Learning about Ecuador laws is one of the things that you need to do when you plan on investing in a property in this area. Regardless if you want to live there on a temporary or permanent basis, you want to make sure that you will not get in trouble with the local authorities in any way.
When you buy a property, that investment is something that you naturally want to protect. Whether you plan on living on it or having it rented, it is important for you to know the rules and regulations that will cover every transaction that you will make. This is not only to stay away from illegal activities, but it is also the smart way of protecting yourself and the money you will be investing.
The Ecuadorian property market
The great thing about the Ecuador laws on real estate investing is that they are buyer friendly.
It is well written and guaranteed by the country’s constitution. It primarily provides protection for both visitors and residents. According to an article published on GlobalPropertyGuide.com in 2012, the country is experiencing an economic growth. Parallel to that is the growth of the property market as well – which is something that the government is willing to support. There is a clear intent to provide better housing conditions as local and foreign investors alike are rushing to the big cities to purchase properties. This makes Ecuador the best, if not one of the best options when it comes to international living.
Although there is no clear measurement for the house price index, there is a construction price index that will give buyers an idea of the overall state of the market. In 2012, the construction price index rose to a historical high of 234.569, an increase of 6.88% in 2011 and 1.95% in 2010. It is a long way for the 210.79 in 2009.
Important laws to learn when buying a property in Ecuador
Before you scrutinize the Ecuador laws about real estate, you need to ask yourself about your intentions with the property that you are buying. Do you want to live in it? If that is the case, you need to learn about the residential laws as well. If you wish to acquire a real estate property to generate rental income from it, then you need to learn a bit more about the laws in this country.
You can say that buying a property in Ecuador is one of the least complicated in the world. In fact, you can get in the country, go to a property for sale and buy it with only your passport as your legal document. The Ecuador visa that you hold is valid enough to allow you to purchase a property.
In you intend on living in your property, you need to process a residence visa so you can stay longer in the country. Or if you started with a tourist visa, and upon arriving, you decided to stay for good, this is a change that you can easily do. A tourist visa will allow you to do your business for 90 days – or you can extend it to six months. This will cost you only $240.
If you decide on staying, you can get a more permanent resident visa. Included in the process of the visa is you need to live in Ecuador for 9 months every year – at least for the first two years since your visa is given to you.
In terms of rights, local and foreign real estate investors are on an equal square. Certain Ecuador laws that you need to follow include the following:
Properties within 50 kilometers along the coast or any international border is off limits.
In case foreigners wish to purchase a property there, they need to request a special permission.
Property buyers should also be aware of locations that are considered as areas of national security.
Be careful of buying “derechos y acciones” or simply put, buying only the shares to a property. In case the property owner dies, the real estate left behind will be given to the heirs – at least if the owner did not leave a will. This purchase is risky.
“Cuerpo cierto” or an outright sale of a property is a less risky real estate investment.
The seller is required to prove that all taxes and bills of the property is paid for and current.
Most of the payments are shouldered by the buyer – except for the commission on the real estate agent.
Transfer of title should be through a public instrument. It has to contain the real consideration of the property.
Deeds are required to have stamps and should be signed by the grantor and grantee. This has to be recorded and filed in the local Registry of Properties.
Bilateral agreements can use mortgages as a valid proof – which has to be executed as a public instrument too. It will only effective based on the date it is recorded in the local registry.
When a mortgage foreclosure happens, it is influenced by what they call summary executory suit. In most cases, buyers will lose the right to redeem the property.
Mortgage financing is preferably on a short term. That is why cash is a common payment method in Ecuador.
When you intend on using the property for rental income, you need to take note of a couple of Ecuador laws that are beyond the “buying process.”
Rental income is usually taxed based on 25% of how much is earned.
US citizens are required to pay worldwide income taxes to the US government but in Ecuador, they are covered by the Foreign Earned Income Exclusion.
It is highly advisable to get the service of a real estate attorney when buying a home in Ecuador. That way, you will benefit from their expertise and knowledge of the Ecuador laws.
This article was originally posted on www.ecuadorexpatrealty.com. All copyright and trademark protections apply.