Navigating Propiedad Horizontal: A Broker and Lawyer's Guide to Buying Condos in Cuenca

Propiedad Horizontal (PH) is the legal structure in Ecuador governing multi-unit developments where individuals own their private units but share ownership of, and financial responsibility for, common areas and infrastructure. This is not simply a homeowners' association; it is a legally registered co-ownership regime.

Your ownership is defined by two components:

Exclusive Ownership: You hold the title to your individual unit (apartment, office, or townhouse).
Co-ownership of Common Areas: You own an indivisible percentage of all common property, including land, foundations, hallways, elevators, roofs, gardens, and recreational facilities. This percentage, known as your alícuota, is critical. It determines your voting power in owners' meetings and the precise portion of all common expenses you are legally obligated to pay.

The Broker's Due Diligence Checklist: Protecting Your Investment Before You Sign

Purchasing a unit in a PH requires a far deeper due diligence process than for a standalone home. We must investigate not only the specific unit but the legal and financial health of the entire building. Failure here is the number one source of costly post-purchase surprises.

1. The Title Search: The Non-Negotiable Certificado de Gravamen

Before any funds are committed, the absolute first step is to obtain a Certificado de Gravamen Historiado y de Venta from the Registro de la Propiedad (Property Registry). This is the official title report and lien certificate for the specific unit you intend to buy. This document is paramount and will reveal:

The legal owner of the property.
Any outstanding mortgages (hipotecas).
Judicial liens, embargoes, or prohibitions against selling the property.
Easements or other registered encumbrances.

Expert Detail: We must insist on a certificate issued within the last few days of the transaction. A certificate that is even a few weeks old is insufficient, as a lien could have been placed in the interim. Closing without a clean, current Certificado de Gravamen is an unacceptable risk.

2. The Foundational Documents: Escritura de Constitución and Reglamento Interno

These are the constitution and bylaws of your building. We will obtain and scrutinize these registered documents to understand the rules you will live by and the obligations you will inherit.

The Deed of Constitution (Escritura de Constitución de Propiedad Horizontal): This document legally creates the PH regime. It describes the land, the building, each individual unit, and, most importantly, assigns the alícuota for each unit. We verify that the unit's details match what is being sold.
The Internal Regulations (Reglamento Interno de Copropiedad): This is your rulebook. We must carefully review it for critical clauses affecting your lifestyle and finances, such as rules on pets, renting your unit (short-term rentals are often restricted), noise, renovations, and the procedures for levying special assessments for major repairs.

3. The Financial Health of the Association

An underfunded or poorly managed building administration can result in sudden, large cash calls for owners. This is a financial minefield we must navigate with precision.

Certificate of No Debt (Certificado de No Adeudar): We will demand a formal certificate from the legally appointed building administrator confirming the seller is current on all monthly fees (cuotas de administración or alícuotas). In Ecuador, this debt attaches to the property, not the person, meaning you could inherit the seller's unpaid fees if this step is skipped.
Financial Statements and Meeting Minutes: We will request the last year's financial statements and, crucially, the minutes from the most recent homeowners' association meetings (actas de las asambleas de copropietarios). The minutes are an insider's tool; they reveal owner disputes, planned special assessments, and upcoming major repairs (like a new roof or elevator overhaul) that may not yet appear in the budget.

4. Municipal Standing and Taxes

A clean title is useless if the property has outstanding obligations to the city.

Municipal Debt Certificate: We will obtain a Certificado de No Adeudar al Municipio for the specific unit to ensure all property taxes (impuestos prediales) are paid.
Property Transfer Tax (Impuesto de Alcabalas): Be prepared for this tax, which is paid by the buyer at closing. In Azuay province, the rate is approximately 1.7% calculated on the higher of the purchase price or the municipal property valuation (avalúo catastral). The notary will not finalize the deed without proof this tax has been paid.
Capital Gains Tax (Plusvalía): While the seller pays this, you must understand it for your future. Ecuador has both a municipal capital gains tax and a national income tax on capital gains. For expats who may sell within a shorter timeframe (e.g., under five years), this tax can be significant. Understanding this now prevents future surprises.

The Transaction Process: Legal Fortification at Every Step

Once due diligence is complete, the transaction proceeds through a structured legal process overseen by a Notary Public.

1. The Promesa de Compraventa (Promise to Purchase Agreement) This is a binding preliminary contract. I will draft or review this to ensure it includes protective clauses, making the final purchase conditional upon a clean title search, satisfactory review of the PH financials, and other due diligence findings. It locks in the price and sets the timeline for closing.

2. The Minuta de Compraventa (Draft Deed of Sale) This is the formal draft of the final deed, prepared by your lawyer for the notary. It contains all legal descriptions, the purchase price, and references the property's adherence to the Propiedad Horizontal regime.

3. The Escritura Pública de Compraventa (Public Deed of Sale) This is the final closing event at the notary's office. You, the seller, and the notary will sign the final deed. Before you sign, we will perform a final verification of all documents, and you will show proof of payment for the Alcabalas and other minor transfer fees. Upon signing and notarization, ownership is legally transferred.

4. The Final Step: Registration (Inscripción en el Registro de la Propiedad) The signed Escritura Pública is not the end. The notary must immediately send the deed to the Registro de la Propiedad for official registration. Only when the property is inscribed in your name in this public registry are you recognized as the sole and definitive owner, protected against third-party claims.

⚠️ A Lawyer's Red Line: Deal-Breakers in a PH Transaction

Some risks are too great to accept. As your legal counsel, I will advise you to walk away from any deal involving:

An Unclean Certificado de Gravamen: Any unresolved lien, mortgage, or sales prohibition is an absolute deal-breaker until it is legally cleared and a new, clean certificate is issued.
Refusal to Provide Financials: A seller or administrator who is unwilling to provide a formal Certificado de No Adeudar and the association's financial records is hiding a problem. Assume the worst.
An Unconstituted PH Regime: In new developments, a developer may try to sell units before the Propiedad Horizontal regime has been legally constituted and registered. This is a significant legal hazard, leaving your ownership status in limbo. We must verify the PH is fully registered before closing.

Conclusion

Purchasing a condominium or townhouse in Cuenca offers a fantastic lifestyle, but it is a sophisticated legal and financial transaction. The allure of a beautiful apartment must be balanced with a rigorous investigation into the health of the entire building. By methodically verifying the title, scrutinizing the PH regime's governing documents and financial stability, and understanding the tax implications, you transform a potentially risky purchase into a secure, long-term investment. My role is to serve as your dual-expert advocate, ensuring every legal document is sound, every financial detail is transparent, and your new home in Cuenca is built on a foundation of absolute legal certainty.