You've found the perfect property, the sale contract has been signed and you are ready to move in or build your dream home. Now imagine the sinking feeling of dread when you discover that there are structural issues, invasions on the land, or worse... Yes there is worse.
In a culture like Colombia - it is always a good idea to know exactly what state the title is in. Whether there are 18 owners, a government loan or dirty money involved, it is on you if you fail to check on the details.
The following information was written by Cristian Daza - Attorney-at-Law, Manizales, Caldas and edited by Erin Donaldson, Editor of Coffee Axis Travel.
Real Estate in Colombia
#1 Do a Study of the Titles
One of the most important things at the moment of buying a property is to know the details. The sure step prior to buying a property is knowing 100 percent that the person who is selling it, is the ACTUAL owner. You should also know its story and be aware of if it has been part of a government seizure.
It seems easy to say, yet so vital to your protection. Information is power and as soon as you know if you can get a certificate of liberty and freedom, the document and good assistance with interpretation, you'll be 60 percent safer when you start negotiations.
In some rare cases, this certificate isn’t enough. Why? Depending on the property profile there may be additional checks to complete:
- Look for permits in the POT (Plan de Ordenamiento Territorial). This deals with how the territory is divided and its permitted uses (for construction, cultivation or commercial activities). If there are environmentally protected areas, places with gold mines or mineral deposits, areas which are protected by indigenous communities (sacred places), or even discover if part of the land is a State/Regional easement making it government territory - and so on.
The idea it is not to scare you away from purchasing property in Colombia. It is vital to work with a lawyer who has relevant experience in real estate transactions, who can understand your necessities and ensure your dream becomes a reality and not a nightmare.
Title and Possession
Our legal system has two steps to obtain the property, one is called the Title, or "real estate deed," the second step is the Possession, or the delivery. In Colombia you're the owner when you have both.
In a normal situation, you pay and then immediately transfer the deed in the notary to register the purchase. The same day you receive the keys and you start your possession. This is one of the most common and optimum situations which a buyer will experience.
Theoretically speaking, everything must happen in succession - within the same day. But, in many cases it doesn't happen like that. Why? There are too many situations to count!
- Prior tenants, or the sellers needing more time to finish leaving with their belongings. The best and safest way in this situation is to be the receiver of the renting contract with the clarification regarding the remaining term and the evacuation of said tenant.
- In the second hypothesis, you can become the landlord of the former owner for a short time. Note: If you let people live in your house without a renting contract, your rights to recover the possession are much more difficult to be made effective.
Tip #1: Don´t let people live in your property without a rental contract. If something happens in the future, this contract is what guarantees you will have possession as fast as possible.
It is possible to be flexible with the facts, or details of the sale. For instance, if you get a bargain price, or you can save 30 percent off the commercial price, or there is an attaching clause with the property, it would be possible to ensure that clients receive the property safely. Even if it isn't possible to possess it immediately.
Keep in mind that life and business has more than one side, before you make an emotion based decision, get assistance.
Purchase Contract vs. Promise to Purchase Contract
We feel it is essential to have a good lawyer review each possible situation to ensure your peace of mind. Then, make a Promise Contract (Spanish) to ensure clarity in the terms and responsibilities that each party must meet.
- The main part is price and specific details of the properties, location area, boundaries, extension and address.
- Complementary conditions are important to protect the money you’ll invest with a clause of “saneamiento por evicción” (cleaning and eviction). This means that the former owner must guarantee an eventual eviction. This is a guarantee that the previous owner leaves the property.
- Time of payment must be reasonable, or the previous owner must pay a fine. Buyers are best served by translating the responsibility of time of payment to a bank in case of any delays.
Tip #2: Be careful at the moment of signing the deed when you see the phrase “compra como cuerpo cierto” or “da por recibida la propiedad” and other similar expressions. It can be translated to “is received as is." In the future it can create problems. The best way is to wait to close the deal once all the things promised have been delivered along with the property. Or, in the worst case scenario, the deed can say "pending "x" condition."
Legalization of Purchase Money
Let's take into account that business with foreigners is a little different. Often foreign buyers don't have a bank account within Colombia.
In this situation, the easiest way to bring in the money is by using a fiduciary such as Alianza Valores. The most direct way to initiate and ensure the transaction, is by showing the promise of purchase contract.
They will essentially receive and transfer your money to the bank account of the seller. This also becomes part of national oversight processes which are in place to prevent money laundering.
Register and Notary Documentation
When both parts are in agreement for the price and the timing of the payment, they meet in the notary. When the transaction is done, they can sign the deed. After that, it takes 3-15 weeks to process the certification of Freedom and Liberty, making you the owner.
You may have problems understanding the legal Spanish and initiating negotiations, an ability requiring sufficient mastery of both languages except in the rare case where the purchaser and seller share a common tongue.
A good lawyer will accompany the purchasing party to explain the deed and review what the seller is saying, and that their client is buying what they are signing for. This review of the purchase/sale documents happens while the notary is writing the deed and after it's done. We consider this an essential step to avoid mistakes and added expenses. One mistake in the deed will cost you time and money to get it fixed later.
Law 1943 or 2018 - Actual Property Value/Price
BE CAREFUL! LAW 1943 of 2018 modified our tax code. It's imperative you declare the real price of the property when you buy it. One of the ways to enforce this law is through the Notary office. This is a person who declares under oath that what is being paid, is in fact the real price.
If you declare that it has a lesser value and manipulate the papers according to the desire of the seller and buyer to pay less taxes in the notary, you could be charged with a judicial action for a criminal act.
You MUST avoid these outdated practices. Do not let the seller convince to declare a purchase/sale value that doesn't match the estimated value.
What you save today could be only the first of many expenditures when you are hit with the consequences.
Editors Note
In 2019, we have seen a major TROLL crisis hit many Expat groups on Facebook. People who don't even live or spend much time in Colombia, are setting themselves up as armchair experts.
We are teaming up with the best local "Boots on the Ground" experts, to ensure we are providing our readers with valuable face-to-face solutions. Coffee Axis Travel is dedicated to ensuring a seamless and gratifying lifestyle abroad.
Come to us for your Real Estate in Colombia needs and we will set you up with our local consultant. For a fee, we will provide private transportation and expert advice with scheduled viewings. We will take you to the properties that fit your vision, and help you fast-track the process of finding your perfect solution. Email for more information: coffeeaxistravel@gmail.com
Written by Cristian Daza
Attorney at Law | Manizales, Colombia
Crisitian Daza is an established attorney and together with his team is ready and willing to help you organize your Real Estate Purchase in Colombia for the best possible outcomes. You can schedule an appointment with him via phone or WhatsApp: +57 320-572-4423 Office: 20 A street No 21 -30 Manizales Office #603 Spanish and English.