Buying Property
We have the knowledge and experience necessary
to safeguard your real estate investment.
From conducting a comprehensive title analysis and negotiating terms with seller’s counsel, to structuring a purchase agreement that protects your interests, Langon can help you throughout the property purchase process.
Our Real Estate Practice Group can assist you with all aspects of any real estate transaction including, but not limited to:
Transfer of Funds:
Analyzing the best options available to transfer funds into Colombia to purchase real estate and general assistance with declaration forms (“formularios”) that client will need to execute in order to “nationalize” funds.
Transaction Due Diligence:
Reviewing all relevant documentation as part of a standard due diligence process including, but not limited to, the property certificate (the “Certificado de Tradición y Libertad”), the property deed (the “Escritura Pública”), tax bills (including the “Impuesto Predial” and the “Impuesto de Valorización”) and other legal documentation.
Formal Title Analysis:
Drafting and finalizing a formal written legal opinion that outlines the findings of the due diligence process, identifies any title defects and provides overall recommendations.
Land Survey:
Reviewing property boundaries for lot transactions while coordinating with independent surveyors to ensure that investment includes correct property boundaries.
Zoning and Land Use:
Reviewing applicable zoning and land use restrictions on lot prior to purchase.
Negotiating Terms:
Negotiate terms of sale with seller and/or seller’s agent incorporating the findings of the formal Title Analysis, consistent with our client’s instructions.
Purchasing Real Estate in Colombia:
1. Open Brokerage Account
We highly recommend that you open an account with a reputable brokerage company. Most brokerage companies offer foreign clients the opportunity to transfer large sums of money into the Colombian market at a low cost and in a way that is more efficient and less time consuming than bank-to-bank transfers. If you are diligent you can expect to open an account within 10 to 20 business days.
2. Collect Key Information
Prior to making a formal offer to purchase a property it is imperative that we gather all the relevant documentation on the property and the seller. Much of this can be obtained from the seller directly, though it is a good idea to obtain it from public sources to ensure the impartiality of the information. If the parties are motivated expect this process to take 3 to 5 business days.
3. Conduct Legal Analysis
Once we gather the necessary documentation we will be in a position to conduct a proper review of the proposed transaction. This process involves identifying any potential title defects and determining if there are any liens and/or encumbrances on the property. Expect this process to take 1 to 3 business days.
4. Perfect Title/Resolve Transaction Impediments
If we uncover any title defects and/or any other issues we can then negotiate with the seller accordingly. This could involve payment on past due property taxes, delinquency on existing mortgages or even competing ownership claims on the subject property. Keep in mind that per Civil Code, art. 1893 et. seq., the seller is obligated to help buyer cure any potential imperfections in the title. It is also during this time that the buyer may consider applying for a mortgage to finance the purchase of the property, though these are still rare for foreign purchasers. The timing for this will vary.
5. Negotiate Purchase Agreement
Once all purchase terms have been negotiated we draft a LOI/Purchase Agreement or “Promesa de Compraventa” contract. The purpose of this contract is to clarify all essential transaction terms prior to the actual transfer of the property. Per Civil Code, art. 1857 et. seq., you must clearly identify the property that is being acquired with its delineated area and boundaries, the purchase price, the method of payment (how, where and when the payment will be effectuated), the date of the delivery of the property, relevant transaction costs (taxes, notary fees and registration costs) and other important terms. If the parties are motivated expect this process to take 1 to 3 business days.
6. Execute Purchase Agreement
The parties will meet at a local notary and sign the Purchase Agreement. Purchaser is usually required to make at least an initial deposit consistent with the terms of the Purchase Agreement, though many foreign clients prefer to make a one time payment to close the transaction as soon as possible. This process generally takes just a few minutes.
7. Transfer Funds
As soon as your brokerage account is set up it should be ready to receive funds from abroad to be used to purchase your target property. Make sure you coordinate with your attorneys to finalize the relevant transfer documentation correctly in order to register your investment properly. Payments to seller as well as relevant transaction fees will be based on information specified in the LOI/Purchase Agreement.
8. Payment of Liens/Miscellaneous Charges
It is at this point that any liens, back taxes, mortgages and other charges are paid consistent with what the parties agreed to in the LOI/Purchase Agreement. The timing for this will vary.
9. Drafting Public Deed
During this phase the parties collect all relevant documentation that verifies clean title and shows that all liens, back taxes, mortgages and other charges have been paid. The notary reviews this documentation and drafts a public deed or “escritura publica” transferring title to the purchaser. This process can take 7 to 10 business days.
10. Signing Public Deed
The date of delivery or “entrega” will be specified in the LOI/Purchase Agreement. On that date, the property should be completely vacated and be ready for the intended use. Buyer will be responsible for all expenses related to the property as of the date of delivery.
11. Take Possession
During this phase the parties collect all relevant documentation that verifies clean title and shows that all liens, back taxes, mortgages and other charges have been paid. The notary reviews this documentation and drafts a public deed or “escritura publica” transferring title to the purchaser. This process can take 7 to 10 business days.
12. Register Public Deed
Once the Public Deed has been signed by the notary, it must be submitted to the Registration Office in order for the new owner to be registered as the formal owner. This process generally takes 10 to 20 business days.
Purchasing Real Estate in Colombia:
Certificado de Tradicion y Libertad
A type of deed certificate that outlines the current legal status of a property including current and past ownership, the existence of any liens, mortgages and miscellaneous past due charges. This document is essential to finalizing a formal title analysis in advance of any potential purchase.
Embargo
Lien. These are typically filed against a property to prevent the transfer of title until a specific debt is settled.
Escritura Pública
A type of public deed issued by a notary that verifies the legal capacity for the transaction to occur. This document is generally finalized once the purchaser makes payment to the seller pursuant to the “Promesa de Compraventa.”
Impuesto Predial
Annual property tax based on the registered value of the property. Property owners are required to pay this tax on a quarterly basis.
Hipoteca
Mortgage
Oficina de Registro de Instrumentos Públicos
Governmental office where official documentation confirming transfer of title is submitted and approved.
Gastos de Compraventa
These are the closing costs and related transaction fees that are assessed in connection with the purchase of a property.
Promesa de Compraventa
A type of property purchase agreement that lays out all the terms of the potential transaction. It typically includes a clear description of the property being acquired, the purchase price, the method of payment, delivery date and other important deal terms.