[BUYING & SELLING REAL ESTATE IN COLOMBIA] 77
applicable. b. Sale and Purchase Agreement (Contrato de Compraventa) The sale and purchase agreement is the regular form of agreement used to acquire real estate properties. When it is preceded by a promise to sale and purchase agreement, by means of this agreement the main contractual obligation of the promise is performed and it usually replicates the terms and conditions agreed on the promise to sale and purchase agreement, unless the parties agreed to modify some of those terms under the sale and purchase agreement. Under the sale and purchase agreement, the seller sells, and the buyer buys the property specified in detail in this agreement for the price set therein, just as it was mentioned before in relation to the promise agreement. When the sale and purchase agreement 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 agreement by public deed itself constitutes only the title by means of which the transaction is done, however, according to the Colombian applicable law to duly 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 geographic location). Only when the public deed is duly registered, the property can be considered transferred, and the main object of the sale and purchase agreement is fulfilled.
The same conditions indicated to guaranty the promise to sale and purchase agreement may be included under the sale and purchase agreement. Those guarantees are included to secure, among others, the registration of the public deed, any breach of the contract in relation to the Reps and Warranties included therein or, the existence of hidden flaws (vicios ocultos o redhibitorios) that could not be detected beforehand under a due diligence process and that may affect the property title after the 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 previously with a due diligence process over the property. Such process should include the revision of the property titles, and the urban or land use analysis, when applicable. 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, named Family Housing Assignment (“ Afectación a vivienda familiar ”) and Unattachable Family Assets (“ Patrimonio de familia inembargable ”) which are
ILN Real Estate Group – Buying and Selling Real Estate Series
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