[BUYING & SELLING REAL ESTATE IN COLOMBIA] 75
KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER COLOMBIAN LAW 1. Standard Forms of Agreements to buy and sell Real Estate:
agreement. In relation to this requirement, as stated by case law, it is also necessary to indicate the Public Notary and the time where the purchase and sale agreement public deed will be executed; (iv) the agreement must determine the purchase and sale agreement, in such a way that to proceed with the closing of the transaction, only the formalities or the legal means to transfer and delivery the propertyare missing. The last requirement mentioned above, refers to the necessity to include in the agreement on one hand, a full description of the property, among others, its identification name, address, boundaries, registration number, tax identification number and, those of the condominium, if the property is part of one, including the public deeds by means of which the property was submitted to the condominium regime. On the other hand, the price agreed by the parties and its form of payment. Some conditions are included in the promise to assure the fulfillment of the contract, which means the execution of the promised purchase and sale agreement by the parties, the transfer of the property by the seller and the payment of the price by the buyer. Among others, it is common to agree the inclusion of penalty clauses equivalent at least to 20% of the price agreed, escrow accounts, banking letters of credit or, the indication of the down payment amount as a confirmatory payment or prepaid penalty in case of breach of the contract by any of the parties, as
Despite the existence of several types of agreements to implement real estate transactions in Colombia, the most common forms of agreements used to acquire real estate properties are the promise to sale and purchase agreement and the sale and purchase agreement. a. Promise to Sale and Purchase Agreement (Promesa de Compraventa) Considering that there are some formalities to acquire real estate properties in Colombia and the need of the parties to be bound by a legal document swiftly, regularly the parties enter first into the promise to sale and purchase agreement. Under this agreement, the parties set the terms and conditions agreed by them to do the transaction of purchase and sale of the property, and the buyer paid a percentage of the price agreed as a down payment of the transaction. Under the promise to sale and purchase agreement, the seller promise to sell, and the buyer promise to purchase the property when some conditions are fulfilled, usually when a specific date arrived, depending on the complexity of the transaction. There are some legal requirements to make valid and enforceable the promise to purchase and sale agreement, as follows: (i) the agreement must be done in writing; (ii) the object of the agreement, must not be prohibited or invalid by law; (iii) it must include the specific date or condition that sets the date to celebrate the purchase and sale
ILN Real Estate Group – Buying and Selling Real Estate Series
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