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Ecuador Real Estate: Legal Issues (Video)

Posted in: Ecuador Real Estate, Living in Ecuador

ecuador-real-estate-legalMany expats moving to Ecuador use property purchase for the basis for their residency visas.

As with most things, there are some specifics to keep in mind.

The rules and nuances of real estate in Ecuador are likely very different from your home country.

In this video interview, Grace Velastegui, an immigration lawyer in Cuenca Ecuador, discusses some of the common issues encountered with buy real estate in Ecuador and how to avoid them.

Real estate can be used as a basis for permanent residency in Ecuador. Learn about the benefits of Ecuador’s residency visa.

Ecuador Real Estate Legal Issues

(complete transcript below the video)

Video Transcript: Ecuador Real Estate Legal Issues

Our specialty is also helping with real estate law. We can assist you with the purchase of a property. Although it is understood that the purchase of property in Ecuador is a very straightforward process, there are some special things that need to be covered. A good title search might be necessary, especially in certain cases for your peace of mind.

The process of purchasing property can be done in one or two stages, depending on the property that you are going to be buying.

If it is going to be a single owned house (owned by an individual) a good title search might be a good idea. You want to make sure that there are no implications in regards to inheritance law or in regard to an ex-wife or ex-husband (for a divorced person) that might be involved in the title. You also want to make sure that the title is free of liens or encumbrances, that there are no mortgages against the building or pending debts with the municipal taxes that have not been paid or paperwork that was not completed or not in order.

So if you buy purchase that is under construction normally (in a condominium for example) the title of ownership is not available yet. Therefore you want to do an agreement to purchase and sell first. This is advisable to be notarized – and not by a private one – unless you pay a very low deposit. If it is a big deposit you want to be insured by a legal instrument that needs to be notarized. In order to have a good, binding document you want to use your own attorney and not use the standard form that the developers might have.

Some people go directly to the notary and legalize the sale or the purchase and they pay the price of the property. Later on they find out that there were some liens or that their title was not possible to be registered in their names or the change of name was not covered or that they had a hidden defects in the title that is not possible to cure.

So in order to ensure the recording of your title, once you have already completed the payment it is a good idea to have an attorney help you do an exhaustive title investigation.

If you purchase a property in Ecuador, you can use the title of ownership to apply for a residency visa as an investor in real estate. You should use a title that covers the requirements in order to apply for a residency visa. So make sure that the paperwork is done correctly for this purpose.

Questions? If you have specific questions, please comment below or contact Grace Velastegui directly.

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Meet the Author

Bryan Haines is co-editor of GringosAbroad - Ecuador's largest blog for expats and travelers. He is a travel blogger and content marketer. He is also co-founder of ClickLikeThis (GoPro tutorial blog) and Storyteller Media (content marketing for travel brands). Work with GringosAbroad.

16 comments… add one
  • Kathie Sedwick Aug 4, 2013, 3:07 pm

    Hi Bryan and Dena,

    Thanks for the timely email that linked to this post. We will be looking to purchase something in or near Cuenca after we move to Ecuador this month. It was a pleasant surprise to find out we have the same attorney! Grace has been helping us with visas, getting our stuff through customs, and finding a place to rent until we find a property to buy. We got her name from another ex-pat, so if anyone is looking for an attorney in Cuenca, we can add our recommendation.

  • dandelgado Aug 4, 2013, 2:12 pm

    Thanks so much Jakob. Gullible seniors are #1 scam targets. Nobody should invest in property without having lived here for a good while. Instead – invest in a big bank CD and rent for a couple of years before making such a big illiquid and risky investment. A CD is all you need for an Investor Visa anyway. Laws are changing so fast here now with the socialist Citizens Revolution so full-disclosure is difficult enough but the real-estate-related sites are not informative about important things – legal issues or security, health care etc. Those sites seem to just be looking for suckers to come to expensive conferences led by more real-estate people. It’s too bad since ecuador is a great little country making important changes that some people might really appreciate if they were more informed. I know people who came here to escape the “socialist USA”. How informed is that?

    • Jakob Aug 4, 2013, 11:48 pm

      Thankfully, the water always stays blue, the trees always stay green, and the Chimborazo always stays white, even as the colours of government change. Citing my own version of the popular slogan of the Revolucion Ciudadana “Tu dinero ya es de todos”.

