Guide

How to secure land for a solar, wind or BESS project in Chile

How developers secure land in Chile for solar, wind and BESS: private or state land, options and recorded leases, easements, and title risks to screen.

By Nicolás Chaparro SoumastrePublished Also in: 中文

Contents
  1. Private land or state land?
  2. Which instruments hold a site in Chile?
  3. What are the steps from screening to a recorded lease?
  4. What makes Chile different from US and European practice?
  5. Who has to sign besides the owner of record?
  6. Which title and land risks should you screen for early?
  7. What will lenders look for in the land file?

Private land or state land?

On private land, the plant site is held under an agreement with each owner. Electric concessions exist for transmission lines, substations, hydroelectric plants and distribution, and only those concessions carry the right to impose easements (LGSE, arts. 2, 3 and 51). A solar or wind site, or a battery yard, goes ahead only if every owner of the polygon signs.

State land follows a different track. The Ministry of National Assets (Bienes Nacionales) grants concessions over state land for a set purpose, by public or private tender, national or international, or directly in justified cases (DL 1.939, arts. 57 and 58). A foreign company may file a direct application, but the awardee must form a Chilean legal entity and sign the concession by public deed (arts. 58 and 59). The concession is paid, lasts up to 50 years and can be transferred only as a whole, to a Chilean legal entity, with the Ministry’s authorization (arts. 61, 62 and 62 A). Its holder may apply for the permits that require being the owner of the land (art. 60).

The trade-off is one public counterparty and an application or tender process, against private parcels that each bring their own owners and title.

Which instruments hold a site in Chile?

A site is usually held with a combination of four instruments:

  • Option. The Civil Code does not regulate an option contract. A land option can be drafted as a promise agreement (promesa), which binds only if it is in writing, sets a term or condition and specifies the lease to be signed (Civil Code, art. 1554), or as an irrevocable offer with a deadline (Commercial Code, art. 99). Option payments run until you exercise the option or it lapses.
  • Lease by public deed. The plant site is leased by escritura pública, a public deed executed before a notary, and recorded with the Conservador de Bienes Raíces, the local land registry. Recorded before any mortgage, the lease binds buyers and mortgagees alike (Civil Code, art. 1962). The Civil Code has no general surface right (art. 577), so a template built on one is redrafted this way.
  • Purchase. Ownership passes only when the deed is recorded (Civil Code, art. 686). Buying just the plant’s polygon means dividing a rural parcel, and lots of 0.5 ha (about 1.2 acres) or more created that way carry a prohibition on changing their use under Arts. 55 and 56 LGUC (DL 3.516, art. 1).
  • Easements. Access roads, gen-ties and collection lines across other parcels need easements, granted by public deed (Civil Code, arts. 698 and 880) or imposed under an electric concession for the line. Our article on transmission line and gen-tie easements compares both routes.

We have signed three of these as the owner of Estancia El Chañar: a long-term wind lease, a land option for solar PV and easements for the lines and roads that cross the property (track record). How an option turns into a lease, and what each stage of the contract should contain, is in our guide from land option to recorded lease.

What are the steps from screening to a recorded lease?

Our page on how land acquisition works in Chile sets out what we deliver at each stage. For the plant site, the work runs in eight steps:

  • 1. Desktop screening. Resource, grid, exclusions and land, from public layers such as the Coordinador’s Infotécnica database and Sernageomin’s mining cadastre.
  • 2. Owner identification. The SII tax roll number (rol de avalúo) points to an apparent owner. Ownership itself is proved by the recording at the Conservador (Civil Code, arts. 686 and 724).
  • 3. Preliminary title. Current title, mortgages, prohibitions and litigation, plus estates, co-owners, the owner’s marital regime and the signatory’s powers.
  • 4. Term sheet. Consistent terms across the owner group, often with a private exclusivity letter while the option is drafted.
  • 5. Option by public deed. A prohibition on encumbering and transferring is recorded in the Register of Interdictions and Prohibitions, so the option shows on the parcel’s certificate (Ley del Registro Conservatorio, arts. 31, 32 and 53).
  • 6. Studies and bankable title. Measurement campaign, environmental baseline and survey, then the full title study and boundary plan for your lenders.
  • 7. Third-party easements and owner signatures. Access and gen-tie easements over neighboring parcels, and the owner’s application for the rural construction approval (Art. 55 LGUC), since under the SAG’s procedure the owner is the applicant.
  • 8. Exercise and recording. Lease by public deed, recorded before any mortgage, with the easements recorded alongside.

