PROCESS OF PURCHASING REAL ESTATE IN COLOMBIA
Real Estate Law - Steps take by Steckenreiter Serna and Associates in the purchase process.
There is some information that you should know in regards to real estate transactions in Colombia. It is also important that you understand the process that you are going to face, if you invest here.
This article contains a detailed explanation of the process in purchasing used real estate.
1. If you are going to register the real estate transaction as a foreign investment, we will advise you in the filling out of the pertinent forms. The registration of foreign investment is required if you plan to apply for a visa. Please review this article - http://www.steckenreiterserna.com/#!REGISTRATION-OF-FUNDS-IN-COLOMBIA/colb/552bbd020cf21933cd589abb
2. Most of the time seller and buyer need some time to close the deal, either because the buyer needs to arrange the transfer of funds or because the seller needs time to find another place. If this is the case, the signature of a contract of promise of sales is highly advisable to firm things up and make sure both parties are serious; therefore the contract of promise of sale includes 20% of the price as a penalty clause (or any other amount that the parties agree), against the unfulfilled party – buyer or seller.
3. It is not always necessary to sign a promise of sale. If the parties are ready to close the deal and they feel some level of confidence, it is possible to go directly to the closing, but the promise of sale is advisable because we can include in this contract many details of the transaction that we usually do not include on the deed.
4. Before the signature of the promise of sale we will review the legal status of the property, therefore a study of the title takes place. The work involved in the study of titles is a professional, preparatory and preventive step that we do for the buyer, as it is in the best interest of the buyer to be certain that the property is in perfect legal condition to be bought. This is the reason why the study of titles is ordered and paid by the buyer, not by the seller, nor between the parties.
The study of titles does not involve the measuring of the property, nor the measurement or detail check of the boundaries of the property, but of course we will check the address and the main and general specifications of the property.
We will make a study of the legal history of the property. This study will involve the reading and revision of the deeds / transactions over the last 10 years of the property or all the titles if its history is less than 10 years. We also revise the complete chain of annotations on the certification of the property, issued by the Public Registration Office. This is with the purpose to verify that there is no type of lien or mortgage that would affect it and that in general terms it is in a perfect legal state for the purchase.
If the conclusion of the study of the titles reflects that some corrections or changes are going to be necessary, we will coordinate with the seller that these are completed before the deed is signed. In this case, we will write a clause in the promise of sale, to be certain that everything will be ready before the date of the signature of the deed.
5. Besides the revision of the legal history of the property, and only for those clients that have account with Alianza Valores Comisionista de Bolsa S.A., we can offer them, as an added value to our services, a complete and deep research of criminal records and money laundering of the complete chain of the previous owners shown in the ownership certificate of the apartment that you are buying. This is a service that Alianza has made available for our company.
6. We will review the Acts of the Ordinary General Assembly for the last three years and any other special meetings that have taken place in this year. This is with the purpose to know the real life of the building, because this kind of meetings will reflect the main problems or situation that the building has. Note that this revision will be possible only under the condition that we receive, either from the seller´s side or directly from the administration of the building the necessary documentation to approach this revision.
7. If the seller´s side provide us with the coexistence rules, and plus the revision of the HOA by-laws, we will produce a summary of the main aspects of the building, which mainly will include:
Your rights and obligations
Main rules in the building
Rules and procedure to make reforms
Rules governing the assemblies and the making decision.
Rules for renting
Rules in relation with pets
Important information that we find in the Acts of the assembly, which might be useful for you.
8. The study of the titles, the criminal record research and the analysis of the building will conclude with a legal concept that will allow you to decide the convenience of the purchase. If we do not have access to the criminal records and the analysis of the building situation, the legal concept will be given based only on the title research.
9. If you are buying a furnished property and if you provide us with the inventory, it will be included in the contract of promise of sale.
10. Based on the price of the deal, we will send you a total estimated budget to be transferred to your bank / brokerage account, in order to complete the transaction. This will include: The price of the purchase, notary fees, reimbursement to be made to the seller for property tax (predial tax), utilities, fees for the administration of the building (see paragraph 12) and contingencies (to pay the next utilities bill, administration, etc.).
11. After the promise of sale has been signed we will send to both parties the estimated notary expenses.
12. There are a number of reimbursements that you will need to make to the seller and the seller to you:
a). Property tax (impuesto predial), paid by the buyer, from the closing date to December 31. This is because the seller will have to pay the whole year to be able to get the “paz y salvo predial”, which is the document that certifies that the seller does not have any debts on predial tax.
b). Utilities, paid by the seller, from the last bill paid to the closing date. Utilities in Medellín are charged one month behind, so the liquidation will be made based on the last three bills.
c). Fees that have been paid to the administration of the building, from the closing date until the last day that has been charged and paid for the seller.
Depending on the date of the closing, we will make a balance to give to the seller and you, so you know who is responsible for what payments.
13. After the deed has been signed we will follow up for the receipt of the title and will review that the Public Registration Office made a proper registration. The receipt of the title, duly registered by the Public Registration Office, might take between 3 to 4 weeks.
14. Once we receive the title and the certification of the registration made by the Public Registration Office, we will give it to you or to whom you authorize.
Note that item No. 14 is included within the fees as long as the property is located in the Medellín area.
With the step number 14 concluded, our professional and legal advice will be completed.