Overview of the Real Estate Buying Process in Ecuador
It is very common that foreigners want to acquire houses in countries other than those of their origin and residence, either for business or because they are looking for a new place to live in. That is why at HalloCasa we strive to give reliable and concrete information on how the process is carried out.
On the issue of restrictions for the acquisition of properties, there is none for foreigners in Ecuador (Art. 9 of the Constitution of the Republic, in accordance with Art. 43 of the Civil Code).
The Ecuadorian constitution guarantees everyone the right to purchase and own a property, however, there are some restrictions such as buying properties that are located in border areas (Source).
Another benefit is that if you buy a property of USD $ 25,000 or more, you will automatically receive a resident’s visa as an investor after completing the corresponding forms. (Source).
2. You like a property
We are glad to see that you are interested in a property published on HalloCasa. On HalloCasa you can use a lot of tools in order to understand the process of buying a property, besides finding general information. On HalloCasa you can also find available documents and additional information, which will allow you to investigate in detail the environment and infrastructure of the property, facilitating the purchasing process.
3. Contact the seller
In Ecuador, you can acquire a property either by contacting your seller directly, or by hiring a real estate broker. HalloCasa will indicate the language in which you can communicate with the respective person. Most of the agents speak English, but in case you need a translator, you will also find those.
4. You receive detailed information about the property
The seller will send all available and necessary documents to you. However, a visit to the property may be of interest to you, so if you need assistance with travel arrangements, you can contact experts who will be available to advise you at the time you contact them.
5. You negotiate the contract and the price
Contract negotiations are often processes in which both parties gradually approach each other. It is important to keep in mind that in Ecuador specific conditions to the sales contract apply, so it will be useful to know its details. You will be able to know notes regarding the additional purchase costs in our frequently asked questions, this might be very interesting for you.
6. You sign the contract and make the payment
You are about to acquire your property! You sign the contract, either personally in Ecuador or through an authorized representative of the country of origin. At HalloCasa you can consult information about notaries whom you can contact. Also, read below our detailed process of buying real estate in Ecuador.
7. You become the owner of the property
Your property is already registered in your name at the Ecuadorian Property Registry. Congratulations! You recognize that this country has great potential, and believe that this is a promising country. We are happy for you! Enjoy your property!
Detailed Process of the Buying Process of Real Estate in Eucador
- 1. You like a property
- 2. Contact the owner / agent
- 3. Transfer Information
- 4. In case of requesting a valuation
- 5. Signing of the promise of sale agreement
- 6. You transfer the money to a bank account in Ecuador
- 7. Buying from abroad or travelling to Ecuador
- 7.1 Option 1: You travel to Ecuador
- 7.2 Option 2: You buy from abroad
- 8. When signing the contract in Ecuador
- 9. When signing the contract abroad
- 10. Registration of Property Title
- 11. Open a Bank Savings Account
1. You like a property
For each property, you will find information on the following topics:
- General information about the property
- Its location
- Its infrastructure
- Demographics of the area
- Additional Information
2. Contact the owner / agent
Methods of contacting the owner / agent:
- Via email
- Via Telephone
- Via Skype
Pay attention to the language skills of the owner / agent.
3. Transfer Information
The owner or broker in charge of the sale of the property will send you the following documents:
- Certificate of assessment: (Source)
This document verifies if the property is free of mortgages, liens (embargos), or other potential limitations . This certificate is a brief story of the property (be it home, building, land, etc.) and the names of their owners. Thus, the Legal Registral Security is verified.
You can request it online. This video will show you how to proceed (Video).
If the property is new, the Property Registry recommends that the real estate project has the respective plans registered or approved by the Municipality of Quito and, if it is a property within a condo, that the declaration for horizontal properties is approved (Source).
- Certificate of payment of “Taxes on urban and rural properties”:
The municipalities collect an annual tax on rural and urban properties called “Taxes on urban and rural properties”. The tax is based on the official value minus some deductions. Rates are relatively low. If a taxpayer has several properties, the values are grouped by municipality, and the rates are applied to the total value per municipality (Source).
- Certification of payment of common expenses (administrative fees in the horizontal properties) (Source).
This document certifies that the owner has paid all the costs of maintenance of common areas, administration and security of their property located in a condominium building or any horizontal property up to the respective date (Source).
If you buy directly from the legal owner, we recommend you to consult an attorney, have your documents translated and certified before they are sent to you.
You can contact translators through HalloCasa.