A standalone BESS runs the same steps but starts from the substation rather than the resource, as our article on siting a standalone BESS explains.

Your interconnection schedule sets the option term. A connection request to the Coordinador Eléctrico Nacional does not need land title (DS 37/2019, art. 15), but the under-construction declaration does: the CNE requires title, such as a lease, or a promise agreement (DS 125/2017, art. 19). If those filings come late, the Coordinador can revoke the connection approval (DS 37/2019, art. 25).

What makes Chile different from US and European practice?

The comparison table on our land acquisition page lists six rules. Four of them change how a site is chosen and how the contracts are drafted.

  • No statutory easements for the plant. Since a plant cannot impose easements (LGSE, arts. 2, 3 and 51), one owner who will not sign leaves a hole in the layout. We count owners per polygon at screening and favor sites where a refusal can be designed around.
  • No surface right. The Civil Code’s list of real rights has no general surface right (art. 577). The site is held by a lease, and its strength against third parties comes from the public deed and its recording ahead of any mortgage (art. 1962).
  • Records indexed by name. Each Conservador keeps its indices by the parties’ names, closed every year (Ley del Registro Conservatorio, arts. 41 to 45). A parcel’s history is rebuilt name by name and year by year, and title insurance is not part of standard practice. Our article on title due diligence in Chile explains how the study is done.
  • Minerals and water apart from the land. A mining concession is a real right separate from land ownership, and it can burden the parcel with occupation and transit easements, subject to compensation (Mining Code, arts. 2, 120 and 122). Those easements are granted by public deed or court ruling and recorded to be enforceable (art. 123). Water use rights are separate too (Water Code, art. 6). Each needs its own search, in Sernageomin’s mining cadastre and in the water rights register.

Who has to sign besides the owner of record?

Many delays come from the people around the owner. We identify them during the preliminary title review, before any offer goes out.

  • Heirs. Heirs cannot dispose of a property until the grant of heirship (posesión efectiva) and the special recordings are on file, and then they dispose of it jointly (Civil Code, art. 688). The Civil Registry grants it for estates without a will, and a court for estates with one (Ley 19.903, art. 1).
  • Co-owners. No co-owner is bound to stay in co-ownership (Civil Code, art. 1317), and none may make changes to the property without the others’ consent (arts. 2081 and 2305). We have every co-owner of a comunidad sign the same deed.
  • Spouses and guardians. An owner married under community property (sociedad conyugal) needs his wife’s authorization to lease marital rural land for more than eight years or to encumber it (Civil Code, art. 1749). A guardian faces the same eight-year limit on a ward’s rural land (art. 407), and property declared a family home (bien familiar) needs the other spouse’s authorization (art. 142).

Which title and land risks should you screen for early?

  • Titles regularized under DL 2.695. The decree-law lets someone who has possessed a property for five years or more, without a recorded title, regularize it if its tax appraisal is at most 1,000 UTM, a tax unit indexed to inflation (arts. 1 and 2). The possessor becomes owner by prescription two years after recording, and cannot encumber the property for two years or sell it for five (arts. 15 to 17). A recent DL 2.695 title needs those dates checked before any easement is granted.
  • Indigenous land. Indigenous community land cannot be leased, and an individual’s indigenous land can be leased for five years at most, on pain of absolute nullity. Encumbering it requires authorization from CONADI, the national indigenous development agency (Ley 19.253, art. 13), which keeps the public registry of indigenous land (art. 15). A site near indigenous groups can also lead to meetings or consultation in the environmental review (DS 40/2012, arts. 85 and 86).
  • Water for construction and panel washing. A water use right granted by concession lasts 30 years, renewable. It is recorded in the Conservador’s Water Property Register and listed in the public water cadastre of the DGA, the water authority (Water Code, arts. 6, 114 and 122). A lease of the land does not carry the owner’s water rights unless the contract deals with them.

What will lenders look for in the land file?

Each lender’s Chilean counsel sets its own list. These are the rules that list is tested against:

  • Priority over mortgages. A lease binds a mortgagee only if it was recorded before the mortgage (Civil Code, art. 1962). Where a mortgage already exists, its holder’s consent is negotiated before close.
  • Assignment. A rural tenant cannot assign or sublease without the owner’s prior written consent (DL 993, art. 7). We put consent to assign to the project company and to lenders in the lease itself.
  • Owner signatures after close. The rural construction approval, and for a distribution-connected project (PMGD) the owner’s sworn consent with each connection request, depend on the owner (DS 88/2019, art. 43). The lease obliges the owner to sign them.
  • IFC Performance Standard 5. It does not apply to voluntary land transactions, but it covers negotiated deals where the buyer could resort to compulsory procedures, and it counts easements and rights-of-way as land acquisition (paras. 5 and 6, note 2). In our reading, a plant lease falls outside it, and line easements backed by a concession fall inside.
  • Equator Principles. Chile is a Designated Country. There, lenders require compliance with local law and assess whether to use IFC Performance Standards as guidance (EP4, Principle 3).

