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Buying in Ecuador

Although the process for buying real estate in Ecuador is simpler than in North America and Europe, it can be confusing for the foreign buyer.

A good introduction to the process is to understand that the rules for purchasing real estate are different in Ecuador --as well as most of Latin America-- than they are in your home country. Here are some of the key differences.

1.       There is no multiple listing service (MLS) in Ecuador. Real estate agents work independently and, as a general rule, do not cooperate very well among themselves.

2.       There is a licensing process for agents in Ecuador but the vast majority work unlicensed. There are no legal consequences for being unlicensed. (CuencaRealEstate is licensed, by the way.)

3.       Less than 10% of properties on the local market have “for sale” signs.

4.       Most properties are "for sale by owner" and often the only way to know this is through word of mouth.  Less than 20% have “listing agents,” as they are called in the U.S. and Canada.

5.       Although Ecuadorian agents may have signed agreements with sellers (in the 20% of cases where a property is “listed”), these are frequently broken (the seller will find his own buyer, for example) and agents rarely go to court to have them enforced.

6.       For a variety of reasons, most of them cultural, many sellers will not allow a "for sale" signs to be posted on their property and some will not allow their property to be listed on a website.

7.       There is no exact equivalent to a North American-style “sales contract” in an Ecuadorian real estate transaction. The Promesa de Compra Venta and the Compra Venta serve this function, as do other promissory documents, but there is almost always a matter of days or even weeks between the time an offer is made and accepted and when these documents are executed. In other words, much depends on word-of-mouth and good faith.  It is possible to draw up a document similar to a sales contract and have it legalized but it would difficult to have it enforced in court. On the other hand, once money has been exchanged, the Promesa de Compra Venta, Compra Venta or other legalized promissory documents are enforceable in Ecuadorian courts.

8.       Depending on the type of property and region of the country, commissions may be paid by either the seller or buyer at rates ranging from 3% to 10%. In most cities, the sellers will pay 3% to 5% on residential sales. A 2008 survey by a Quito real estate association found that sellers typically add 5% to 10% to the ask price if they are paying the commission. Most real estate agents working with foreign buyers charge the buyer a commission ranging from 5% to 8%. Sellers usually lower their ask price if they are not paying the commission so the final price to the buyer will be no higher than if they seller were paying the commission.

9.       Most local real estate agents will not provide a free “tour” of properties. In the local market, it is common practice to meet an agent at a particular property. Agents for foreigners generally provide this service but charge $15 to $20 per hour, with some agents reimbursing the buyer if a sale is made.

10.   All legal documents in the process are written in Spanish. Documents written in English have no legal status. If you do not speak Spanish, however, it is important that you get a translation of all legal documents so you understand the transaction.

Getting the facts

If you use word-of-mouth advice, such as you might find on internet blogs, bulletin boards or forums, be sure to verify the information with your attorney. Although you can pick up useful information this way, much of what you read on-line is incorrect. Take this sort of information for what it is: a good starting point.

There are a number of reliable tools available for those seeking real estate and business advice about Ecuador. We recomYunguilla viewmend the Ecuador Owner's Manual, published by International Living (Go to to order). The book provides an overview of buying property in Ecuador, updated every two years, as well as overviews of the visa process and relocating from another country to Ecuador. If you purchase the Owner's Manual are interested in hearing of  updates since publication, contact David Morrill at He is also a partner in CuencaRealEstate.

Your best source of information for buying property, of course, is the attorney who handles the transaction.

Once you understand the purchase process, most buyers will find that purchasing property in Ecuador is simpler than in their home country. Foreigners, whether they are residents or not, have the same right to own property in Ecuador as citizens and land registry offices do not  record whether a property owner is a foreigner or a native.

The Process

Once an agreement to purchase has been negotiated but the buyer is not yet ready to pay the seller the full price, the buyer's attorney will prepare a Promesa de Compra-Venta, or promise to buy. As noted above, the Promesa de Compra-Venta document is similar to the sales contract in North America, although it is more formal and much more binding on the buyer. It is customary that the buyer makes a downpayment at this point, usually about 10% of the purchase price, when the Promesa de Compra-Venta is signed. The Promesa de Compra-Venta, which is a notarized document, states the sales price, the closing date and lays out penalties for default. Unlike a North American contract, there are fewer avenues for opting out of the deal. It is important that the buyer complete all inspections of the property and negotiate any price adjustment prior to signing the Promesa de Compra-Venta.

Depending on terms laid out in the Promesa de Compra-Venta, the final step in the purchase is execution of the Compra-Venta.

If the buyer is ready to pay the full price negotiated with the seller immediately, the Promesa de Compra-Venta can be eliminated, and the Compra-Venta, the final closing document, can be executed. This saves time and legal fees. The Compra-Venta is also signed in the office of a notary and all outstanding money due the seller is turned over. A brief point of explanation: in Ecuador, as in much of Latin America, a notary is an attorney with advanced training. Generally, you pay the notary at the conclusion of the notarization.

The buyer's attorney is responsible for researching the title of the property, making tax payments from funds the buyer has provided and, after the signing of the Compra-Venta, registering the property with the Office of Land Registry. The attorney is also responsbile for making certain any existing leins on the property are satisfied. The attorney will present two notarized copies of the Compra-Venta to the Land Registry. One will be filed at the Land Registry Office, the other returned to the buyer and serves as the property deed.

If the buyer is unable to be in Ecuador at the signing of documents, he or she can sign over Power of Attorney to an attorney or representative.

Closing Costs and Taxes

Closing costs and fees and taxes are very reasonable in Ecuador. A buyer should expect to pay about 1.5% of the purchase price for these costs.

Real estate taxes and fees are based on an assessed municipal value, generally 15% to 50% of the purchase price. The value will vary by area of the country and by such factors as whether the property is located in a rural or urban area. In other words, a house costing $170,000 may have a municipal tax value of $50,000. The buyer will pay a registration tax of 1% based on this municipal value. At the point of sale, a transfer tax, also based on the municipal value, is also paid. Your attorney should give you a close estimate of all closing costs prior to closing.

Property taxes are very low in Ecuador. The owner of the $170,000 house mentioned above, pays about $250 annually. Again, the tax is based on the muncipal value.

As we mentioned earlier, if you are not fluent in Spanish, make sure to have the closing documents translated into English or your  native language. This is well worth the extra expense. If you are present at the closing, the Ecuadorian notary will make sure that you understand the documents you are signing.

A Final Word

If you own real estate in Ecuador you should have an Ecuadorian will. Although it is very possible that your Ecuadorian assets will go to your heirs without a will, this can be a long and painful legal process. You will pay less than $200 to have a simple will drawn up by an attorney and notarized. If you wish, you can write a "hybrid" will that will be good in both the U.S. and Ecuador. Simply have the will notarized in Ecuador with a copy sent to your representative in the U.S.