Navigating Corporate Property Purchases in Ecuador: A Broker & Lawyer's Guide for Expat Buyers

As a real estate broker and lawyer practicing in Cuenca, I've guided countless expats through the intricacies of the Ecuadorian property market. When the seller is a registered corporation, or Compañía, the process demands a heightened level of professional scrutiny. A corporate seller isn't an individual; it's a legal entity governed by complex statutes and regulations. My goal here is not to offer generic advice but to provide the specific, actionable intelligence needed to transform a potentially risky transaction into a secure, legally ironclad investment.

The Corporate Seller: A Different Legal Landscape

Buying from an individual involves verifying their identity and title. Buying from a Compañía requires a deep dive into its corporate health and legal authority. The "seller" is a legal fiction, represented by individuals whose power to act must be rigorously confirmed. Any misstep here doesn't just complicate things—it can void the entire sale. We must approach this transaction with the precision of a corporate lawyer, not just a property buyer.

Essential Legal Steps for Corporate Property Transactions

The following steps are my non-negotiable protocol when a client is purchasing property from a corporation in Ecuador.

1. Corporate Verification and Legal Authority:

   • Superintendencia de Compañías Certificate: We begin by pulling an up-to-the-minute Certificado de Cumplimiento de Obligaciones (Certificate of Compliance) from the Superintendency of Companies. This confirms the company legally exists, is in good standing, and isn't in a state of dissolution.
   • The Gold Standard: The Nombramiento del Gerente General: We must obtain the seller's notarized and registered appointment of the General Manager (Nombramiento del Gerente General). This document, inscribed in the Mercantile Registry (Registro Mercantil), is the primary proof of who has the legal authority (facultades) to represent the company. We will cross-reference this with the company's bylaws (estatutos) to confirm the manager is explicitly empowered to sell real estate assets, sometimes requiring a specific shareholder resolution (Acta de Junta General). A simple power of attorney (poder) is insufficient and can be a red flag.

2. Property Title and Lien Verification:

   • The Critical Certificado de Gravamen: This is arguably the single most important document in the transaction. We will obtain an updated Certificado de Gravamen (Certificate of Liens and Encumbrances) from the Registro de la Propiedad (Property Registry) for the specific property. This certificate, valid for only a short period, reveals a complete history of the property and, crucially, lists any current mortgages (hipotecas), liens, court-ordered embargos, or usage restrictions (servidumbres). A "clean" certificate is the only acceptable green light to proceed.
   • For Apartments (Propiedad Horizontal): If buying a condo or apartment from a developer, we must verify the master Declaratoria de Propiedad Horizontal is correctly registered for the entire building. Without this, individual titles (escrituras) cannot be legally separated and registered in your name. This is a common and disastrous pitfall for buyers of new construction.

3. Municipal and Tax Due Diligence:

   • Municipal Solvency: A Certificado de No Adeudar al Municipio (Certificate of No Debt to the Municipality) is mandatory. It confirms that the impuesto predial (annual property taxes) are paid in full. Any outstanding debt remains with the property and becomes the new owner's liability.
   • The Plusvalía (Capital Gains Tax) Factor: Ecuadorian law requires the seller to pay a municipal capital gains tax called plusvalía. While legally the seller's responsibility, a Compañía unprepared for this tax can delay or even derail the closing. We must ensure this is calculated and its payment is contractually guaranteed before you sign the final deed, preventing last-minute disputes at the notary's office.
   • The Buyer's Tax: Alcabalas: Be prepared for the property transfer tax, known as Alcabalas. In Azuay province, this is calculated by the provincial government and is approximately 1.5% of the higher of the purchase price or the municipal property valuation. This tax is the buyer's responsibility and must be paid to enable the final registration of the deed.

4. The Binding Preliminary Agreement (Promesa de Compraventa):

   • For any serious transaction, a notarized Promesa de Compraventa is essential. This legally binding contract locks in the purchase price, payment schedule, closing date, and all conditions. Critically, it will name the Compañía as the seller, represented by its legally appointed General Manager. It also includes penalty clauses (cláusulas penales) that protect your deposit should the company fail to meet its obligations, such as clearing a lien before closing.

5. Closing: The Final Deed (Escritura Pública de Compraventa):

   • The transaction culminates at the office of a Notario Público (Notary Public). In Ecuador, a Notary is a highly trained lawyer with state authority. They are legally required to verify the legal capacity of the parties (especially the corporate representative's authority), the cleanliness of the title via the Certificado de Gravamen, and proof of tax payments.
   • The Notario drafts the final Escritura Pública, which is read aloud and signed by all parties. Your funds are typically transferred at this moment. The final, critical step is the inscription of this new deed in the Registro de la Propiedad. Only upon successful registration is your ownership legally perfected and protected against all third parties.

Financial Safeguards: Protecting Your Capital

• Documented Payments: Never pay in cash. All payments, from the initial deposit to the final balance, should be made via verifiable bank transfers (transferencias bancarias). The transaction details must be explicitly referenced in both the Promesa and the final Escritura as proof of payment.
• Withholding for Foreign Companies: If the selling Compañía is domiciled outside of Ecuador, tax law may require you, the buyer, to withhold a percentage of the sales price for income tax purposes. This is a complex rule that requires expert legal guidance to ensure compliance and avoid personal liability.

Real Estate Due Diligence Checklist for Corporate Purchases

• [ ] Corporate Status: Certificado de Cumplimiento from the Superintendency of Companies.
• [ ] Legal Representation: Registered Nombramiento del Gerente General and corresponding shareholder resolution (Acta de Junta).
• [ ] Title Deed: The seller's original Escritura Pública.
• [ ] Lien Certificate: An updated Certificado de Gravamen issued no more than 30 days before closing.
• [ ] Municipal Solvency: Certificado de No Adeudar for property taxes.
• [ ] Tax Compliance: Confirmation of payment arrangements for plusvalía (seller) and Alcabalas (buyer).
• [ ] For Apartments/Condos: Verification of the registered Declaratoria de Propiedad Horizontal.
• [ ] Building Permits: Ensure all constructions on the property are permitted and registered in the municipal catastro; unregistered structures are a major liability.

⚠️ Lawyer's Warning: The Veto-Worthy Property Risk.

The "Verbal" or Undocumented Authorization. I have seen deals collapse and buyers lose deposits because they trusted a representative who claimed to have authorization to sell. A manager might present a simple power of attorney or state the board has "agreed" to the sale. This is a trap. Without a formally executed and registered Acta de Junta General (Shareholder Meeting Minutes) that explicitly authorizes the sale of the specific property at the agreed-upon price, the transaction is legally baseless. A dissenting shareholder or creditor of the company could later challenge and annul the sale, leaving you in a legal nightmare. If the seller cannot produce this formal, registered resolution, you must veto the transaction until they can. No exceptions.

Conclusion: Your Secure Path to Expat Ownership

Purchasing property from a Compañía in Ecuador is entirely manageable, but it is not a process for the unguided. It requires a forensic examination of corporate documents and an unwavering adherence to legal procedure. By leveraging specialized expertise to verify authority, scrutinize the title, and secure the transaction contractually, you can confidently acquire your property in Cuenca, assured that your investment is built on a solid legal foundation.