If you have a target area or substations in view, send us the project basics.

Frequently asked questions

Should a developer buy the land or lease it in Chile?
The plant site is usually leased. A lease by public deed, recorded before any mortgage, binds later buyers and mortgagees (Civil Code, art. 1962). Buying only the plant's polygon means dividing a rural parcel first, and the new lots carry a prohibition on changing their use under Arts. 55 and 56 LGUC (DL 3.516, art. 1).
Is there a maximum term for a land lease in Chile?
The Civil Code sets no general maximum for leases. The limits depend on who grants the lease: five years for an individual's indigenous land (Ley 19.253, art. 13), eight years for marital or a ward's rural land without the required authorization (Civil Code, arts. 407 and 1749), and 50 years for a concession on state land (DL 1.939, art. 62).
Does a land option have to be recorded with the Conservador?
No, but we record it. A promise agreement binds if it is in writing, sets a term or condition and specifies the lease (Civil Code, art. 1554). Recording a prohibition on encumbering and transferring puts the option on the parcel's certificate, for any later buyer or lender to see (Ley del Registro Conservatorio, arts. 31, 32 and 53).
What happens to the lease if the landowner sells the land?
It survives if it was granted by public deed: a buyer for value must respect it (Civil Code, art. 1962). For rural land, the new owner must also keep the lease on its existing terms (DL 993, art. 10). Because we record every lease, a buyer sees it on the parcel's certificate before closing, and so does the buyer's lender.
Which public sources show state land, indigenous land or mining concessions on a parcel?
We check three at screening: the geoportal of the Ministry of National Assets for state land, CONADI's public registry of indigenous land (Ley 19.253, art. 15) and Sernageomin's mining cadastre. Each is a starting point. The title study then confirms it parcel by parcel, against the Conservador's records and with your Chilean counsel or ours.

Sources

  1. Código Civil (Civil Code), arts. 142, 407, 577, 686, 688, 698, 724, 880, 1317, 1554, 1749, 1962, 2081 and 2305 (verified on )
  2. Código de Comercio (Commercial Code), art. 99 (verified on )
  3. Ley del Registro Conservatorio de Bienes Raíces, arts. 31, 32, 41 to 45 and 53 (verified on )
  4. Ley General de Servicios Eléctricos (DFL 4/20.018 of 2006), arts. 2, 3 and 51 (verified on )
  5. DS 37/2019, Ministry of Energy, Transmission Systems Regulation, arts. 15 and 25 (verified on )
  6. DS 125/2017, Ministry of Energy, Coordination and Operation Regulation, art. 19 (verified on )
  7. DS 88/2019, Ministry of Energy, Small Distributed Generation Regulation, art. 43 (verified on )
  8. Código de Minería (Mining Code), arts. 2, 120, 122 and 123 (verified on )
  9. Código de Aguas (Water Code), arts. 6, 114 and 122 (verified on )
  10. Ley 19.253 (Indigenous Law), arts. 13 and 15 (verified on )
  11. DS 40/2012, Environmental Impact Assessment System Regulation, arts. 85 and 86 (verified on )
  12. Ley 19.903 (grant of heirship), art. 1 (verified on )
  13. Decree-Law 2.695 of 1979 (regularization of small rural property), arts. 1, 2 and 15 to 17 (verified on )
  14. Decree-Law 3.516 of 1980 (division of rural parcels), art. 1 (verified on )
  15. Decree-Law 993 of 1975 (rural leases), arts. 7 and 10 (verified on )
  16. Decree-Law 1.939 of 1977 (state property), arts. 57 to 62 A (verified on )
  17. SAG, rural construction approval procedure (Informe de Factibilidad para Construcciones, IFC) (verified on )
  18. IFC Performance Standard 5, Land Acquisition and Involuntary Resettlement (2012), paras. 5 and 6 and note 2 (verified on )
  19. The Equator Principles EP4 (July 2020), Principle 3 (verified on )
  20. Equator Principles, list of Designated Countries (verified on )

This article is general information and does not replace legal advice on your case. The laws cited may change; check their current text at the Library of the National Congress of Chile (bcn.cl).

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