No Title Insurance ! Now you are saying - no Escrow !!
Buying Property in Colombia is a ''New'' Experience. In our last article, http://www.steckenreiterserna.com/#!Need-Title-Insurance-for-Colombia-/colb/5512c3c50cf220353055a23a ,(note this url now pertains to Sandra Maria Serna Toro) we said that it was important to place all notions and previous experience of buying properties in other countries aside. When it comes to the concept of escrow, you must do the same. Lawyers in Colombia do not have escrow accounts. Although I can not state a fact, it might be because the amounts could be so large that an unscrupulous attorney might be tempted to go MIA with someone else's funds. Is it possible to even get escrow in Colombia ? Yes, it is possible to obtain something similar. You can go to a fiduciary, make a contract with them and they will hold money in trust but there will a fairly high fee for doing this which must be borne by the buyer. The challenge is that this is not standard practice in Colombia and it is highly unlikely a Colombian seller would accept this. Once a foreigner has done business here, it is highly improbable that they too would not accept this type of payment. Usually at the signing of the promise de compraventa, a seller will receive between 10% to 30% of the real price as a down payment. You must be wondering, how in the world is a buyer protected ? One of the most uncomfortable things I ever had to do in Colombia, more than 10 years ago when life was a bit ''wilder'', was hand a seller approximately 30,000 usd as a downpayment. Fortunately I have a good attorney and I was assured that in the Colombian process of buying real estate the process worked well. It would be worthwhile to examine the steps in purchasing real estate in Colombia. The first 3 steps should be research a trustworthy real estate agent or agency - one that has an office and ''skin in the game''. Don't use the expat working out of the corner cafe or your driver or favourite bartender. Next find a bilingual lawyer with the same criteria. Thirdly establish a relationship with a financial institute that can manage international, financial transactions. Prep these steps in advance so if you find the perfect property, you can move quickly. Present to your agent the criteria of the property that you are looking for, price, area, location, amenities and discuss these details. Of course everyone wants value, view and location ! Have them prepare six to ten options and try to reduce the your selection to five maximum. Most people go into the twilight zone after viewing more than five properties. When you have found the property that you like, the initial offer is made verbally. You will have to decide on the real price and very possibly the price that will go on the deed. This is tax avoidance practiced by Colombians and if you really love the property you may have to negotiate/tolerate this as well. The considerations must be - what will be your tax implications when you sell and do you need to register this full amount to apply for a visa. You will also need to set a date for the promesa de compraventa (promise to buy and sell) and the signing of the deed/escritura. Once you have an agreement you will need to take the matricula/registration number to your lawyer for her to do a title search. It is this title search where you will discover if there are any problems that might prevent the property from being sold (liens, mortgages, etc.). Once this step is complete and you know the property is clean, you sign the promesa and deliver the deposit cheque. The promise usually carries a penalty of 20% to 30% to either buyer or seller in the case of default - and thus this rarely happens. If your funds are available and the seller is ready you could immediately sign the escritura/ deed and the property would be yours. Before the escritura can be signed, the notary's office, who will prepare and review the final documents will require proof - paz y salvos for the predial/property tax and the HOA fees. There will also be a small adjustment made between the parties privately for any utilities owing. The documents will be submitted to the appropriate governmental agencies and within a month you will usually have the official documents returned. You lawyer will then review them with you to be certain that have been no errors in the registration.