Buying Real Estate in Ecuador
One question that often arises when contemplating a move to Ecuador is whether or not expats can purchase property and how easy the process is.
The good news is that it is possible, and the process is relatively straightforward. You just need to make sure you’re protected and avoid a common real estate scam.
Can a foreigner buy property in Ecuador?
You do not need to be a citizen or even a resident of Ecuador to purchase real estate. Expats can purchase land, houses, condos, and more.
However, government property and national parks are off-limits.
Placing an Offer
It’s important to note that the process of placing an offer is different from other countries, with most offers being made verbally and then put into an email format once accepted.
From there, the contract is drawn up, and terms are agreed upon. If you are going to be working with terms, there is another document that will proceed with the actual sales contract, called a “promesa”, which is a promise of sale.
If you’re interested in buying property in Ecuador, but can’t physically be there for the closing process, you can do a power of attorney with a lawyer who can sign on your behalf.
Another option for those who can’t find the perfect home or condo, is to purchase land and build on it. There are plenty of reputable builders in Ecuador, many of whom speak fluent English and can correspond with you directly.
Transferring Money for the Sale
When transferring money for a property purchase, there are two options: a domestic wire or an international wire.
The main difference between the two is the cost, with an international wire costing between $25 to $70 USD, depending on the bank’s rules and regulations.
Regardless of the amount being transferred, a SWIFT code is required for international wires to ensure the money goes to the correct bank.
Protecting Your Investment
In terms of protecting both the buyer and seller, “promesa contracts” typically include a penalty clause if one party needs to break the agreement.
For smaller earnest money amounts, a civil contract can be used, which may include an inspection contingency.
While property inspections are not required by law in Ecuador, buyers have the option of hiring engineers or land surveyors for inspections. Most property inspectors charge about $1 USD per square meter.
Title searches in Ecuador are conducted through the local municipality. There is no title insurance option in Ecuador.
When buying property in Ecuador, it is important to have a “Certificado de Solvencia.” This certificate shows the history of the property, including all previous owners, and any liens or encumbrances, as well as who needs to sign the deed or contract.
In lieu of title insurance, the “Certificado de Solvencia” ensures that the property being purchased is free and clear of any issues.
We recommend working with a professional attorney who specializes in real estate law to help with the process because a common scam in Ecuador and other Latin American countries is to sell property that is not actually owned by the seller.
If the property is in a gated neighborhood with an HOA, an additional step is required to protect the buyer.
The administrator of the HOA must provide a letter to the attorney to be put into the file with the local municipality before signing. It should specifically state that there is no money owed to the HOA by previous owners of the property.
Homeowners insurance is not required by law, but it is recommended.
Real Estate Financing in Ecuador
The majority of real estate deals are done with all cash via bank transfers.
It is nearly impossible to get financing as an expat in Ecuador because the credit rating system is different and the lending institutions don’t recognize foreign credit reports.
For those who do need financing, personal loans backed by collateral in the US or seller financing are options, but not common.
The Real Estate Closing
Once you’ve found the property that you want to purchase, you will need to sign a sales contract and transfer the money to the seller’s account.
Once that’s done, you officially own the house, and the property will be registered with the municipality, which takes a week or two. Then, an actual paper deed will be generated for you, called an “escritura”.
As for additional fees, closing costs are typically the buyer’s responsibility, but it’s possible to negotiate this with the seller. The closing costs can vary depending on the deal, rural and municipality taxes, and legal fees.
It’s always a good idea to talk to the attorney to get an estimate of what the closing costs might be before you agree to buy any property in Ecuador.
Final Thoughts
Overall, the process of purchasing a property in Ecuador is straightforward and inexpensive compared to many other countries.
Your main concern is to make sure the seller owns the property and has the right to sell it before you agree to purchase it and certainly before you transfer any money.
To maximize your protection, work with a reputable real estate agent and real estate attorney.
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Hola todos! Welcome to my author bio page! Let's see. Where to begin... I grew up in the country on a lake outside a small Kansas farm town. As soon as I could, I got the hell outta there! Since then, I've lived and/or worked in Kansas City, Washington D.C., Denver, San Francisco, and Ecuador. I started and sold a dotcom, wrote a book about it, started a YouTube channel, and now I write a lot. Amelia and I have embraced the Unconventional Life and we want to help you do it, too!
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