Buying a Business in Uruguay: What to Check in the Lease Before You Pay
INGAR · · Guides
These are two deals, not one
Before you hand over money for a going business, you need to settle two separate questions: what business you're actually buying and on what legal footing you'll occupy the premises. Neither one covers the other.
You can sign a promise of sale over the commercial establishment and still have no secured lease. You can also take delivery of the equipment, the inventory and the social media accounts without acquiring any right to operate at that address.
The practical rule is simple: don't release the purchase price until the right to use the premises is settled in writing, with the scope reviewed by your escribano (Uruguayan notary, who handles real-estate and business transfers) or attorney. If you're on the other side of the counter, the companion guide is how to sell a business in Uruguay.
Goodwill, the business, the lease and the building are four different things
Everyday conversation lumps it all together as "buying a business," but in legal terms several distinct assets and contracts may be in play.
| Element | What it may include | Which document settles it |
|---|---|---|
| Commercial establishment | The business as an organized whole, the trade name, the customer base and other elements covered by the deal | Promise of sale and transfer deed, as applicable |
| Specific assets | Machinery, furniture, stock, vehicles, web domains or trademarks | Inventory and asset-by-asset documentation |
| Lease on the premises | The right to occupy the property for a set term and under set conditions | A valid assignment of the lease, or a brand-new contract |
| The property itself | The premises as real estate | Not transferred when you buy the business, unless there's a separate real-estate purchase |
Article 1 of Decreto-Ley 14.433 provides that the transfer of a commercial establishment must always be executed by public deed. It also provides that a promise of sale, once recorded, gives the buyer an in-rem right that prevails over any later sale, lien or attachment. The decree-law still says "Registro Público de Comercio"; today that registry is the Registro Nacional de Comercio (Registro de Personas Jurídicas, Sección Registro Nacional de Comercio), under articles 6 and 49 of Ley N.º 16.871.
That filing protects the deal over the business. It does not make the buyer the owner of the building, and it does not transfer the lease automatically.
The LUC doesn't govern commercial leases
The no-guarantor leasing regime created by the LUC (Uruguay's 2020 Urgent Consideration Law, a broad reform package) is simply not available for a commercial space. Article 421 of Ley 19.889 requires the property to be designated for residential use. Within a home, it allows only certain domestic, artisanal or professional activities that meet its conditions. The full regime is laid out in our guide to Uruguay's rental law.
So there is no such thing as a "commercial lease under the LUC." To know which rules govern a given space, you have to look at the contract, the year the building was constructed, and the legal regime that applies as a result.
Article 102 of Decreto-Ley 14.219 carves out leases of buildings constructed after June 2, 1968 from much of that statute. In those cases the Civil Code and the terms the parties agreed on carry particular weight. Older buildings may fall under different provisions.
It isn't enough, then, to say that "all commercial leases are unregulated" or that "they're all governed by the rental law." Before you buy, a professional needs to pin down the specific regime that applies to the premises.
Commercial tenants don't get the automatic one-year extension
Article 4 of Decreto-Ley 14.219 says, word for word, that when the contract term expires the tenant is entitled to a one-year extension "except where the use is industrial or commercial."
The consequence is concrete: a buyer of a going business cannot count on that extra year to recoup the investment or organize a move.
That doesn't mean the landlord can change the locks the day after expiration. Forcing a tenant out requires the proper legal process. It means something narrower and more precise: a commercial tenant gets no additional year of contract term out of that article.
Articles 21 and 22 of the same decree-law don't solve the problem either. They sit in a chapter aimed at contracts predating the 1974 law and set out transitional measures for that situation. They do not grant a four-year extension today to anyone signing a new commercial lease.
Can the lease pass to the buyer?
There's no single answer that covers every space.
The general rule
Article 1791 of the Civil Code states that a tenant has no right to assign the lease. Where that's the governing rule, the safe route is to obtain the landlord's consent and document a formal assignment, or to sign a fresh contract in the buyer's name. The same principle, applied to residential rentals, is covered in early lease termination and lease assignment.
It's not enough for the seller to assure you that "the owner is on board." The consent and its conditions have to be on paper.
The special assignment that travels with the business
Decreto-Ley 14.219 provides a special route for certain commercial leases. Articles 65 and 66 allow the lease to be assigned along with the transfer of the establishment if several conditions are met: among them, keeping the same line of business, having term left on the contract, showing at least two years of occupancy as a starting point, resolving the guarantees, and serving notice of the proposed deal on the landlord through a notary or the courts.
