Buying Real Estate in Ecuador
Buying real estate in Ecuador is easier than in many places in the world — even if you are not physically living in the country.
Ecuador allows for foreigners from any country to purchase and hold property. It is actually written in its country’s Constitution. And, unlike some countries, where buying beach property is restricted, there are no such restrictions in Ecuador.
If you are in the country the process is relatively easy, but I definitely recommend that you hire a lawyer to ensure all the paperwork and legalities are in order. If you are outside of the country and find a property you want to purchase, you can hire a local Ecuadorian attorney and give them a limited Power of Attorney to represent you in all the legal matters pertaining to the acquistion of that particular property. The POA will be dissolved once the purchase is complete. There are many reputable bi-lingual lawyers in Ecuador, but do your homework and get references. Ecuador At Your Service can guide you all the way and introduce you to great local attorneys as well.
In spite of it being a relatively easy process, there are some points worth noting if you are going to be purchasing real estate in Ecuador.
First, there are no Multiple Listing Services. Very few brokers share information or have databases of other broker’s listings, so you may have to shop around. Ecuador At Your Service shares properties and listings with key Ecuadorian agents, so you get the benefit of having more exposure and buyers if you are selling a property, and more property choices if you are looking to buy.
Finding the right agent, of course, is key. Choose someone who intimately knows the market and has a broad-based inventory of the kinds of properties you are interested in seeing. Also choose someone you like and trust, because you’ll be spending a great deal of time with your agent throughout the process of buying or selling. Ask for references — word of mouth goes a long way.
Avoiding the “Gringo Price” is also important, and though you may never completely prevent the inflated prices that are presented to out-of-towners, a reputable agent will help negotiate when working with locals, especially if you don’t speak Spanish.
In general, brokers will take you to look at properties without charging you. Be aware, however, agents are looking for serious buyers and not just people who want to see what’s available and “buy down the line.” This is what paid real estate tours are for, and there are many tour companies in Ecuador or who feature Ecuador on their world real estate tours. These are ideal if you are just looking and trying to get an overview of the local market.
Financing is basically non-existent in Ecuador. Exceptions are if you have worked as an employee (salaried) for one year, or have owned a business for three years.
Commissions are generally paid by the seller and the going rate in Cuenca is 3% of the purchase price. Prices along the coast and in some other cities can be higher.
Once a price has been agreed upon, it will be necessary to go to an attorney’s office with your passport or your Cedula (a government ID) if you have one. These are the only forms of identification necessary for purchasing a home. You will also need at least one check.
This contract includes the sales price, the upfront payment (ranges from 10% to 30% of purchase price), subsequent payments and schedules, construction starting and closing dates, and information on defaulting or penalties. Try to include a clause that allows you to receive penalty payments if the construction is not completed by the stated deadline. Though this is not always enforceable, it puts the developer on notice.
If you are buying a pre-construction property and you cannot oversee the construction, it is advisable to hire an in-country project manager or contract with a Spanish-speaking friend in Ecuador to work with the developer and architect. This will help ensure the building process proceeds as promised. Ecuador Interiors, a subsidiary of Ecuador At Your Service, has five years experience in project managing and interior design.
If you are ready to buy the property immediately, you can skip this step and go directly to signing the “Compra Vente” or “Escritura de Compravente” which will save you time and money. This final closing document must be notarized. To legally participate in this Notary process you must be fluent in Spanish and understand the procedures. If you do not speak Spanish, Ecuadorian law requires you to bring a translator for your protection. If you’ve hired a bi-lingual lawyer (highly recommended) she can also serve as your translator — if there is not a conflict of interest in the buying process.
Once notarized the final sales agreement must be registered with the Office of Land Registry. One copy will be filed with the Registry Office and you will receive the other, which is considered your deed.
Closing costs include legal fees, notary fees, and translation of documents, transfer and registration taxes, and real estate commissions.
If you buy real estate in Ecuador, it is also recommended to have your attorney draw up an Ecuadorian will. Without such a document, ensuring your property goes to your heirs and friends is long and tedious process. You will pay less than $200 to have this document made, and it is worth every penny.
In future blogs, we will be interviewing real estate attorneys and VISA experts to better explain the complete buying and investment process.
Ecuador is a wonderful place to be a homeowner or investor. For more information, to help you in your search for the perfect property, or for assistance in project managing, please contact: ashley@ecuadoratyourservice.com