The Definitive Expat Guide to Buying in Cuenca: House vs. Apartment

Choosing between a house and an apartment in Cuenca is a decision that extends far beyond aesthetics and lifestyle. As a Real Estate Broker and Lawyer practicing in Cuenca, I've seen firsthand how this choice fundamentally alters the legal and financial path to ownership. My duty is to protect you, the expat buyer, from the hidden liabilities and complexities of the Ecuadorian property system. This guide dissects the critical differences, injecting hard-won local knowledge to ensure your investment is secure.

Legal Foundations: Understanding What You Actually Own

The single most important distinction between a house and an apartment lies in the legal structure of the title you receive.

Buying a House: Propiedad Individual vs. The Gated Community Trap

When you purchase a standalone house on its own plot of land, you are typically acquiring a Propiedad Individual (Individual Property).

• Ownership Structure: You own the land and all structures on it exclusively. Your Escritura Pública de Compraventa (Public Deed of Sale) describes the exact metes and bounds of your property, giving you direct, uncomplicated title.

• Critical Due Diligence: The process is direct but requires meticulous verification.

  1. Certificado de Gravámenes (Certificate of Liens): This is the single most important document in any property transaction. Before any money changes hands, we obtain this official certificate from the Registro de la Propiedad (Property Registry). It is the definitive proof that the property is free of mortgages (hipotecas), liens (gravámenes), and legal prohibitions against its sale (prohibiciones de enajenar). A "clean" certificate is non-negotiable.
  2. Municipal Records (Cadastro Municipal): We verify that the property's dimensions and tax valuation on file with the municipality match the title and that property taxes (impuestos prediales) are paid in full. We obtain a Certificado de No Adeudar al Municipio to prove this.
  3. Permits for Construction: A frequent issue with older homes is unpermitted additions or renovations. We check municipal records to ensure all construction is legally registered; otherwise, you could inherit fines and legalization costs.

• Hyper-Specific Detail #1: The Gated Community (Conjunto) Distinction: Many expats are surprised to learn that buying a detached house within a gated community or urbanización cerrada often means you are NOT buying a Propiedad Individual. Instead, these properties are typically structured under the Propiedad Horizontal regime, legally identical to an apartment. You own your home, but the roads, security gate, and common green spaces are co-owned, and you are subject to homeowners' association fees (alícuotas) and rules.

Buying an Apartment: The Propiedad Horizontal (PH) Regime

Apartments, condos, and most homes in gated communities are governed by the Ley de Propiedad Horizontal (Horizontal Property Law).

• Ownership Structure: You receive a deed for two things:
  1. Exclusive Ownership: The defined space of your individual apartment or house unit.
  2. Co-ownership (Alicuota): A legally defined percentage of all common areas—lobbies, elevators, land, roofs, pools, security infrastructure, etc. This percentage dictates your voting power and your share of monthly fees.
• Critical Due Diligence for Apartments: The due diligence is more complex because you are investing in a small-scale business—the building itself.
  1. Escritura de Declaratoria de Propiedad Horizontal and Reglamento Interno: These are the building's constitution and bylaws. We scrutinize them for restrictions (e.g., on pets, rentals, renovations) and to understand the governance structure.
  2. The Paz y Salvo de Alícuotas: This is a sworn certificate from the building administrator (Administrador) confirming the seller is fully paid up on all monthly condo fees and special assessments. Never close without this document. Unpaid alícuotas attach to the property, not the person, and will become your debt.
  3. Hyper-Specific Detail #2: Reviewing the Libro de Actas (Minutes Book): This is an insider tactic. We request to review the minutes from the last few homeowners' assembly meetings. This is where you uncover the real story: ongoing lawsuits between neighbors, debates about massive upcoming repairs (like a roof or elevator replacement) that will lead to a derrama (special assessment), or general financial mismanagement. The financial statements may look fine, but the Libro de Actas reveals the building's true health.

Financial Realities: The Full Cost of Your Cuenca Property

The purchase price is just the beginning. Understanding transaction and ownership costs is vital.

