[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:
Notary and the time where the sale and purchase agreement public deed will be executed; (iv) the agreement must determine the sale and purchase 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 property are 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 applicable, 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 its fulfillment, which means the execution of the promised sale and purchase 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 to the inclusion of penalty clauses equivalent at least to 20% of the price, 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 applicable. b. Sale and Purchase Agreement (Contrato de Compraventa) The sale and purchase agreement (the “ SPA ”) is the regular form of agreement used to acquire real estate properties.
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 (the “ Promise ”). Under this agreement, the parties set the terms and conditions agreed by them to do the transaction of sale and purchase of the property, and the buyer paid a percentage of the price agreed as a down payment of the transaction. Under the Promise, the seller promise to sell, and the buyer promise to purchase the property when some conditions are fulfilled, usually when a specific date arrives, depending on the complexity of the transaction. The following are some legal requirements to make valid and enforceable the Promise: (i) the agreement must be done in writing; (ii) the object of the agreement should not be prohibited or invalid by law; (iii) it must include the specific date or condition that sets the date to celebrate the sale and purchase agreement which must be done by public deed. In relation to this requirement, as stated by case law, it is also necessary to indicate the Public
ILN Real Estate Group – Buying and Selling Real Estate Series
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