In that scenario, the landlord has ten days to object, and only on the grounds that the statutory conditions haven't been met; if there's a dispute, a judge decides.
This route doesn't apply automatically to every space. Article 102 excludes buildings constructed after June 2, 1968 from the section that houses articles 65 and 66. That's why it's wrong to claim either that every assignment needs the owner's discretionary blessing or that every buyer can force one through.
First you determine which regime applies. Then you pick the instrument.
Subletting isn't the same as assigning
In an assignment, the tenant is trying to put someone else in their place under the contract. In a sublease, the tenant keeps the master lease and grants a third party the use of all or part of the space.
If article 23 of Decreto-Ley 14.219 applies, the right to sublet has to be stated in writing. Outside that regime, article 1791 of the Civil Code starts from a different premise: it permits subletting for the same use and within the remaining term as long as the contract doesn't expressly forbid it.
The gap between those two positions is far too wide to handle from memory. If you're thinking about sharing the space, renting out a section or running a second business inside the property, get the authorization reviewed before you close.
There is no legal "five-year" rule
Five years may well be a sensible term for a particular deal, but it is not a statutory minimum and not a universal market floor.
The term you need depends on how much you're putting in, what cash flow the business can realistically generate, how much of the value rides on that specific location, and what cushion you want left once you've recovered your capital.
A first pass at the math:
Months to payback = total investment ÷ normalized monthly cash flow
Total investment isn't just the advertised asking price. It can include professional fees, taxes, fitting out the space, restocking inventory, working capital and reopening costs.
Monthly cash flow shouldn't be revenue, nor the "profit" the seller quotes you. Rebuild it net of rent, wages and payroll charges, taxes, utilities, maintenance and the replacements the business actually requires.
An example. If total investment is USD 30.000 and verifiable normalized cash flow is USD 2.500 per month, the division gives you twelve months. That doesn't make a deal with twelve months of contract left a safe one: any dip in sales, any repair, any delay stretches the payback period out. Your firm term should leave real room beyond that point.
The right question isn't "will they give me five years?" It's: how many firm months do I have left, and how many do I need, under a conservative scenario, to get back everything I'm putting in?
What drives risk and value
| Variable | Lower risk | Higher risk |
|---|---|---|
| Term remaining | Comfortably exceeds the payback period | Expires before or just after you recover the investment |
| Rent level | In line with verified cash flow | Eats the margin on a moderate sales dip |
| Escalation | Formula, currency and frequency clearly agreed | Open-ended review, or terms you can't model |
| Renewal | A clear option, exercisable on defined terms | A vague intention to "talk about it" at expiration |
| Assignment or exit | A mechanism that's spelled out and legally workable | Outright prohibition, or dependence on a future negotiation |
| Permitted use and permits | Your intended use is compatible and can be licensed | The business hinges on permits that are still uncertain |
| Lease recording | Contract recorded and reviewed | Unrecorded contract, or an unexamined sale-reservation clause |
A line like "to be renewed by mutual agreement" is not a guaranteed extension. All it says is that the parties may negotiate later on. To value the business, count the firm term first and treat any uncertain renewal for what it is: a possibility.
Weighing a business that comes with a leased space? At INGAR we handle the real-estate side of the deal: we review the lease and its registry status, confirm who actually holds title to the property, and set up the conversation with the landlord before you put money down. Message us on WhatsApp or browse the businesses for sale we currently have listed.
Check the owner and whether the lease is recorded
The person selling the business isn't always the owner of the space. Have your escribano confirm who holds title to the property, what authority the signer actually has, and what relevant filings or encumbrances show up.
A mortgage on its own doesn't mean the property is headed for foreclosure, and it doesn't automatically void the lease. But the registry picture can shift the risk profile and deserves a professional read, especially when location carries much of the business's value.
Whether the lease itself is recorded matters too. Article 1792 of the Civil Code requires anyone who buys the property to honor the remaining lease term, provided the contract is in a public deed or a duly recorded private instrument. And it adds something worth reading twice: "If the contract has not been recorded, the purchaser shall not be obliged to honor the term and may evict the tenant as in cases of a lease without a fixed term."
Don't assume a long contract shields you against third parties. Check whether it's recorded, what it says about a possible sale, and whether the instrument you're about to sign needs to be recorded as well.
If the lease doesn't continue, is the business worth nothing?
Not necessarily. What can collapse is the value of the business as a going concern at that location.
