Expat Due Diligence Checklist: 15 Critical Checks Before Signing a 'Promesa de Compraventa' in Ecuador

Understanding the 'Promesa de Compraventa'

Before delving into the checklist, it's essential to grasp the legal standing of the Promesa de Compraventa. This is not a mere expression of interest; it's a preliminary contract that legally binds both buyer and seller. It typically outlines the terms of the future sale, including the agreed price, payment schedule, and the timeframe for signing the definitive deed of sale (Escritura Pública). Crucially, it often involves a deposit, which can be forfeited by the buyer if they withdraw without valid legal grounds, or may need to be returned with penalties by the seller if they default. Therefore, scrutinizing every detail and ensuring absolute clarity and legal compliance at this stage is paramount.

The Expat Due Diligence Checklist: 15 Critical Checks

1. Seller's Legal Capacity and Ownership Verification

The Critical Question: Does the person or entity selling the property have the undisputed legal right to do so?

Action: We must verify the seller's identity and legal standing. For individuals, this involves checking their national identity card (Cédula de Identidad) or passport. For companies, it requires obtaining their registration documents and proof of authorized signatory. Most importantly, we need to examine the property's title deed (Escritura Pública) registered at the Registro de la Propiedad (Property Registry) in the canton where the property is located. This document will confirm the current owner and any existing liens or encumbrances.

2. Property Title Search and Encumbrances

The Critical Question: Is the title clear of any debts, mortgages, or legal disputes?

Action: A comprehensive title search at the Registro de la Propiedad is indispensable. This check will reveal any outstanding mortgages, provisional registrations (gravámenes provisionales), court orders, or other claims against the property. We are looking for a clean title (dominio libre de gravámenes y limitaciones). Any issues found here can halt the transaction or require significant negotiation and legal resolution.

3. Municipal Property Records and Tax Status

The Critical Question: Is the property free from municipal debts and zoning restrictions?

Action: Obtain a certificate from the Tesorería Municipal (Municipal Treasury) confirming that all property taxes (Impuesto Predial) are up-to-date. Unpaid taxes can become the responsibility of the new owner. Simultaneously, verify the property's zoning classification with the Dirección de Planificación Urbana (Urban Planning Department) to ensure it aligns with your intended use (e.g., residential, commercial).

4. Land Boundaries and Physical Survey Verification

The Critical Question: Do the physical boundaries of the property match the legal description in the title?

Action: While often overlooked by expats, a discrepancy between the property's physical dimensions and its legal description can lead to significant future disputes. We will compare the title deed's description with actual site inspections, and if there are any doubts, recommend a formal survey by a qualified Ecuadorian surveyor (topógrafo).

5. Building Permits and Unregistered Construction

The Critical Question: Is all construction on the property legally permitted and registered?

Action: Inquire about building permits for any structures on the land. Unregistered or unauthorized construction can lead to fines, demolition orders, or difficulties in obtaining future permits or financing. We will request documentation from the Dirección de Planificación Urbana and review it against the physical reality.

6. Utility Services and Infrastructure

The Critical Question: Are essential services (water, electricity, sewage, internet) reliably available and legally connected?

Action: Verify the operational status and legal connection of all essential utilities. Check for any outstanding utility bills. For rural properties, confirm the source and legality of water supply. Understanding the infrastructure reliability is crucial for daily living and future resale value.

7. HOA/Condominium Fees and Regulations

The Critical Question: Are there any outstanding homeowner association (HOA) fees, and are the community rules acceptable?

Action: If the property is part of a condominium or a planned community, obtain a certificate from the HOA administrator stating that all fees are paid. Review the HOA's bylaws and regulations (reglamentos internos) to ensure they align with your lifestyle and expectations.

8. Seller's Debts and Civil Lawsuits

The Critical Question: Is the seller involved in any ongoing legal disputes or significant personal debts that could impact the sale?

