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Ecuador - Buying Property
Foreign investors and expats are attracted to Ecuador’s property market thanks to the low prices, dollar based economy and beautiful landscapes.
Reasons To Pause Before Buying A Property In Ecuador
The banking section of this country guide gives a brief history of Ecuador’s turbulent economic history. Some expats prefer to keep their savings back home and have a monthly transfer into their Ecuadorian bank account to pay their regular living costs. Based on this, you may want to consider how much of your financial wealth you want to lock up in property.
Additionally, the title of a property is not as secure in Ecuador as it is in many Western countries. If your lawyer does their job properly, they will unearth any problems with the deeds and or how the property has been officially recorded. If they don’t, you will have a lengthy wait for the sale to proceed or worse, you could lose your property.
Meanwhile, with existing properties, the relatives or divorced spouse of the seller can step in and slow down the sales process. These people may demand their entitlement to equity from the property and if so, everything has to pause whilst their claims are investigated and negotiations concluded.
If any of these risks are of concern, renting may be a better option. That said, with a good lawyer – one from Ecuador, so they know the system – and appropriate financial advice, you can proceed with a property purchase on a surer footing.
Funding Your Property In Ecuador
If you arrived in Ecuador less than two years ago, you will find it difficult to secure a mortgage. Lenders have to be confident you are not about to disappear abroad and that you can maintain a financially viable household in your new country.
You therefore have the choice between purchasing property from your own savings, or waiting to be established in the country before hunting for a home.
Occasionally a third option is available, whereby a home seller is willing to accept instalments over a few months. Tread cautiously and think through all the things that could go wrong before you proceed with this type of financing.
If you are buying your home without a mortgage (and associated valuation), be aware that price comparison data is not available. This means you have no idea whether a property has an excessive price which you will struggle to reach when you later come to sell. Ensure you have viewed enough properties in the area to have a good idea of what the realistic prices are.
Good Reasons To Rent Before Buying
In addition to building a good credit history in Ecuador for mortgage purposes, renting a property before you buy has a host of other benefits.
The country has significantly different environments and climates. Experiencing every season in an area helps you understand if you want to live there in the long term.
A wonderful holiday is not the same as living in a country. You will probably want to be near some expats in order to feel part of a small community, but every person is different. You might think the main street of a small town is sufficient for all your needs but a few months later realise you really miss shopping malls and departments stores. Time in a rental home gives you breathing space to assess what works well and what doesn’t.
Furthermore, homes in Ecuador may be different from what you are used to. If you haven’t lived in a terraced or semi-detached home before, you won’t be used to hearing your neighbours moving around or playing loud music. Flats might be less insulated against sound than you have previously experienced. Whether you are aiming to live in a town or city or out in a rural farmhouse, trying the style of house before you buy will inform your purchasing decision.
Areas To Consider Property Purchases
Some people need to live near their jobs, while others seek rural seclusion. Many expats want to find a coastal retreat to enjoy a pleasant retirement in warm temperatures.
Our article Beachfront Retirement Communities For Expats In Ecuador sets out some of the popular options available for those seeking a new home in a comfortable and relaxed community by the sea.
Building Your Own Home In Ecuador
Many expats prefer to purchase a piece of land and build the house of their dreams. The same risks regarding title deeds of land apply here as for existing homes, so ensure you always use good quality legal services.
Don’t draw up the plans and expect a local contractor to get on with the build while you live elsewhere. A building project anywhere in the world can be delayed or fail with that set-up. You need to be onsite managing the project and co-ordinating the various services, or employ the services of someone else to do this.
A good architect can draw up plans which look wonderful. However, a huge percentage of builds go over budget, meaning you then have to seek cutbacks. Be prepared for this, or have a serious contingency budget to hand.
Close management is also required since in Ecuador the contractors will not fix mistakes or niggles for free. If something goes wrong, you will pay for it to be fixed. Being onsite means you can spot these problems earlier.
There will be a huge number of personal decisions to make. What finish do you want on the walls and ceilings? Where should the sockets be placed in each room? Even tiny decisions such as the design of the toilet and the handles for each door can have a big impact on your satisfaction with the house if you don’t like what has been fitted.
You can find out more in our article Should You Buy Or Build A House In Ecuador?
The Importance Of A Good Lawyer
Always find a qualified, reputable lawyer who is based in Ecuador. They must be independent from the seller and working completely for your benefit. If you are buying a new build property, do not use a lawyer who has been recommended by the developer.
When you make the initial deposit for a property, do so through your lawyer, with the correct paperwork. If issues arise later with the property or its title which legitimately prevent you from completing on the purchase, you will find your case strengthened by the involvement of the lawyer. Informally handing over the deposit at the end of a sales pitch leaves you much more vulnerable to financial penalties if you later fail to reach completion.
Key checks the lawyer must make during the purchasing procedure include:
● Requesting the Certificado Simple from the property register and checking the title (or Escritura) thoroughly
● Ensuring there are no known debts or outstanding taxes on the property
● Requesting the La Linea de Fabrica from the local authorities and inspecting it for zoning and potential restrictions on the land
● Checking that the legal boundaries of the property match the actual boundaries in place; an Acta de Nueva Linderacion will be necessary if the original title did not include measurements
● Asking whether the property can be directly accessed from the road or if someone else owns an access route?
● Searching for any water or mining concessions that exist
● Obtaining colour copies of your passport
● Correctly registering the property in your name
● Informing you of the correct local authority taxes and property registration fees
● Presenting a written invoice for the legal work in accordance with your initial quote
Ensure you understand everything your lawyer has checked. If anything is unclear or still outstanding, question it. If all goes well, the process should be completed within four weeks.
Home Inspections In Ecuador
It is not part of the standard property purchase system in Ecuador for a home inspection to be carried out. However, once you have purchased a property, that’s the end of the matter for the developer or seller, and you cannot come back to argue that the foundations are weak or the wiring is faulty. Therefore, the services of a building surveyor, whilst an additional cost at a time you can least afford it, may save you a lot of money in the long run.
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