Equipment, inventory, a registered trademark, a customer base you can take with you, digital channels — all of these can hold value. But they have to be appraised separately and at recoverable values, not as though the business will keep humming along at the same address.
If the reason for the sale is that the lease is about to expire or won't be renewed, the valuation changes completely. You're no longer buying the same cash flow: you're buying assets to dismantle, relocate or liquidate, plus whatever intangibles genuinely survive the move.
The right sequence for closing
- Ask for the full contract and every amendment. Go through the term, rent, escalation, permitted use, guarantees, assignment, subletting, renewal, alterations and termination triggers.
- Pin down the applicable regime. The building's construction date and the legal structure of the business can change the rules.
- Confirm the owner and the registry status. Cover the property and, where relevant, the lease itself.
- Verify the business's numbers. Test sales, costs and taxes against documentation. Don't calculate a return on verbal figures.
- Decide how you'll occupy the space. That may be a valid assignment, a new contract, or whatever mechanism the professionals on the deal recommend.
- Make closing conditional. The promise of sale can provide that your obligation to pay, or to pay the balance, depends on the lease being settled on specific terms. That clause doesn't arise automatically by law — someone has to draft it.
- Coordinate the paperwork. The promise or deed for the business and the lease should close as a single economic transaction, even though they're separate instruments.
Don't pay first and plan to "sort out the lease later." Once the money changes hands, your leverage changes with it.
Frequently asked questions
Does the LUC let me lease a commercial space without a guarantor?
Not under the regime in articles 421 through 459. That system requires the property to be designated for residential use. Guarantee arrangements for a commercial space have to be analyzed under whichever regime applies and under the terms you agree on.
Do I get a one-year extension when the lease on a commercial space expires?
Not under article 4 of Decreto-Ley 14.219: the statute expressly excludes industrial and commercial uses. That doesn't clear the way for a self-help eviction; recovering the property by force still has to follow legal procedure.
Does buying the business make me the tenant?
Not by itself. Transferring the establishment and acquiring the right to occupy the space are separate matters. You need a valid assignment or a new contract, depending on the regime and the structure you choose.
Do I always need the landlord to approve the assignment?
As a general rule, a tenant has no right to assign. That said, articles 65 and 66 of Decreto-Ley 14.219 set out a special mechanism for certain commercial contracts under strict conditions. The first step is determining whether that regime covers the property.
Can I sublet part of the space?
It depends on the regime and on the contract. Under article 23 of Decreto-Ley 14.219, the right has to be in writing. Under the Civil Code's general rule, it may exist if it wasn't prohibited, for the same use and within the tenant's remaining term. Don't move ahead without reviewing the specific case.
How many years of contract should I ask for?
Enough to recover the investment under a conservative scenario and still leave operating room. There's no universal number. Work from the firm term remaining, not the original term and not a verbal promise of renewal.
What happens if they sell the building my business operates in?
It depends on whether the lease is recorded. Under article 1792 of the Civil Code, the purchaser must honor the term when the contract is in a public deed or a duly recorded private instrument. If it isn't recorded, they're not bound by it.
Can I make the purchase conditional on the lease being signed?
Yes, the deal can be structured that way. It has to be drafted precisely: which contract is required, who has to sign it, term, rent, escalation, guarantees, what happens if the condition fails, and what becomes of any money already handed over.
The bottom line
When you buy a business that comes with a leased space, settle three questions before you pay:
- Which assets and rights are actually part of the purchase?
- How much firm term do you need to recover the investment?
- Which document entitles you to occupy the space, and against whom is it enforceable?
The deed for the business is no substitute for the lease. A promise to renew is not a firm option. And five years may be plenty, more than you need, or nowhere near enough, depending on the real numbers.
The deal gets studied and documented before the money moves. Fixing it afterward is usually more expensive and a lot harder.
This content is informational and does not replace legal, notarial, accounting or tax advice. Buying a commercial establishment can also involve debts, certificates, employment obligations, licensing and other issues that go well beyond the lease.
Sources
- Civil Code — article 1791, assignment and subletting (IMPO)
- Civil Code — article 1792, sale of leased property (IMPO)
- Decreto-Ley 14.219 — article 4, extension and the industrial/commercial exclusion (IMPO)
- Decreto-Ley 14.219 — articles 21, 22, 23, 65, 66 and 102 (IMPO)
- Decreto-Ley 14.433 — article 1, public deed and recorded promise of sale (IMPO)
- Ley 19.889 — article 421, residential-use requirement (IMPO)
Legislation consulted on IMPO on July 27, 2026.