[BUYING AND SELLING REAL ESTATE IN ECUADOR]
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parents and their children, is void if the children are legally incapacitated; and, ii) under current regulations, the transaction incurs costs that are typically borne by both parties unless otherwise agreed. These costs include taxes, municipal fees, registration fees, and other formalities, which are usually paid by the buyer, except for capital gains and transfer taxes, which will be discussed later. b) Conditions for perfection: For the SPA to be perfected, the following requirements must be satisfied: i) It must be executed before a Notary Public in the form of a public deed, identifying both the property and the agreed price; and, ii) It must be registered in the Property Registry Office of the city where the property is located. c) Procedure: The procedure for perfecting an SPA is as follows: Once the necessary documents are obtained, the settlement and payment of taxes must be completed with the local Municipality and the Provincial Council. Simultaneously, a registered attorney must draft the SPA, which will be then executed by the parties before a Notary Public. After the public deed has been finalized, including proof of property tax payment, it must be submitted for registration with the Property Registry Office of the relevant city. RECOMMENDATIONS PRIOR A SALE AND PURCHASE AGREEMENT Legal and Regulatory Optimization in Real Estate Projects: What Should You Know Before Investing? In the Ecuadorian legal context, urban planning and real estate law are constantly evolving, making it essential to protect investments through specialized reports prepared by
accredited professionals. This is particularly important given that urban regulations are dictated by each city’s development and land - use plans. One of the most critical documents to review before acquiring any real estate in Ecuador is the Plan de Uso y Gestión del Suelo (PUGS), or Land Use and Management Plan, which establishes the rules for the use, occupation, buildability, management, and development of both urban and rural land. The PUGS consists of two key components: i) The structuring component, which sets out long-term objectives and the desired territorial model in alignment with the local development and land-use plan; and, ii) The urban planning component, which defines land use, buildability, and the management tools required based on the land’s classification. This plan is in force for twelve years and may be updated at the beginning of each local government term to reflect emerging changes and needs within the territory. As a result, the development of real estate projects involves several critical regulatory and legal considerations that, if not properly addressed, can result in significant delays. Therefore, a successful project must begin with comprehensive due diligence on the property and an appropriate financing strategy. a) Real Estate Due Diligence: Due diligence is an investigative process that evaluates the risks associated with a property at the time of transfer and registration, as well as its potential and limitations concerning urban planning and construction. It is a vital tool for prospective buyers and current owners who wish to understand the status of their property and the applicable local regulations, especially for future real estate projects.
ILN Real Estate Group – Buying and Selling Real Estate Series
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