Sidor Abogados is a renowned law firm specializing in various areas of practice, including real estate law. They have recently brought attention to the new restrictions imposed by the Ministry of Agriculture on rural property subdivision projects. Due to the pandemic and the growing trend of remote work, there has been a significant migration from urban areas to rural regions in Chile.

As a result, there has been an increased demand for rural land sales, leading to the creation of subdivision projects for larger rural properties. These projects involve dividing the land into smaller lots, commonly known as "parcelas de agrado," where buyers can build their homes. Despite having developed infrastructure such as access to water and electricity, these areas are legally classified as rural and have never been urbanized.

However, the rapid development of these new urban centers outside of urban ratios has raised concerns regarding water supply, waste management, population density, transportation, and agricultural limitations. To address these issues, the Ministry of Agriculture released an Ordinance No. 637 on July 12, 2012, which restricts the subdivision of rural properties if there is a risk of creating new urban centers.

If the Agricultural and Livestock Service determines that this is the case, they will suspend the procedure and notify relevant entities such as the Regional Housing and Urban Development Service, the National Forestry Corporation, and the Regional Water Directorate. The ordinance empowers the Agricultural and Livestock Service to notify any other institution with an interest in the subdivision process. If the relevant authorities determine that the objective of the subdivision project is indeed to create a new urban center, the Agricultural and Livestock Service should reject it.

Furthermore, on July 18, 2022, the Ministry of Agriculture issued Circular No. 475, which established criteria for reviewing rural property subdivisions. These criteria are divided into two groups: general criteria, which include cases where a private individual or another public service denounces the possible creation of a new urban center, and specific criteria, which outline twelve cases that, if present, should lead to the suspension and possible rejection of the subdivision process if the project violates regulations.

For example, these cases include incorporating elements of a condominium in the plan, a project design incompatible with the agricultural, livestock, or forestry purpose of the resulting lots, resulting in parcels of 5,000 square meters or more, advertisement on social media or real estate portals, implying urban or residential characteristics, and generating 80 or more lots. However, it should be noted that the projects already approved will not be affected, and the rights acquired by the owners of the lots will remain intact. While the legislation regarding rural property subdivision and real estate development is in need of modifications and updates, some lawyers believe that the changes made through administrative instruments are unconstitutional and lack legal validity.

Restricting the development of single-family homes in rural areas, especially those that are of no agricultural use, can have an impact on the middle class and the prices of future subdivision projects. The true impact of these new restrictions on rural property subdivision projects remains to be seen as the new Ministry instructions come into effect. Additionally, the opinion of the Comptroller General's Office is awaited on this matter.

If you have any questions related to this or any other legal matter, do not hesitate to contact Sidor Abogados