4. In case of requesting a valuation
An appraisal is a concept given by a specialist (in Ecuador appraisers are called “experts”) in this subject about the value that should be assigned to a property for its subsequent sale. In order to issue this concept, several aspects must be taken into account: the state of the property, its age, the area where it is located, and its general physical characteristics.
In the case of Ecuador, the National Direction of Appraisals and Cadastre, which is a Directorate of the sub-secretarial of Habitat and Human Settlements, provides specialized services in real estate appraisals to the requesting entities, whether they are natural or juridical in the urban and rural areas at the national level (Source).
HalloCasa offers you the option to contact experts and real estate appraisers. You will find the following information on HalloCasa:
- Name of the Evaluator
- Contact Details
- Available languages
5. Signing of the promise of sale agreement
- The market price (or real value)
- The appraised value (optional)
- The environment
You or your representative signs the promissory sales contract. The fundamental parts of this contract are:
- Full identification of the buyer and seller. Foreigners are identified in Ecuador with the passport. However, in order to invest in the country, the foreigner must also present his identity card and the RUC number (Source). The RUC is the Single Taxpayers Registry and any natural or juridical person with economic activity in Ecuador must obtain the Internal Revenue Service of the Equator (SRI) (Source).
Requirements for obtaining the RUC:
- Submit the original and provide a copy of the identity card, citizenship or passport with identification sheets and type of visa.
- Submit the original of the voting certificate of the last electoral process
- Provide a copy of a document certifying the address of the official address on behalf of the taxpayer
The taxpayer approximates to any window of attention to the taxpayer of the Internal Revenue Service at national level carrying the above mentioned requirements and registers the Single Taxpayer Registry (STR). There is no cost to get the STR. The process takes approximately 5 minutes.
- Detailed description of the property including the identity number which is called Royal Folio.
- Value of the property and form of payment. The value of the penalty clause (“guarantee”) should also be stipulated in case of default by either party.
- The notary’s office in which the definitive deed will be signed must appear, as well as the date and time of such signature.
- It also stipulates the distribution of notary expenses, taxes, and any other expenses that cause the process of buying and selling.
To know the real estate purchase rates in Ecuador, see the section “What are the transaction costs (notary fees, taxes, transfer costs)?” in our FAQs below.
- In case you make the purchase directly with the legal owner, ask a lawyer to translate and certify all documents. Make sure you have a copy of these.
- For those who do not have enough knowledge of Spanish, it is recommended to consult a lawyer who speaks the language, or hire a translator: HalloCasa provides you with a list of translators so you can get in touch with the respective ones.
- Examples of these documents can be downloaded from “Downloads”.
- Remember that the sales contract in Ecuador must be authorized by a notary.
6. You transfer the money to a bank account in Ecuador
Bringing money to Ecuador: Every passenger entering the country with an amount equal to or greater than USD $ 10,000 or its equivalent in other currencies, has the obligation to declare it before the corresponding authorities, in accordance with the Organic Law on Prevention, Detection and Eradication of Crime Money Laundering and Financing of Crime. this purpose, you must complete the Customs Registration Form (CRF) (which you can find in “Downloads”), which is given by the airlines during the flight and then delivered to the customs authority; The declaration of the amount does not involve the payment of taxes on foreign trade, and also if the amount has been correctly stated, it will not be subject to any penalty (Source).
Sending through Currency Exchange Offices:
- Western Union:
- Submit your Identity Document. If you have a Western Union Card, please also show it.
- Beneficiary’s first name and last name.
- Give the money in cash and sign the corresponding receipt.
- Obtain the receipt. This will have the Transfer Control Number that identifies your transaction (Source).
- Zoom: Although it works the same way as Western Union, you should check the shipping rates (Source).
- Bank transfer to someone you know: to do so, you must meet the following requirements to transfer money to a bank account in Ecuador:
- Beneficiary data
- Beneficiary account number
- Bank Swift Code
- Address of the beneficiary
- Open an electronic savings account in Ecuador:
For foreign customers requesting to open a bank account:
- Passport or copy of the Ecuadorian Identity Card with legible color.
- Certificate of enumeration issued by the Ministry of Foreign Affairs.
- Copy of the payroll of a service: water or light or telephone (from your place of residence).
- In case the foreign citizen is a member of a company, attach a copy of the contract or letter of the company indicating their functions and the time of the same in the country.
- A personal written reference (from an Ecuadorian client) or bank or company.
7. Buying from abroad or travelling to Ecuador
7.1 Option 1: You travel to Ecuador
Before traveling it is ideal to previously confirm the time you will need to carry out the complete business. Remember to bring all the necessary documentation. Check with your bank about the best option to transfer the money to Ecuador according to the seller.
