Navigating the Unforeseen: Seller's Demise After 'Promesa' in Ecuador Real Estate

As a Real Estate Broker and Lawyer practicing in Cuenca, I guide my expat clients through every stage of a property transaction. The goal is always a secure investment and a smooth closing. The journey typically begins with a foundational document: the Promesa de Compraventa (Promise to Purchase Agreement). This isn't a simple reservation; it's a binding contract. But what happens if the unthinkable occurs and the seller passes away between the signing of the Promesa and the final closing, the Escritura Pública de Compraventa (Public Deed of Sale)?

This scenario, while rare, transforms a standard transaction into a complex legal process involving inheritance law. Your investment is not lost, but protecting it requires precise, expert navigation. The seller's contractual obligations do not die with them; they pass to their heirs.

The Legal Framework: From Contractual Obligation to Inheritance

Under the Ecuadorian Civil Code, a signed Promesa de Compraventa creates a legally enforceable obligation. Upon the seller's death, this obligation, along with all their assets and liabilities, becomes part of their estate. The estate is then transferred to their heirs through a process called Sucesión por Causa de Muerte (Succession by Cause of Death).

The heirs inherit the property, but they also inherit the legal duty to sell it to you under the terms of the Promesa. Your right to purchase remains intact and is fully enforceable against the seller's estate. However, the heirs cannot simply sign the final deed. They must first legally establish their status as the new owners.

Immediate Steps and Critical Due Diligence

Upon learning of the seller's passing, your immediate actions are critical to safeguarding the transaction. Panic is your enemy; a methodical, lawyer-guided approach is your shield.

Formal Notification: Your attorney should send a formal, written notification to the seller's family or known legal representative. This letter serves as an official record acknowledging the existing Promesa and your intent to complete the purchase.
Identify Heirs and Verify Legal Authority: The most crucial step is identifying the legitimate heirs and confirming they have completed the Posesión Efectiva. This is the legal procedure that grants heirs the administrative authority over the deceased's assets.
- Hyper-Specific Detail #1: The Posesión Efectiva can be a swift notarial process ('notarial') if all heirs are known, in agreement, and there is no will. However, if there is a will or any dispute among heirs, it becomes a judicial process ('judicial') that can take significantly longer. Your attorney must obtain and verify the final, registered Acta Notarial de Posesión Efectiva or the corresponding judicial order before proceeding. Without this document, any signature on a final deed is legally void.
Obtain an Updated Title Search (Certificado de Gravamen): Your lawyer must immediately request a new, updated Certificado de Gravamen from the Registro de la Propiedad (Property Registry).
- Hyper-Specific Detail #2: This is non-negotiable. When a person dies, their creditors may place liens (known as embargos) on their assets, including real estate. A certificate that was clean a month ago could now show new encumbrances from the estate's debts. This certificate is only a snapshot in time; we will pull a final one on the day of closing to ensure the title remains clear.
Confirm Payment of Inheritance Tax: The heirs cannot legally transfer the property title until they have declared the estate and paid any applicable Impuesto a la Herencia (Inheritance Tax) to the SRI (Ecuador's equivalent of the IRS). Your attorney must demand proof of this payment, as a failure to pay can create future title clouds.

Navigating the Final Closing (Escritura) with Heirs

Once the heirs have obtained the Posesión Efectiva and settled any immediate estate obligations, the closing can proceed. The process mirrors a standard closing but with additional required documentation.

All Heirs Must Sign: Every legally recognized heir with a stake in the property must be present to sign the final Escritura Pública before a Notario (Notary Public), or they must grant specific Power of Attorney to one representative to sign on their behalf.
Notary's Verification: The Notario acts as a gatekeeper of legality. They will meticulously scrutinize the following documents from the heirs:
- The seller's Certificado de Defunción (Death Certificate).
- The registered Acta Notarial de Posesión Efectiva or judicial order.
- Personal identification (cédulas) for all signing heirs.
- Proof of payment of the municipal Impuesto Predial (property taxes) for the current year.
- The updated Certificado de Gravamen confirming a clean title.
Payment of Transfer Taxes: As the buyer, you are responsible for paying the Impuesto de Alcabala (Property Transfer Tax).
- Hyper-Specific Detail #3: In Azuay province, where Cuenca is located, the Alcabala tax is approximately 1% of the sale price or the municipal property valuation (avalúo municipal), whichever is higher. This tax must be paid before the Notario will proceed with the final signing.
Handling the Seller's Capital Gains Tax (Plusvalía): The estate is responsible for paying the municipal capital gains tax, known as plusvalía. This tax applies to the profit made on the sale. Your legal team must ensure the calculation is done and the tax is paid by the heirs from the sale proceeds, preventing any future liability from falling on you.

Financial Safeguards: Protecting Your Capital

In a transaction involving an estate, financial prudence is paramount.

Payment via Cheque Certificado: While escrow is not a standard practice in Ecuador, the safest method of payment is a Cheque Certificado (Certified Check) from a reputable Ecuadorian bank. This check should be made out to the order of "the heirs of [Deceased's Name]" and physically handed over at the Notario's office simultaneously with the signing of the Escritura. This prevents funds from being disbursed before the legal transfer is executed.
The Unregistered Construction Trap:
- Hyper-Specific Detail #4: A frequent and dangerous problem in Cuenca is unregistered construction. If the deceased built an addition, a second floor, or even a covered patio without obtaining municipal permits and updating the property record (declaratoria de fábrica), the property is in a state of legal irregularity. The heirs must complete this legalization process before the sale. To purchase a property with unregistered construction is to inherit a significant liability, including fines and potential demolition orders.
Differentiating Property Regimes:
- Hyper-Specific Detail #5: The legal complexity increases if the property is an apartment or part of a gated community under the Propiedad Horizontal (Horizontal Property) regime. In this case, your lawyer must obtain a certificate from the building's administrator confirming that the deceased was fully paid up on all homeowner's association fees (alícuotas). Any outstanding fees become a debt against the property, and you could be held liable upon taking ownership.

⚠️ Broker's Legal Warning: The Absolute Deal-Breaker

The single greatest risk you face is pressure to close the deal before the Posesión Efectiva is fully completed and registered. You may be told it's "just a formality" or "almost done." Do not proceed. Any sale signed by heirs who lack the registered legal authority to act on behalf of the estate is voidable. This could lead to years of litigation with other potential heirs or creditors and a complete loss of your investment. Insist on seeing the finalized, registered documents, and have your attorney independently verify them at the Property Registry.

Conclusion

The death of a seller post-Promesa introduces legal hurdles, but they are surmountable with expert guidance. As your broker and legal advisor, my role is to transform this complex situation into a secure, step-by-step process. We will meticulously verify every document, liaise with the heirs' legal counsel, and ensure every legal and financial safeguard is firmly in place. Your dream of owning a home in Cuenca will not be derailed; it will simply be pursued with the heightened diligence this sensitive situation demands.

If you are considering a property purchase in Cuenca or find yourself facing a complex transaction, do not navigate it alone. Schedule a consultation to ensure your investment is built on a solid legal foundation.