Real Estate Law

Promissory Sales Agreements 

 

If the property you wish to buy is under construction, or you and the seller have agreed that payments will be made over time in installments before ownership is transferred, you'll want to start with a Promissory Sales Agreement.

 

The Promissory Sales Agreement is designed for the situations described above, and basically delineates the following:

 

• Method of Payment

• Method of  Transfer of Ownership

• Specific Characteristics of the Property

• Location of the property (i.e. Lot number, Apt. Number, boundary descriptions if it is undeveloped land, etc.)

• Legal agreement on actions to be taken in case of non-compliance by the buyer or seller

 

It is important to note that the Promissory Sales Agreement is as valuable for the seller as for the buyer.  Its purpose is to guarantee the rights of both parties as they are agreed upon in the contract before money or property changes hands.

 

The promissory sales agreement, by law, must be drawn up as a public document and signed before a notary public of the Republic of Ecuador.  If this procedure is not followed, the contract will simply not be valid, and therefore the buyer and seller will not be able to claim fulfilment of their rights.

 

The seller must provide the buyer with proof of up-to-date payment of all taxes, as well as a copy of the deed, a copy of his/her cedula (National ID Card) or passport, voting card (if applicable), and a certificate from the Registry of Properties verifying that there are no existing legal impediments to prevent the sale of the property.

 

... and Closing Contracts

 

In CLOSING CONTRACTS the SELLER must prove that all property taxes, utility fees, and other fees charged before the purchase date are completely paid. The seller is also responsible for paying the capital gains tax on the sale.

 

The BUYER will also have his/her own set of closing costs which should be about 2.5-3% of the purchase price. All government fees are mandated by the local municipios and notaries.

 

Note: A Power of Attorney (POA), is a good idea if you want EcuaAssist to start getting your paperwork done before you are physically in the country).