7.2 Option 2: You buy from abroad
In this case, you must grant power to a representative in Ecuador, fulfilling the requirements that you have previously indicated.
Because this document must be legalized in the Ecuadorian consulate closest to your residence, we suggest you to contact the consulate so that the document meets all the conditions that they demand. This will save time and make progress in the process.
In“Downloads” you can download an example of such a power.
8. When signing the contract in Ecuador
- The notary checks all documents (see “Downloads”).
- You sign the contract.
- You make the negotiated payment.
On the date, specified location and before a public notary, you and the seller or broker in case it is done through an intermediary, will meet to sign the deed. At the time of doing this, the legal transfer of title to the property is celebrated.
After signing, you will transfer or deliver the agreed money and the seller will proceed to make the transfer of the property.
9. When signing the contract abroad
- The notary checks all documents.
- Your representative signs the deed and makes the agreed payment.
10. Registration of Property Title
Registration of Property Title
- The document must have attached the promissory sales contract, issued by legal review.
- First and Second Copy of the deed.
- Certificate of Current Assessments.
PROPERTY TITLE INSCRIPTION
- The user (The person buying the property) must pay the cashier the value for the inscription.
- You will receive your payment slip indicating the date you have to approach the Registry to withdraw your transaction.
WITHDRAWL OF YOUR PROPERTY TITLE
- The user must take a ticket to be assisted.
- Provide proof of payment.
Important: Your scripts may have 3 types of responses:
– The user must make the corrections that are requested.
– The user must take a ticket to be assisted.
– The user has to approach the counter for property titles to withdraw the suspension.
– The user immediately re-enters the property title through the cashier with no value to pay.
– The user receives the document with the new delivery date.
– The user must approach the counter for the property title to sign the book of the repertoire for the delivery of the deed.
Estimated delivery time:
4 working days (Sources).
11. Open a Bank Savings Account
A foreigner with a tourist visa in Ecuador cannot open a checking account, however, it is possible to open a savings account.
To open a savings account, please provide the following:
● Copy of your Passport
● Utility Services bill
● Certificate of registration
● 2 personal references
● Savings Account Opening of $ 200 (Source)
What are the necessary expenses for the process of buying and selling a property in Ecuador?
The values are stated in US Dollars because it is the current Ecuadorian currency with the highest circulation.
The mandatory expenses are:
- Certificate of assessment: USD $ 7 (per property) (Source). This process takes 6 business days. To request it, you must complete Form RPC-01 section A (you will find the format template in “Downloads” (Source).
- Tax on utilities (transfer of ownership) 0.5% On the value of the property (Source).
*Inside the table: “When the appraisal exceeds US$ 20.000 it is charged the amount of US$ 200.00 plus 0.75% for the excess value”
- The commission of a real estate agent for the urban perimeter is 6% and for the rural perimeter 8%. (Source).
- Assessor (appraiser), if desired: an appraisal in Ecuador is charged depending on the property type and its characteristics. This value is paid by the person who hires.
The appraisals are charged depending on the value of the property (Source):
Up to $ 1,000,000.00: 1%
Up to $ 1,000,000.00: 0.9%
Up to $ 2,000,000.00: 0.8%
Up to $ 5,000,000.00: 0.7%
Up to $ 10,000,000.00: 0.6%
More than 10.000.000.00: 0.5%
● Translation costs, if necessary, will be paid by the person who hires the translator.
Where can I find real estate financing in Ecuador?
Pichincha bank offers loan service for housing for foreigners living abroad.
The requirements are:
Purchase of housing from abroad through Pichincha bank:
- The minimum amount of credit is $ 3,000 and the maximum amount is $ 60,000.
- The interest rate is adjustable.
- For migrants, the financing of housing from abroad through Pichincha bank) is offered between 3 and 12 years (Source).
Through the Austro Bank:
- Financing the purchase of a home from outside Ecuador is easier thanks to Austro Bank, since this loan finances up to 60% of the appraisal of the new home.
- A minimum of 3 years of work stability is required abroad.
● A co-debtor with residence in Ecuador is also required (Source).
About the real estate market in Ecuador:
How liquid is the real estate market?
As of June 2016, the Ecuadorian real estate market has seen a drop in housing prices, one of the sectors that have felt the effects of the economic crisis and the safeguards proposed by the government.
Due to the high prices of real estate located in commercial and central urban areas, citizens have opted to acquire housing in rural areas, which significantly reduces their value, thus generating new residential sectors (Source).
