[BUYING & SELLING REAL ESTATE IN COLOMBIA] 76
When it is preceded by a Promise, the SPA usually replicates the terms and conditions agreed on the Promise, unless the parties agreed to modify some of those terms. Under the SPA, the seller sells, and the buyer buys the property specified in detail in this agreement for the price set therein, just as was mentioned before in relation to the Promise. When the SPA is used to instrument a real estate transaction, it must be done in writing by a public deed executed by the parties before a Public Notary. The SPA by public deed itself constitutes only the title by means of which the transaction is done, however, according to Colombian law, in order to transfer the property title to the buyer it is required the registration of the public deed under its registration number at the Registration Office to which the property is linked (according to its geographic location). Only when the public deed is duly registered, the property can be considered transferred, and the main object of the SPA is fulfilled. The same conditions indicated to guarantee the Promise may be included under the SPA. Those guarantees are included to secure, particularly, the registration of the public deed, any breach of the contract in relation to its reps and warranties or the existence of hidden flaws ( vicios ocultos o redhibitorios ) that could not be detected beforehand under a due diligence process but that may affect the property title after its acquisition. 2. Due Diligence: In order to have certitude about the legal situation of the property at the time of the transaction, it is highly recommended to proceed beforehand with a due diligence
process over the property. Such a process should include the revision of the property titles, the urban applicable regulations or a land use analysis, when needed. a. Revision of Property Titles: The revision of the property titles is conducted mainly to determine that the seller is the entitled owner of the property and, to rule out the existence of circumstances that affect or may potentially affect the ownership right over that property in case of acquisition (e.g., encumbrances, limitations to the property rights or registered lawsuits). In relation to residential properties, it is important to highlight the existence of some legal figures to protect family housing, such as the Family Housing Assignment (“ Afectación a vivienda familiar ”) and the Unattachable Family Assets (“ Patrimonio de familia inembargable ”) which are indeed encumbrances to the ownership right. The aforesaid revision refers to those legal acts in relation to the property that are duly registered under the registration number of the property, which are reported under a no liens certificate ( certificado de tradición y libertad ). Such certificate should have an issuance date no longer than ten previous days and, in any case, before the execution of any agreement, a new one should be requested and revised to prevent the appearance of recent unknown acts registered after the completion of the due diligence process. Depending on the criteria used by the legal expert in charge of the due diligence, the revision could refer to the registered acts of the property since the beginning of the
ILN Real Estate Group – Buying and Selling Real Estate Series
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