Written by: Sara Chaca
Attorney – Abogada of “Ecuador Visas”
January 25th, 2017
Very truly, as an Ecuadorian Attorney, whenever a highly valued Expat client comes to me, anxiously wishing to buy a property anywhere in Ecuador, for good reason I ask them the following question: Have you been struck by “property love”, or have you been afflicted with “property infatuation”?
Buying a property in Ecuador, if you are really in love with one, can in fact be a WONDERFUL idea, so long as you are aware of the possible pitfalls that might dare to rear their ugly head(s). This is because, firstly, unlike in places such as the US, Canada, Europe and Australia, title insurance is not a common protection mechanism in Ecuador (if at all), so it is usually any prudent person’s “numero uno” concern as to ensuring the safety of making such a high level purchase. A second thing to be aware of, is whether the Notary and/or Municipality who last effected any documentary change in the property with respect to the current owner, might have made a problematic error in the property recording(s) of past, because this might invalidate the ability to ensure a smooth transfer of the property (or even any transfer of the property at all). A third issue that is a common occurrence, is that the current owner’s relatives or divorcing/ex-spouse might have something to say about the sale of the property, if or when they might learn of it. This could be in the case that the current owner might still owe some duty of equity or care to or for their benefit(s) with respect to the property (this in my experience, is more common with Ecuador homes for sale by owner). A fourth possibility (among other hypotheticals beyond just these four mentioned within this paragraph), is that you might happen to see a sign for Ecuador properties for sale, boasting offers such as “Land for Sale in Ecuador”, “Farms for Sale in Ecuador”, or perhaps “Beach Houses for Sale in Ecuador”. Such an innocent enough looking sign, might in the end just be a fraud to lure in unsuspecting Expats to lay down their funds in the heat of their “excitement to buy something”. That is to say, one person or group may be pretending to own various parcels of property or groupings of homes in Ecuador, by presenting false documents, so as to try to evidence legitimacy to an unsuspecting Expat, and then issuing the Expat “purchaser” a fake Deed (or even no Deed at all).
Getting past the sour grape possibilities with respect to Ecuador real estate for sale, there truly are EXCELLENT reasons to buy real estate in Ecuador. Not the least of which is that one can use an Ecuadorian property as their Investor Visa qualification for becoming a legal Resident of Ecuador. Plus, if one elects investing in real estate in Ecuador, they can stop accumulating monthly rent receipts, and become a landlord themselves, potentially earning monthly rental income before rolling out of bed in the morning. In fact, one can alternatively and potentially accumulate very healthy annual returns on the increased value (yearly appreciation) of their purchased property in Ecuador, including as a “tax preferred” investment at that. Like all other things in life and in business, just remember that the calculation for risk vs. reward simply needs to be taken into account, before making the decision to buy a property in Ecuador.
And so, as per the processing of any actionable and desired Real Estate Closing in Ecuador, some very necessary steps must occur in order to complete the property purchase process. Investigation of the property, so as to confirm that it has no debts, as well as confirming through the Municipality where the property is located that it has clear title and no other known problems with it, are paramount to this endeavor. Plus, the property has to be registered in your name, once all other requirements and necessary verifications have been performed. Please also note that it is relatively difficult to obtain Expat Mortgages in Ecuador, at least in the first 2 years of a foreigner being a Resident of Ecuador. And of course it virtually goes without saying, that it is effectively impossible to secure an Ecuadorian mortgage if you are only a part-time visitor to Ecuador and not a full-time Resident of Ecuador. For this reason, Expats almost exclusively buy property in Ecuador as a full cash purchase, or sometimes as an installment purchase over a 6-12 month period of time (which is in effect akin to short-term financing being provided by the seller to the buyer).
In order for there to be a legal sale of a property in Ecuador and it be recorded by the Municipality where it is located in, you as the Buyer are far better off to have your own Attorney (rather than the Seller’s Attorney) write a “Minuta” document that will put the property in your name. The reason why this is most desirable, is so that the sales agreement is written with only your benefit in mind, being that you are the buyer and the new property owner for going forward purposes (the seller generally only needs to know that your money is green, and little else besides that). Naturally, you need to pay the Municipality costs as well as Notary fees associated with any property purchase in Ecuador, as and when they become necessary for clearances/verifications, permissions, and registrations during the property purchase process. Of course, these fees and costs depend fully on the Municipality where your property is located, the tax assessed value of the property in comparison to the actual purchase price that you are paying for the property, and whether there are/were any outstanding taxes owed with respect to the Ecuador real estate property.
What any Attorney needs in order to be able to represent you for the Real Estate Closing itself, is the former (past) Escritura and/or Minuta of the current or prior owner’s purchase of the property, plus color copies of each the Buyers’/Sellers’ Identifications (i.e. Foreign Passport or Ecuadorian Cedula). The Real Estate closing process generally takes around 2-4 weeks to complete from start to finish, depending on how quickly the Seller/Buyer are in providing the necessary documents, required information and/or answering any questions that arise as you move through the process.
Payment for buying/selling a property in Ecuador is usually made via bank wire transfer (international wire transfer is generally more typical in the case of Expats). And, so as to pay Attorney fees and/or fees to reimburse your representing Attorney for Municipality costs or Notary Fees prepaid by your Attorney on your behalf, these are usually paid by either personal check, cash in hand or a cash deposit made to the bank account of the Attorney.
In summation of the above, if you have found, or may at any time find, a property in Ecuador that seems to sing and/or appear to have your name on it, don’t be afraid to jump at will to make an offer to buy it. Just always be sure for purposes of purchasing an Ecuador property, to retain competent legal counsel here in Ecuador, so as to ensure that your attempt to purchase it will not be made in vain, and even more desirably, not be made in pain.
Sara Chaca (Attorney – Abogada) is a seasoned Ecuadorian Lawyer, whose law practice is operated out of Office #303 in Edificio Acropolis, Cuenca, Ecuador. Sara’s personal email address is email@example.com, and Sara’s personal cell phone number is 099.296.2065. Sara has a less than 24 hour first response policy, in that if you email or call her, she WILL return your first email or first phone call in less than 24 hours (more typically closer to 24 minutes). Most importantly, all first time consultations with Expats for any type legal matter(s) are always FREE OF CHARGE.