Action: Conduct a search for any active civil lawsuits or bankruptcy proceedings against the seller. This can be done through the Corte Provincial de Justicia (Provincial Court of Justice). While not always directly tied to the property, severe financial distress of the seller could complicate or derail the transaction.

9. Existence of Easements or Rights of Way

The Critical Question: Are there any legal rights granted to third parties to use parts of the property?

Action: Review the title deed and conduct a physical inspection for any visible easements or rights of way (e.g., for utility lines, access to neighboring properties). These must be clearly documented and understood, as they can affect the property's usability and value.

10. Seller's Marital Status and Spousal Consent

The Critical Question: Is the seller legally permitted to sell the property without spousal consent?

Action: If the seller is married, their spouse's consent is often legally required to sell jointly owned property. Verify the marital status and ensure all necessary parties are in agreement and will sign the final deed. Failure to do so can render the sale invalid.

11. Seller's Tax Identification Number (RUC/CI) Accuracy

The Critical Question: Is the seller's tax identification information correctly reflected in all documents?

Action: Ensure the seller's Cédula de Identidad number (for individuals) or Registro Único de Contribuyentes (RUC) number (for businesses) is consistently and accurately recorded on the Promesa de Compraventa and all subsequent legal documents. Errors can cause significant delays and legal complications during registration.

12. Land Use and Environmental Regulations

The Critical Question: Are there any restrictions on how the land can be used due to environmental or conservation laws?

Action: For rural or undeveloped land, investigate any potential environmental regulations, protected zones, or conservation easements that might restrict development or land use. This is particularly important in areas near national parks or ecological reserves.

13. Historical Property Documentation Review

The Critical Question: Does the property's chain of title indicate any past issues or complexities?

Action: A thorough review of the property's historical title documents, going back several decades, can sometimes uncover past ownership disputes, boundary issues, or unregistered subdivisions that might resurface. While extensive, this provides a deeper layer of security.

14. Seller's Intent to Remain on Property (if applicable)

The Critical Question: If the seller is remaining on the property temporarily, is this clearly defined and legally documented?

Action: If the seller requests to remain on the property after the sale for a period, this must be formalized in a separate, legally binding agreement (e.g., a rental contract or contrato de comodato). This protects your rights as the new owner and avoids potential future disputes over occupancy.

15. Proposed Purchase Price vs. Market Value

The Critical Question: Is the agreed-upon purchase price fair and reflective of the current market value?

Action: While not strictly a legal check, this is a crucial financial safeguard. I will provide an independent market analysis for the property, comparing it to recent sales of similar properties in the area. This prevents overpaying due to emotional attachment or lack of local market knowledge.

Navigating the Legal Process with Confidence

The Promesa de Compraventa is your commitment, and understanding these due diligence points empowers you to make that commitment with absolute confidence. Each of these checks is designed to uncover potential risks before they become costly problems. In Ecuador, the legal framework for property transactions is robust, but it requires careful navigation by those unfamiliar with local practices.

⚠️ Broker's Legal Warning: The Property Risk You Must Veto.

The most common and insidious risk expats face is unregistered construction or unregistered additions to existing structures. Sellers may omit this, or believe it's a minor issue. However, unregistered construction is illegal and can result in significant fines, demolition orders from the municipality, and an inability to transfer clear title. Always ensure that all structures on the property are documented with the municipality and reflected in the property's registered plans. A thorough check with the Dirección de Planificación Urbana is non-negotiable. If this is not transparent, veto the purchase.

Your Trusted Partner in Ecuadorian Real Estate

Acquiring property in Ecuador should be an exciting and rewarding experience. My role is to ensure it remains so by meticulously handling the legal and financial complexities on your behalf. By adhering to this comprehensive checklist, you are taking the most critical steps toward a secure and successful property investment.

Ready to embark on your property journey in Cuenca with the utmost peace of mind?

Schedule your free, property-risk consultation today. Let's ensure your investment is protected every step of the way.