ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN ECUADOR]

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KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER ECUADOREAN LAW

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STANDARD FORMS OF AGREEMENTS A. Offer to Purchase sets forth Buyer’s offer of price, date for closing, contingencies for inspections, financing etc. and date for signing a formal Promise of Purchase and Sale agreement, which for validity has to be a notary public deed. B. Promise of Purchase and Sale Agreement sets forth the complete terms of the purchase and sale.

inspection for structural issues, title, and if requested, a plot plan of the premises, especially when the building is relatively new, and plans are available. B. Commercial: In addition to the inspections performed by residential buyers, commercial buyers also usually obtain a survey, an environmental review, and a use and zoning/permitting analysis which is issued by the corresponding municipality. FORMS OF OWNERSHIP A. Residential Property is usually held in an individual’s own name; some owners prefer the Stock Company kind of “shield” . Joint owners may take title as: 1. Tenants in Common (each own 50%); 2. Tenants by the Entirety if the owners are a married couple (they each own the undivided whole of the property). 3. Individual or solo owner. 4. Horizontal Property where each owner owns an apartment or unit and the corresponding portion of the common areas as yards, halls, staircases, pools. B. Commercial Property may be held as follows: 1. As the Owners pursuant to the forms set forth in A above. 2. Stock companies 3. Limited Partnership 4. Other types of businesses incorporations, as personal, limited copartnership (less frequent).

C. Note : In Ecuador, a Promise of Purchase and Sale Agreement may be enforced as a binding contract; better if registered at the City Real Estate Registry. D. The costs of Promise of Purchase and Sale Agreements are very low, since the notarial fees are in that case charged on the down payment or even considered as an undetermined sum deed, not on the Purchase price which will be stated afterwards in the final Purchase deed. II. BROKERS A. All Brokers in Ecuador whether they are working with the Buyer, or the Seller represent the Seller unless the Buyer enters into a separate Buyer’s Broker or Dual Agency Agreement. Brokers are officially registered, so they are good people. However, it´s always important to see if they are affiliated either to the Chambers of Commerce or the Brokers´ Local Associations. B. Seller usually pays the brokers commission unless negotiated otherwise (not customary). III. BUYER’S INSPECTIONS A. Residential: Prior to Closing, the Buyer performs property inspections including

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ILN Real Estate Group – Buying and Selling Real Estate Series

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