Between 2005 and 2010, square meter prices have increased as follows:
47% in Quito
65% in Guayaquil
52% in Cuenca.
Taking into account the three most representative cities of the sector, the average price of m2 has varied from US $ 473 in 2005 to US $ 731 in 2010.
The Association of Ecuador Housing Promoters estimates that the increase is due to adjustments for the increases in material prices that represent 60% of the direct costs, labor that is 30% of the costs and the overall inflation rate of the economy (Source).
How has the Ecuadorian real estate market developed in the past years?
The downward trend in sales of the real estate sector, which has been in place since July 2015, has remained so far. Two factors have affected the construction sector since 2015 (see above): the announcement of the projects of surplus value and Inheritance Law, which was restarting again in 2016, and the economic crisis of the country, which translates into a fall in demand for houses, apartments, etc. Another factor which will affect the market will be the 12 to 14% increase in value added tax (VAT) (Source).
The following types of housing are common in Ecuador
House or villa:
Permanent construction made with resistant materials;
Set of rooms which is an independent part of a building of one or more floors, with water supply and exclusive hygienic service
It has a common entrance and, in general, does not have exclusive service of water or hygienic service
Emergency House (pre-fabricated)
Single-story construction with brick walls, adobe, block or wood and thatched zinc roof; Single fall of water (roof) and no more than two rooms
Rustic construction, covered with palm or straw, with cane walls and with cane or earth wood floor
Construction of adobe or straw walls, dirt floor and thatched roof.
What are Strata?
The socioeconomic strata in Ecuador are divided as follows (Source).
A: (First stratum) Rich
B: (Second stratum) Medium High
C +: (Third stratum) Media
C-: (Fourth Stratum) Medium Low
D: (Fifth stratum) Low
Legal Matters in Ecuador
Do I have to declare my rental income at the Internal Revenue Service of Ecuador – IRS?
Yes. According to the reform proposed by the government, people who remain in the country will be considered as tax residents for tax purposes, including sporadic absences, more than 183 days in the same fiscal year.
A natural person must pay taxes to SRI if the main nucleus of his activities or economic interests in Ecuador, within the last 12 months, is greater than that of income in any other country. It also states that if his / her assets or equity in Ecuador are superior to other countries, he / she will also be considered a tax resident (Source).
According to the Art. 60 of the tax Code, foreigners who receive in Ecuador any kind of remuneration, shall be considered as domiciled in Ecuador, although he/she is residing abroad.
Is there a limit on the amount or price for investments?
No. You can acquire properties with total freedom according to the Ecuadorian constitution. (Source)
What kind of real estate can a foreigner acquire in Ecuador?
Any which is not in the public or official Ecuadorian domain (Source).
What immigration policies apply to foreigners? Can I bring my family in case of an emergency?
First of all, for a foreigner to make real estate investment in Ecuador, he or she must apply for a real estate investor visa
To obtain a Real Estate Investor Visa or Fiduciary Papers, he/she needs:
- Real Estate and / or Real estates Shares
- Property Title of real estate, registered in the Property Registry
- Updated certificate of non-existence liens on the property
- Any type of certificates or titles, including covered bonds, Bonds of Pledge, Accumulation Policies, Shares, Obligations, Bonds issued by the Private Sector of Ecuador.
- Copy of the title or certificate of deposit at the Central Bank of Ecuador.
- Bonds of the State or Other Public Sector Entities
- Copy of the certificate or deposit document made at the Central Bank of Ecuador for the purchase of bonds to other public entities.
In addition, you need:
- Visa application
- Passport, valid for not less than 6 months
- Criminal Record Certificate “Criminal Record Check”
- Medical certificate notarized stating that you do not suffer from infectious diseases, including an HIV test
- Two current photographs, passport size, color, front and white background;
- Visa right: USD $ 200
In the three preceding cases, the minimum amount of the investment must be an amount whose productivity allows the person concerned to live suitably, depending on the number of family members. Check with the nearest Ecuadorian Consulate on this matter.
If the investment was made, the supporting instrument is required.
If the investment has not been perfected, the applicant must guarantee it with a deposit in the Central Bank of Ecuador.
Note: All immigrant or nonimmigrant visas require an application form. The cost is USD $ 30.
Family members must apply for a protection visa (Source).
Is there a reliable property manager on site?
HalloCasa provides you with a list of property managers.
Can I transfer money from Ecuador to my home country?
Yes, you can transfer money from Ecuador abroad. We recommend that you discuss this matter directly with the administrator of your property.
Besides the bank transfer option, you can use currency exchange companies like western union, money gram, or zoom.