Buying a property in Ecuador, if you are in love or smitten with one, can be a WONDERFUL idea, so long as you are aware of the possible pitfalls that might dare to rear their ugly heads.
This is because unlike in countries such as the US, Canada, Europe and Australia, title insurance is not a common protection mechanism in Ecuador.
Any prudent person’s “numero uno” concern is to ensure absolute protection in making such a large item purchase; almost certainly the biggest investment that an Expatriate can or will ever make in Ecuador.
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 (or even with regards to prior owners of the property before that), might have made a problematic error in the property recording(s); this can interfere with the ability to ensure a smooth transfer of the property (or even prevent the transfer of the property).
A third issue that is a common occurrence in Ecuador, is that the current owner’s relatives or divorcing/ex-spouse might have interfere with the sale of the property, if or when they learn of it, at any time in the process (even including after the property sale has gone through if it was property sale was unbeknownst to them). As an example, the current owner might still owe some contractual or familial duty of equity or care to, or for their benefit(s), with respect to the property that you wish to buy.
Another, fourth possibility (among other hypotheticals beyond the scope of this column), is that you might happen to see a sign advertising the sale of an Ecuadorian property, boasting offers such as “Land or House for Sale”. Such an innocent enough looking sign might really in the end just be a fraud to lure in unsuspecting Expatriates, so as to induce them to misguidedly lay down their funds in the heat of their “excitement to buy something”. That is to say, one person or group may be claim to own various parcels of property or homes in Ecuador, presenting false documents (that might otherwise appear legitimate at first blush) as evidence of authenticity to an unsuspecting Expatriate, even going so far as to issue the “purchaser” a fake Deed (or even no Deed at all).
And so, the actual process of a getting to a “Real Estate Closing” in Ecuador, means some very necessary steps must occur first in order to reduce your risk. A thorough investigation of the property, confirming through the Municipality where the property is located, that it has clear title and no known debts, deficits, liens, outstanding taxes or other problems with it, are paramount to this endeavor. After closing on the property, you are also required to register it in your name.
Please also note that it is relatively difficult to obtain Expatriate Mortgages in Ecuador—at least in the first 2 years of a foreigner being a Resident of Ecuador. It is effectively impossible to secure an Ecuadorian mortgage if you are only a part-time
tourist or short-term visitor to Ecuador, as compared to a full-time legal Resident of Ecuador, holding a Cedula ID Card. For this reason, Expatriates almost exclusively buy property in Ecuador with a full cash purchase, or sometimes as an installment purchase over a 6-12 month period of time, through the use of a written “Promise to Buy” (which is akin to short-term financing being provided directly 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 the property is located in, you as the Buyer are ALWAYS far better off to have your own Attorney (rather than the Seller’s Attorney) write the very necessary “Minuta” document that will put the property in your name.
The reason this is so important is because the formal property sales agreement should be principally written with your own interests in mind as the buyer (even exclusively so, if/when possible), being that you are the buyer and will be the new property owner for going forward purposes. The seller really only needs assurance that your money is green!
You’ll also need to pay the Municipality costs and Notary fees associated with your property purchase in Ecuador, as and when they become necessary for clearances, permissions, registrations and verifications, during the property purchase process. Of course, these fees and costs depend fully on the Municipality where your property is situated in Ecuador, as well as on what the tax assessed value of the property is in comparison to the actual purchase price that you are paying for it, and whether there are/were any outstanding taxes or other debts owed with respect to your property.
What any Ecuadorian Real Estate 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 owner’s past 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 may arise, as you and they move through the process to effect the change in property ownership to your name.
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 Expatriates). Any Real Estate Attorney fees and/or fees to reimburse your representing Ecuador Real Estate Attorney for Municipality costs or Notary Fees, that are prepaid by your Attorney on your behalf, are usually paid either in cash, by personal check or by a deposit made to the bank account of the representing Attorney with respect to your Real Estate Closing.
Getting past some of those sour grape possibilities, 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 (assuming a minimum Municipality granted tax assessed value of $30,880 for any property—as of 2018).
If you have found, or in the future find, a property in Ecuador that seems to “have your name on it,” certainly don’t be afraid to make an offer to buy it. Just always be sure—for purposes of purchasing any property in Ecuador—to retain competent Ecuadorian legal counsel, so as to ensure that your attempt to purchase your property will not be made in vain, and perhaps even more importantly, that it not be made in pain!
Sara Chaca (Attorney – Abogada) is a seasoned Ecuadorian Lawyer. She can be reached at firstname.lastname@example.org or on her personal cell phone at 099 296 2065. You can also visit her at her office in Edificio Acropolis, #303, Cuenca, Ecuador.
Sara has a less than 24 hour first response policy. If you email or call her, she WILL return your first email or first phone call in less than 24 hours. Most importantly, all first time consultations with Expatriates for any type of legal matter(s) are always FREE OF CHARGE.