  • Fran Yates Aug 4, 2013, 9:17 am

    Seems it would be easier to by a lot or home that is built as the subdivision has already done the legal work. The Master Plan subdivision Las Olas in Bahia de Caraquez is alive and well, actually building the huge golf course now, seems a safer bet. Who wouldn’t want to live on the water, actually the Pacific Ocean.

  • Jean Cohen Aug 4, 2013, 6:26 am

    As always, you give excellent and helpful information. Like you, Bryan, we plan on renting and certainly not buying until being a resident for some time.

  • Nina Vaughn Aug 4, 2013, 2:24 am

    Sure. You can use lawyers but the minute they know you are American, European , etc., they will charge you an arm and a leg. One lawyer tried to charge 3,000 dollars in Ecuador to become an Ecuadorian citizen even though my mother was Ecuadorian. I went to the consulate in Miami and paid 10 dollars. I would go to a consulate in your country of origin first and when I have gathered all the necessary info, use a well respected Realty company like Mancasas or others . I personally know there is a Keller Williams in Ecuador. I do not do Real Estate but know agents that are great and people in the right places. I do know the feeling of being taken in even though I lived there many years so talk to your Embassy first / Consulate and save yourself a lot of money.

    • Bryan Haines Aug 4, 2013, 6:39 am

      While I’m sure that there are dishonest lawyers in Ecuador (like in every country) it is unfair and untrue to categorize all lawyers this way. We have used a few lawyers in Cuenca and had great success. Just do your research first – get referrals from a trusted friend and you’ll be fine.

      • Nina Vaughn Aug 4, 2013, 11:57 am

        I never said they were dishonest. They can charge whatever they want and that is not being dishonest. You can use their services or go another route like I did for my citizenship. I knew he was charging too much and that was his prerogative. Yet, if you do your research first, you can save time and money. Yes, asking friends for referrals is highly recommended when using lawyers and Real Estate Agents like in any other county.

        • Bryan Haines Aug 4, 2013, 8:03 pm

          You’re right. You didn’t use the word dishonest. But I would call anyone who charges $3000 for a $10 service dishonest. I take issue with the suggestion that all lawyers are overcharging.

          I agree that there is a need to research before hiring. While we used lawyers for processes here in Ecuador we arranged all the paperwork back in Canada.

    • Kathie Sedwick Aug 4, 2013, 3:14 pm

      Hi Nina,

      I’m sure there are plenty of people looking to take advantage of foreigners, but we’ve found Grace’s fees to be extreme reasonable and she’s been great. She came highly recommended from other ex-pats, now from Bryan and Dena, and we can add our recommendation. I’m sure a lot of this can be done without an attorney if you know what you’re doing, but my husband and I feel a lot better about having someone help us with all this.

  • Graham Aug 4, 2013, 12:03 am

    Am I correct to assume the 12% recapture of taxes under the resident visas/over sixty-five years old status, is not applicable on rent payments of rental property? How about the purchase of food items … and if so, are receipts of sale easily obtained … even to include purchases from within a farmers market type establishment?

  • Marian Aug 3, 2013, 11:50 pm

    Bryan, you always post very usable, expat friendly information. I am always interested to hear what you have to say, that would be helpful when my husband and I relocate to Cuenca. The video regarding benefits of acquiring real estate and thus citizenship in Ecuador is a gem. We are going to buy and thus make our life in Cuenca easy in all regards. Thanks and greetings from Phoenix, AZ!

