Buying Preconstruction Properties in Ecuador
I have always wanted to live in a loft.
When I lived in New York City, some 30 years ago, a friend bought this amazing loft on West 26th Street. She was a photographer and the space was expansive, arty, beautiful. Never mind that it was in a bit of a dangerous area. It only added to the allure.
Fast forward, 10 years later. My best friend (also a photographer) bought a three-story loft in Venice, California. Sure, you could hear gunshots at night, but the space was simply magnificent.
So why couldn’t I find this perfect work/home space and try it on for size?
I did. But, not in New York City or Los Angeles. My new home is in Cuenca, Ecuador.
And, my loft? A 2,000 square-foot gem inside one of Cuenca’s renovated World Heritage Site colonial buildings. There’s no gunshots or danger lurking here. Just beautiful cobblestone streets, cafes, wonderful restaurants, and art galleries that entice my senses.
I first saw the building in September 2010. Not exactly the dream home I was looking for, but I recognized good bones when I saw them. And, thanks to an amazing developer and architect, what once was a shell filled with dust and wood, is now my cherished home.
When I met the accomplished architect, he had blueprints and extensive plans. I quickly changed them … knocking down a proposed wall, moving the stairs, adding a skylight.
Like birthing a baby, the renovation took nine months to complete. And, there were definite aches and pains along the way. But, it was all worth it when my new “baby” finally emerged.
I was on site three times during the construction (for about two weeks each visit) to work with the architect, designing, re-designing, and picking out appliances, counters, cabinetry, and flooring. Being on site was critical to the success of the final outcome and each time I traveled to Cuenca I averted some sort of potential problem.
When I was not there, we worked together via the Internet and Skype, which worked out perfectly. I was updated every step of the way and had full reports from my team during the various stages of construction.
Buying a pre-construction home is not for the faint of heart. But, I am one of the lucky ones. The team was honest, reliable and (almost) on time. And, my loft has subsequently been shown in national Ecuadorian design magazines, in the Miami Herald and in The New York Times.
Now this is not always the norm. I have friends who bought a condo in Cuenca the same time I did. They were told that their apartment would be completed by December 2010. Nearly a year later, they still hadn’t moved in. Others have been swayed by false promises, poor construction, or in some cases … outright lies.
So how do you ensure your experience is a good one? That what you buy is truly what you thought you were buying? I’m sorry to say there are no guarantees … in Ecuador, or anywhere else in the world.
There are, however, a few tips worth noting before purchasing a pre-construction property. Here are mine:
TOP TEN TIPS FOR BUYING PRE-CONSTRUCTION
(1) Investigate your developer and make certain he is reputable, financially stable, and has a strong track record. Get references, talk to previous purchasers or people who have worked with him, and see some of his completed projects, if possible.
(2) Find a reputable, in-country attorney who is fully independent (and not attached to the developer) to research any property you are thinking of buying.
(3) Make sure you get a purchase or sales contract that covers all possible contingencies, and that has all the standard clauses necessary for purchase in the country you are buying in. To be legally binding, the contract must be in the language of the country where you are purchasing, Ask for a translated copy in your native language and make sure all the points are clear before you sign.
(4) Be certain that the seller of the property is the legal owner. If the seller is the legal representative for the owner or for a corporation that is controlled by the owner, you will have to get an addendum stating that relationship to make sure you are legally covered. Also make certain that there are no outstanding mortgages, unpaid taxes, or any leans against the property that you might incur at a later date.
(5) Study, re-study, and make sure you understand the architectural floor plans and renderings. Check closet spaces, traffic flow, measure rooms or ask for room dimensions to ensure your furniture fits. Check which way doors open, if there are enough electrical outlets and if they are placed for ease and convenience, see where appliances will go and if there is enough light. What looks good on paper does not necessarily translate into comfortable everyday living.
(6) Understand what is included in the purchase price and outline the details in your sales contract. What is indicated in an architectural drawing or seen in a model apartment is often not “standard” like hardwood floors, marble countertops, chandeliers, bathroom fixtures. Make sure that all the specifics are spelled out, so there will not be the possibility of a bait-and-switch later. If the developer has promised you something … get it in writing!
(7) If you have received developer financing, financing rates might change during construction, so make certain that you have an adjustment clause that reflects real changes in labor costs or construction, not just the whims of the developer. The adjustments should tie into an official government inflation index. If you are paying cash, ask the developer to remove any adjustment clauses from the contract.
(8) Ask that a fixed start date and an end date for construction is put into your contract, and try to include a clause that allows you to receive penalty payments if the construction is not completed by the stated deadline. This is not always enforceable, but it puts the developer on notice.
(9) If you need to back out, or can’t make payments, or if you want to sell your unit prior to completion, understand clearly what the ramifications are. Some developers allow clients to assign their sales contract to another buyer, others don’t. Most pre-construction contracts state that if the purchaser backs out, they lose their property, and any money they’ve put into it. In some cases additional fines can occur. Make sure you know what you’re getting into if something happens and you cannot move forward with your purchase.
(10) Once you have made your final payment and the sale is closed, get the title and deed transferred into your own name as soon as possible.