Navigating the Sale: How to Legally Document and Value Personal Property with Your Cuenca Home

As an expat selling your home in Cuenca, you are liquidating a significant asset under a foreign legal system. The primary transaction concerns the real estate—the land and structure—but often, a buyer wants your high-quality furniture, appliances, or even artwork. This inclusion of personal property, or bienes muebles, is a critical point in the transaction that, if mishandled, can lead to overpaid taxes, legal disputes, and even the collapse of your deal at the closing table.

As a Real Estate Broker and Lawyer practicing in Cuenca, I have intervened in countless transactions where poorly documented personal property agreements created severe complications. My goal is to ensure your sale is legally fortified, financially optimized, and executed without ambiguity. This is not just about convenience; it is about protecting your financial interests under Ecuadorian law.

The Foundational Distinction: Bienes Inmuebles vs. Bienes Muebles

Ecuadorian property law makes a clear and non-negotiable distinction between two types of assets:

Real Property (Bienes Inmuebles): This is the land and everything permanently affixed to it—the house, built-in cabinetry, plumbing, etc. Ownership is transferred exclusively via a public deed, the Escritura Pública de Compraventa, which is then inscribed in the Registro de la Propiedad (Property Registry).
Personal Property (Bienes Muebles): This includes all movable items: freestanding furniture, refrigerators, vehicles, art, rugs, and so on. These items are not part of the real estate and cannot be legally transferred through the Escritura. They require a separate, explicit agreement.

Why Co-mingling Values is a Costly Mistake

Simply inflating the real estate price to "include" the furniture is a common but dangerous shortcut. Here are the specific financial and legal risks you incur:

Tax Overpayment on Impuesto de Alcabala: The property transfer tax, known as Alcabalas, is levied on the sale of real estate. In Azuay province, this tax is approximately 1.5% of the sale price (or the municipal valuation, whichever is higher). By artificially inflating the home's price with the value of personal property, you directly and unnecessarily increase your tax burden. For a $20,000 furniture package, you would be overpaying taxes on that amount for no reason.
Capital Gains Tax (Plusvalía) Complications: If you are selling a property you've owned for less than five years, you may be subject to a municipal capital gains tax called plusvalía. This tax is calculated on the profit from the real estate sale. Inflating the sale price with personal goods distorts this calculation, potentially triggering a higher tax liability or drawing unwanted scrutiny from the SRI (Ecuador's IRS).
Title and Registry Errors: The Registro de la Propiedad only registers the transfer of bienes inmuebles. Including a single, inflated value in the Escritura creates a legally inaccurate public record. This can cause title issues for the buyer in the future and opens the door for disputes over what was truly included.

The Broker's Playbook: Step-by-Step Documentation for a Legally Sound Sale

To protect both parties, we implement a clear, multi-step documentation process that isolates the personal property from the real estate transaction.

Step 1: Pre-Negotiation Due Diligence

Before any contract is signed, the buyer's lawyer must pull an updated Certificado de Gravamen Actualizado from the Property Registry. This critical document certifies that the property title is clean and free of liens, mortgages, or legal encumbrances. While not directly related to personal property, it establishes the legal viability of the core transaction before other details are finalized.

Step 2: Create the "Inventario Valorizado de Bienes Muebles"

This is your master document. Do not treat it as a casual list. It must be a formal, detailed inventory that includes:

Itemized List: Every single item, from the sofa to the silverware. Specify brand, model, and a brief description.
Condition: Be brutally honest. Note "minor scratch on left leg," "like new," or "fully functional." Photos are highly recommended.
Agreed Value: Assign a reasonable, depreciated market value to each item. This is a negotiated figure between you and the buyer. The total value should be defensible, not an arbitrary number designed to manipulate the real estate price.

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

The Promesa is the most important preliminary contract. It locks in the terms of the entire deal and must be signed before a Notary (Notario) to be legally binding. It must explicitly separate the values:

"The agreed-upon price for the real property (bien inmueble) is ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000.00). Separately, the parties agree to the sale of personal property (bienes muebles) for the price of TEN THOUSAND DOLLARS ($10,000.00), as detailed in the 'Inventario Valorizado de Bienes Muebles,' attached hereto as Annex A and forming an integral part of this agreement."

This language creates an undeniable legal separation of the two transactions.

Step 4: Separate Payment for Personal Property

Here is a hyper-specific detail that prevents countless issues: advise the buyer to make two separate payments. The main payment for the real estate will be documented by the bank and referenced by the Notary for the Escritura. The payment for the personal property should be a separate transaction (e.g., a separate wire transfer, check, or cash payment with a signed receipt). This creates a clean paper trail and proves the distinction between the two sales, which is invaluable if tax authorities ever have questions.

Step 5: The Closing (Escritura Pública de Compraventa)

The final deed signed at the Notary's office will focus exclusively on the real estate. The Notary will verify the property's legal details against the Certificado de Gravamen and the municipal records. While the Escritura itself will not list the furniture, it can, and should, reference the prior agreement:

"It is declared that this sale is executed in accordance with the terms and conditions previously agreed upon by the parties in the Promesa de Compraventa signed on [Date] at the [Number] Notary of Cuenca."

This clause legally links the deed back to the Promesa, which contains the legally binding annex with the personal property inventory, providing full legal coverage without contaminating the property title.

⚠️ Broker's Legal Warning: The Notary is Your Final Checkpoint.

In Ecuador, the Notario is more than a witness; they are a legal official responsible for the validity of the transaction. If a Notary sees a real estate value in a Promesa that is wildly inconsistent with the municipal valuation (avalúo catastral) or suspects tax evasion by bundling personal property, they have the authority to refuse to execute the Escritura. I have personally seen deals collapse at the closing table for this very reason. Attempting to improperly document the sale is not just risky; it can be fatal to your transaction. Using separate, clear documentation as outlined above ensures a smooth, unquestioned closing.

Conclusion: Execute Your Sale with Legal and Financial Precision

Including personal property in your Cuenca home sale can be a powerful incentive for buyers and a practical solution for you. However, this convenience must not come at the cost of legal integrity and financial prudence. By meticulously creating a valued inventory, legally separating the transactions in the Promesa de Compraventa, and ensuring a clean paper trail, you protect yourself from tax liabilities and future disputes. This level of diligence is the hallmark of a secure and successful real estate transaction in Ecuador.