  • Jakob Aug 3, 2013, 10:57 pm

    I have gone through the process of buying property in Ecuador twice so far and I can tell you that there are many intricacies that are not in the “manual”. I did all my paperwork myself and did not use a lawyer at all. I only used a notary to create the new title (escrituras) and dealt with the authorities before and after personally. My wife worked for a real estate company in Ecuador that went bankrupt which also taught me a thing or two about the system. I could write a book about it, but instead I will give you a few pillars and you can investigate around them yourself:
    – If you don’t speak Spanish let a trustworthy lawyer do the entire thing for you. Beware of crooks.
    – Don’t buy communal land (comuna) or land whose paperwork consists of a “cesion de derechos” unless you know exactly what you are doing. Always ask if the owner can show you the “escrituras”. If not, walk away. Make sure you know the difference between “cesion de derechos” and “escrituras” or you might not be able to tell the difference.
    – When buying land make sure you have it measured out (informe tecnico). Not all lots’ measurements comply with what is on paper. There is a general version of this where someone from the municipio moves in with a mere measuring tape and a detailed version where they actually plug sticks into the ground and connect them by thread for a detailed land survey. In my case a metre was missing on a length of 20m reducing the area by approximately 20 square metres. I talked to the neighbours to adjust their fence and struck a deal with the seller (I still bought).
    – You will have to deal with the following entities during the process of purchase of land or resale house. Make sure you know their fee structure before you approach them. Those fees may vary from canton to canton (administrative district), but they might also vary according to how gullible you look on any given day.
    1. Municipio (Municipality)
    2. Registro de Propiedad (Property Registry)
    3. Notario (Notary)
    4. Cuerpo de Bomberos (local firefighters’ office)
    – If you buy a house from a builder they will handle a lot of the paperwork for you, but it is not like in North America. The builder will only start building once you pay the money, and they will do so with YOUR money. If the builder goes bankrupt your money is gone. You still own the land and whatever construction is already on the land.

    True story: In one instance I was looking at land in a village on the coast where the escrituras seemed all right. However, I did some small talk with the locals of whom several told me that the lot had been resold before and the original owners had been several people. One of the original owners did not show up for the sale, so the others counterfeit the signature of the missing person to close the sale. Officials closed both eyes and now the lot has new owners. I walked away, because this is common knowledge in the village. At any moment someone can come forward and contest the validity of the previous transaction. Bottom line, keep your eyes open! I bought in two places that I had been coming to for years, so I knew very, very well what I was buying. This is also the reason why locals told me the entire story, because they already knew me. And: Sometimes your only protection is the goodwill of the people, forget title investigation. Buy what you know!

    When I bought one of the properties which has a nice ocean view the sellers informed me that multiple Americans had tried to buy it from them from abroad without ever having set foot in Ecuador. This is crazy, don’t, unless you really don’t know what to do with your money! Legally, it is not even possible to buy property in Ecuador without being either physically present or having someone with Power of Attorney who is physically present.

    • Bryan Haines Aug 4, 2013, 6:40 am

      Thanks for this great info Jakob.

    • Jakob Aug 4, 2013, 8:56 am

      Addendum:
      When registering the property with the municipio they will have to enter the property value into the system. It is important for you to know that you have 2 options there:
      Option 1… Enter the purchase price
      Option 2… Enter the official appraisal price that the municipio has on record (avaluo municipal)

      One can be a lot lower than the other (usually, purchase price is higher). This greatly affects fees and taxes of the transaction, so choose well. You save when you enter the lower value. On the flip side, if you ever want a bank credit based on your property as collateral the bank will assume whatever value is on record for the credit limit. Locals who want to save a buck fall into that trap all the time.

      This article also suggests that you would have paid the full purchase price before the final step of registering the property with the Registro de Propiedad.
      Quote: “…So in order to ensure the recording of your title, once you have already completed the payment it is a good idea to have an attorney help you do an exhaustive title investigation…”
      This is what authorities will tell you the legal process is. However, in both instances I withheld 50% of the money until the registration came back clear. There is a theoretical window of opportunity for dishonest people to sell the property a second time between when you pay and you register. Moreover, if there is a problem registering, the seller probably won’t help you much if they already have all the money. I call the time after you have “completed the payment” too late.

    • Stewart Aug 4, 2013, 5:39 pm

      Jacob,
      I have to say too excellent information.

      In the past many isolated properties have been invaded by squatters both in the sierra and along the coast. So you have to really investigate property ownership prior.

      We went through a property purchase experience early this year, and everything went fine. We did not buy the house we rented before because these owners would not negotiate and they asked for too much. We didn’t feel trust so our search brought us to an architect / builder who was building next to his house. We asked several people who have worked and dealt with him and only heard good things.

      In any case, we still had our own lawyer as the title (escritura) can be tricky and take a while (months) for municipal approval. All in all it’s wonderful to have your own home when construction is completed and you’re finally moved in.

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