The Transaction Blueprint & Closing Costs

1. Promesa de Compraventa (Promise to Purchase): This binding preliminary contract locks in the price and terms. A deposit (typically 10%) is paid. Pro Tip: Insist this deposit be held in a third-party escrow account (like your lawyer's client account), not paid directly to the seller, to protect your funds if the seller defaults or due diligence uncovers a serious problem.
2. Closing at the Notaría: The final Escritura Pública is signed before a Notario Público. The Notary is a neutral legal official who verifies identities, confirms payment, and authenticates the deed.
3. Hyper-Specific Detail #3: The Closing Costs Breakdown: Budget for an additional 2-3% of the purchase price for closing costs. The seller pays their capital gains tax (plusvalía), but the buyer is responsible for:
   • Impuesto de Alcabala (Property Transfer Tax): In Azuay province, this is approximately 1% of the property's municipal valuation or the sale price, whichever is higher.
   • Provincial Tax (Tasa Provincial): A smaller tax levied by the provincial government.
   • Registration Fees (Derechos de Registro): Fees paid to the Registro de la Propiedad to register your new title.
   • Notary Fees (Gastos Notariales): The Notary's legally mandated fees for drafting and executing the deed.

Ongoing Ownership Costs & The Exit Strategy

• House: You bear 100% of the costs for maintenance, insurance, security, and repairs.

• Apartment/PH: Your monthly alícuota covers common area maintenance, security, and building insurance. However, you are still responsible for your own unit's interior maintenance and can be hit with unexpected derramas.

• Hyper-Specific Detail #4: The Plusvalía Tax (Capital Gains) Trap: While this is a seller's tax, as an investor, you must understand your future liability. The plusvalía is a municipal tax on the "extraordinary" profit from a property sale. The calculation is complex, but it heavily penalizes short-term ownership. Selling a property within the first few years can result in a surprisingly high tax bill, significantly impacting your net return. This is a critical factor for anyone not planning to hold the property long-term.

Real Estate Due Diligence Checklist

This is my non-negotiable checklist for every client, ensuring your legal and financial protection.

Action Item	House (Individual)	Apartment (PH)
Verify Seller's Identity & Title	✅	✅
Obtain Certificado de Gravámenes (Clean Title Cert.)	✅	✅
Obtain Certificado de No Adeudar (Municipal Taxes Paid)	✅	✅
Review & Sign Promesa de Compraventa (with Escrow)	✅	✅
Verify Construction Permits & Zoning	✅	—
Review PH Constitution & Bylaws (Reglamento)	—	✅
Obtain Paz y Salvo de Alícuotas (Condo Fees Paid)	—	✅
Review Libro de Actas (HOA Meeting Minutes)	—	✅

⚠️ Lawyer's Final Warning: The Two Red Flags You Never Ignore

As your advocate, there are two issues that constitute an immediate "walk away" from a deal if they cannot be flawlessly resolved:

1. A "Dirty" Certificado de Gravámenes: Any lien, mortgage, or legal prohibition on the certificate that the seller cannot definitively clear before closing is an absolute deal-breaker. You do not want to inherit someone else's legal or financial battles.
2. Missing or Refused Paz y Salvo de Alícuotas: For a PH property, a seller's inability or refusal to provide a clean, administrator-signed certificate of paid condo fees is the biggest red flag. It signals deep financial problems that will become your burden the moment you sign the deed.

Conclusion

A house in Cuenca offers autonomy, while an apartment provides convenience and shared amenities. Legally, they are worlds apart. Your protection lies not in the property type but in the rigor of the due diligence process. Understanding the nuances of Propiedad Horizontal, demanding key documents like the Certificado de Gravámenes and Paz y Salvo, and dissecting closing costs like the Alcabala tax are the hallmarks of a secure and successful transaction. My dual role as broker and lawyer is to navigate this intricate landscape on your behalf, transforming complexity into clarity and risk into peace of mind.

Ready to secure your Cuenca property the right way? Schedule a complimentary consultation to discuss your specific needs and a risk-mitigation strategy.