Ecuador Guide
Buyers Guide
Transaction Process: At the point when both parties reach an agreement to purchase a property 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”, promise to buy. The Promesa de Compra-Venta (promise to purchase) document is similar to the sales contract in North America, although it is more formal and binding on the buyer. It is customary that the buyer delivers 10% of the purchase price at the signing of the Promesa de Compra-Venta. The Promesa de Compra-Venta, which is a notarized document, states the sales price, the closing date and provides detailed explanations about penalties for default. Unlike a North American contract, there are fewer avenues for opting out of the deal and retrieving the 10% binder back. 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.
If both parties are ready to close the sale at the time the price is negotiated, 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 to 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 fee generally runs between $50 and $ 300.
Legal Guide
Having an experienced Ecuadorian attorney is a critical component when purchasing property in Ecuador. 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 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, fees and taxes are a fraction of what a real estate buyer will pay in the United States for similarly priced property. A buyer should expect to pay about 1.5% of the purchase price for these costs.
- Taxes are based on an assessed municipal value, generally 2% to 2.5% of the purchase price. The value varies by area of the country and by such factors as whether the property is located in a rural or urban area. In other words, an urban house costing $170,000 has a tax value of $4,250. The buyer will pay a registration tax of 1% of the municipal value of the property and a transfer tax of between 10% and 38% of the municipal value.
- Property taxes are very low in Ecuador. Owners of the $170,000 house pay approx $110 annually.
- Buyers of real estate in Ecuador will find that all fees, taxes and legal fees for a real estate purchase will amount to approx $1,500.
Towns
Salinas: Known as “little Miami” this coastal town is the heart beat for summer vacationers and the countries elite who are flying down to this coastal city for major holidays and beach lifestyle that have made many foreigners look for summer residences. Salinas has yacht clubs on both ends of the peninsula which makes this summer resort one of the finest investment areas along the coast and simply gives it a laid back feeling with a great deal of infrastructure available. The beaches are very nice and this beach town has plenty to do from sailing, fine dinning, gambling and more…
Playas: is a beach area but is quickly transforming into the mecca for sun-worshipers. There is a stunning golf course just 15 minutes away.
Olon: “also know for its preppy vibe” is a very nice area with one of the beast beaches on the coastline and scenic picture viewing from stunning mountain top properties. This beach town has smooth and gentle sloping beaches. Olon is positioned next to Montanita Beach which prides itself as the “hippie retreat” of South America.
Montanita: This surfing town is the Las Vegas of Ecuador. It attracts over a dozen of European nationalities and is the mecca for surfing along the coast. Entertainment is not shy and this small town host a slew on bars, cubs, restaurants and most importantly a great beach with tons of water sports. Teenagers and adults of all ages will love the excitement that Montanita offers.
Manta: Manta is the largest city on the coast and is the largest tuna exporting city in the world. It also is the fastest growing city in Ecuador. Beautiful beaches and mountains surround Manta which also has more of a modern design with malls, international airports, internet, tv studios and everything else a large has to offer. The current total resident count of the city is approx 260,000.
Bahia de Caraquez: Bahia de Caraquez is a beautiful town on a bay that hosts many sailboats throughout the year. This city is a clean and advancing in population as many North Americans are finding their way there. The bay is beautiful and clean as the inhabitants pride themselves on eco-tourism.
Canoa: Canoa is a popular surf area across the bay from Bahia De Caraquez and up the road a bit. Canoa’s wide and nice sandy beach makes this area very attractive for those looking for a true beach town feeling. It boasts plenty of bars and restaurants for your enjoyment with annual surfing contest. Due to the recent demand for this area prices are rising and property appreciation continues. In addition to the endless outdoor activities Canoa also sports a slightly more tropical climate.