspects • the rights of third parties over the real estate, eg, if there are lease rights, if they are sub - ject to a specific licence, if the real estate is subject to any tax, or if there is some kind of foreclosure on the real estate; • whether there is any debt involved in the case of condominiums; and • whether there are any litigious procedures concerning the real estate. to analyse are the following: • titles and encumbrances;

The parties negotiate the representation and warranties within a commercial real estate trans - action. The typical representations and warran - ties in Andorra are as follows: • the buyer must obtain authorisation for any foreign investment from the Andorran govern - ment before the completion of the transac - tion; • at the time of granting the public deed of sale, the property must comply with the conditions for building on the land, being free of charges, encumbrances, tenants and occupants; • the property must be transmitted with all the rights, facilities, elements and equipment that are inherent and accessory to it; • the seller shall carry out all the necessary or agreed acts to avoid the occupation of the property by third parties so that it is free; and • although, from a legal standpoint, an environ - mental contingency certificate is not request - ed, it is highly recommended. The buyer’s remedies against the seller for misrepresentation include the resolution of the agreement, with the return of any reciprocal benefits, the compensation of damages to the buyer, or the specific performance of the terms and conditions of the agreement. Depending on the relevance of the transaction, it is customary for the seller’s representations and warranties to expire after a certain amount of time. The typical range of that survival period is usually between two to four years. On the other hand, there is usually a cap on the seller’s liability for a breach of its representa - tions and warranties, the typical range of that

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

cap being from a limited percentage of the price to the full price. 2.6 Important Areas of Law for Investors The most important areas of law for an investor to consider when purchasing real estate could be: • civil law, to have the base knowledge of property rights and the different charges and encumbrances that the real estate could have; • administrative law, in order to know the regu - lations pertaining to planning and zoning; and • tax law, to use the most beneficial tax struc - ture to acquire the real estate. 2.7 Soil Pollution or Environmental Contamination In accordance with Andorran legislation regard - ing civil liability, the liability for others’ actions must be considered. In this sense, the buyer of the real estate shall be liable for any soil pollution or environmental contamination of real estate, even if it is not attributable to said buyer. The liability for others’ actions allows the buyer of the real estate to claim the necessary expens - es to compensate for the damages against the seller since they had responded previously when it did not belong to them. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A buyer can ascertain the permitted uses of a parcel of real estate under the applicable zon - ing and planning law by consulting the Andor - ran official gazette ( Butlletí Oficial del Principat d’Andorra – BOPA), where the permitted uses for a plot or zones are published.

It is possible to enter into a specific development agreement with relevant public authorities to facilitate a project relating to, eg, the execution of a project of national interest or local sectorial plans, a project concerning the construction of roads and communications infrastructure, or the execution of the hydraulic and energy policy. 2.9 Condemnation, Expropriation or Compulsory Purchase In Andorra, there is a law of compulsory expro - priation. The procedure first requires the prior declaration of the public utility of the construc - tion project and necessitates the occupation of the property or the acquisition of the affected economic rights. In order to carry out the expro - priation, the expropriator must develop a file, which is public information and be published in the Andorran official gazette. Later, the govern - ment transmits the entire file to the Andorran Parliament ( Consell General ), with all the obser - vations and objections received, attaching a report suggesting the approval or denial of the declaration of public utility and the necessity of occupation. The Andorran Parliament makes the final decision, which has to be published in the Andorran official gazette and is directly enforce - able. In addition, Act 5/2025 has introduced a spe - cial regime for empty homes ( habitatges buits ). This Act provides for the compulsory transfer of the right to use empty homes to the Andorran government for a maximum period of five years, which will incorporate them into the public hous - ing stock for rental at affordable rates. The owner will receive financial compensation equivalent to an affordable rent amount. According to the Act, a dwelling is considered empty if (i) there is no electricity or water supply, or, despite having it, there is no energy or water consumption for the 18 months preceding the entry into force of Title

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ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra

IV; or (ii) it has been unoccupied for at least 18 months preceding the entry into force of Title IV and this unoccupancy is due to a cause attribut - able to the owner. 2.10 Taxes Applicable to a Transaction Taxation on the purchase of real estate depends on the envisaged purchase scheme (ie, asset deal or share deal) as well as the condition of the parties intervening in the transaction. Asset Deal The condition of the seller will determine whether an asset deal will be subject to General Indi - rect Tax ( Impost General Indirecte ), which is the Andorran VAT, or Transfer Tax ( Impost sobre transmissions patrimonials immobiliàries ). If the seller does not qualify as a businessperson or professional for VAT purposes, the sale and purchase of real estate will be subject to Transfer Tax, which will be borne by the purchaser. The applicable Transfer Tax rate will be 4%. Should the seller qualify as a businessperson or professional for VAT purposes, the sale and purchase of real estate will be subject to VAT, which will be charged by the seller and borne by the purchaser. The applicable VAT rate will be 4.5%. If an asset is transferred as part of an independent economic unit for VAT purposes, such transfer will not be subject to VAT. Share Deal If the transfer of real estate is carried out through a share deal, the transaction would not be sub - ject to VAT or Transfer Tax. However, the Transfer Tax Law sets out an anti- abuse rule to tax indirect transfers of real estate. This rule will apply if a company’s assets con - sist of at least 50% of real estate assets located

in Andorra and are transferred and, by virtue of such transfer, the purchaser acquires more than 20% of the company’s shareholding. In both cases – Asset Deal or Share Deal – capi - tal gains on the transfer of real estate would be subject to Corporate Income Tax ( Impost sobre societats ) if the seller is a company which is resi - dent for tax purposes in Andorra, at a nominal rate of 10% to 20%, depending on how long the asset has been held by the seller. If the seller is an individual, Personal Income Tax ( Impost sobre la renda de les persones físiques ) or Non- Resident Income Tax ( Impost sobre la renda dels no-residents fiscals ) would apply. In this case the nominal rate would be between 0% and 25%, depending on both the residence in Andorra of the seller and the time elapsed since the date of acquisition. 2.11 Legal Restrictions on Foreign Investors A restriction on foreign investment in real estate establishes that a foreign natural person must obtain a prior foreign investment authorisation from the Andorran government to acquire real estate located in Andorra. Furthermore, foreign legal persons cannot directly acquire a property located in Andorra, so they must use an Andor - ran special purpose vehicle or SPV. The acquisition or constitution of the SPV is also subject to obtaining the relevant prior for - eign investment authorisation from the Andorran government if the foreign entity owns more than 10% of the SPV’s share capital or controls more than 10% of its voting rights. Finally, the Andorran government has a veto right, which enables it to deny the authorisation of foreign investment when the investment may harm, even occasionally, the exercise of public

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