Navigating the Sale: Selling Your Cuenca Property with an Existing Tenant – A Broker and Lawyer's Safeguard

As an expat in Cuenca, selling your property is a significant financial event. When that property is occupied by a tenant, the transaction becomes layered with legal complexities governed by Ecuador's Ley de Inquilinato (Tenancy Law). Rushing this process without a granular understanding of local property law is a direct path to legal disputes and financial loss. As a Real Estate Broker and Lawyer practicing in Cuenca, my primary mandate is to shield you from these risks. This guide provides an authoritative, step-by-step legal and procedural framework for selling a tenanted property, ensuring your transaction is secure, compliant, and financially optimized.

The Legal Framework: Ecuadorian Tenant Rights Are Paramount

Ecuadorian law heavily favors the tenant. These protections are not guidelines; they are legally binding obligations that property owners must rigorously follow. Misunderstanding or ignoring them is the single most common and costly mistake a foreign seller can make.

The `Contrato de Arrendamiento`: Your Controlling Document

The contrato de arrendamiento (rental agreement) is the legal cornerstone of your relationship with the tenant and will dictate the terms of engagement during a sale.

Lease Term: A fixed-term lease provides a clear end date. However, even with a fixed term, you cannot arbitrarily remove a tenant before its expiration simply because you have a buyer. The lease transfers with the property unless legally terminated.
Termination Clauses: A professionally drafted contract might contain clauses addressing the sale of the property. However, any such clause must still comply with the minimum protections afforded by the Ley de Inquilinato.
Rent Payment History: Before even listing the property, ensure the tenant's payment history is current. Any arrears create an encumbrance that can derail a closing.

Broker's Legal Point: As the seller, you are legally accountable for guaranteeing the integrity of the existing lease. Any unresolved issues or breaches of contract can be transferred to the new owner, who would have legal grounds to pursue you for recourse post-sale.

Pre-Sale Due Diligence: Your Non-Negotiable Checklist

Before a single potential buyer views your property, a comprehensive legal and administrative audit is essential. This demonstrates to buyers that you are a serious, organized seller and preempts closing delays.

Obtain the Certificado de Gravamen: This is the most crucial preliminary document. Issued by the Registro de la Propiedad (Property Registry), this certificate provides a complete history of the property, revealing any liens (gravámenes), mortgages (hipotecas), or court-ordered restrictions. You must have a clean and updated certificate before signing a Promesa de Compraventa to prove clear title.
Secure the Certificado de No Adeudar al Municipio: This certificate from the Cuenca municipality confirms all property taxes (impuestos prediales) are paid to date. In Ecuador, property tax debt attaches to the property, not the person. No buyer will close without this.
For Condos/Apartments (Propiedad Horizontal): You must obtain a Certificado de No Adeudar a la Administración. This document from your building's administrator confirms that all homeowner's association fees (alícuotas) are paid. Failure to provide this will halt any closing on a horizontal property.
Review Your Original Escritura Pública de Compraventa (Deed): Confirm that the property details, including dimensions (linderos) and your personal information, are accurate. Discrepancies can cause significant delays at the notary's office.

The Legal Process of Selling with a Tenant

Step 1: Formal Notification and Tenant's Rights

The law mandates that you formally notify your tenant of your intent to sell.

Written Notice (Notificación): This should be a formal, written notice delivered by a registered courier or, for absolute legal certainty, via a Notario Público. This creates an undeniable record of delivery.
The 90-Day Rule for Uso Personal: This is a critical, often misunderstood legal nuance. If your buyer intends to occupy the property personally, they can legally request termination of the lease. However, this right can only be exercised after they become the legal owner. The new owner must then provide the tenant with a minimum of 90 days' written notice. As the seller, you must make this timeline clear to your buyer to manage their expectations. You cannot deliver a vacant property on closing day unless the lease has already naturally expired or the tenant has voluntarily agreed to leave in writing.

Step 2: The Buyer's Intent Dictates the Path

The Buyer as an Investor: This is the simplest scenario. The buyer inherits your role as the landlord. The lease agreement, terms, and the tenant's security deposit (garantía) are transferred to the new owner at closing. This must be explicitly detailed in the sales agreement.
The Buyer as an Occupant: This is more complex. The sale must be made contingent on the legal termination of the lease. The buyer must understand and agree to the 90-day notice period they will need to provide after closing. Any attempt to circumvent this process can lead to legal action by the tenant.

Step 3: The `Promesa de Compraventa` (Promise to Purchase Agreement)

This binding preliminary contract must be drafted with surgical precision.

Explicitly Disclose Tenancy: The Promesa must state that the property is occupied, referencing the lease agreement's expiry date and rental amount.
Handling the Garantía (Security Deposit): The agreement must specify the treatment of the security deposit. Will it be transferred directly from seller to buyer at closing? Or will the seller refund it to the tenant, with the buyer collecting a new deposit? This must be documented and signed by all parties to prevent post-sale disputes.
Define Responsibilities: The Promesa must clearly assign responsibility for providing all legal documents and outline penalties if either party fails to meet their obligations by the closing date.

Step 4: The Closing – The `Escritura Pública de Compraventa` (Final Deed)

At the Notary's office, all documentation is finalized and the legal transfer occurs.

Notary's Scrutiny: The Notario Público acts as a neutral legal authority. They will refuse to execute the deed if any required documents, like the Certificado de Gravamen or municipal debt certificates, are missing or expired.
Deed Wording is Final: The Escritura must unequivocally state whether the property is being transferred with the tenant in place (con inquilino) or if the lease has been legally terminated. This wording legally solidifies the new owner's rights and responsibilities.

Understanding Transactional Taxes

While some taxes are the buyer's responsibility, a savvy seller understands the complete financial picture to negotiate effectively.

Alcabalas (Property Transfer Tax): Paid by the buyer. In Azuay province, this is approximately 1% of the higher of two values: the municipal property valuation or the declared sale price. Knowing this helps you understand your buyer's total closing costs.
Plusvalía (Capital Gains Tax): Paid by the seller. This is a municipal tax on the profit from the sale. It is calculated based on the difference between your purchase price and the sale price, adjusted by a municipal coefficient and the time you have owned the property. Expert Tip: For expats who have owned the property for less than five years, this tax can be more significant. It's crucial to request a projection of this tax from the municipality before finalizing your sale price to avoid surprises.

⚠️ Lawyer's Warning: The Legal Blunder You Cannot Afford

The most catastrophic error a seller can make is attempting an informal or "cash for keys" agreement to remove a tenant. Any side deal made without formal legal documentation is unenforceable and can be construed as an attempt to illegally evict. If a tenant feels their rights under the Ley de Inquilinato have been violated, they can file a legal claim that can freeze the sale of your property indefinitely, embroiling you in a costly and lengthy court battle. Every interaction and agreement with your tenant regarding the sale must be in writing, legally sound, and preferably reviewed by counsel.

Conclusion: Secure Your Investment with Expert Execution

Selling a tenanted property in Cuenca is not a DIY endeavor. It demands a sophisticated understanding of property law, tax obligations, and the non-negotiable rights of tenants. By following the meticulous legal procedures outlined here—from comprehensive pre-sale due diligence to the precise wording of your final Escritura—you transform a potentially risky transaction into a secure and profitable one.

My role as your broker and lawyer is to serve as your fiduciary shield, proactively managing these legal complexities so you can focus on your next chapter.

Ready to ensure your property sale is legally ironclad and financially successful? Contact me for a confidential consultation to assess your property's legal standing and map out a secure sales strategy.