Property Ownership in Colombia

Becoming a resident in Colombia may be a tricky process however buying property in Colombia is much easier. In fact non residents are afforded the same property ownership rights as citizens of Colombia.

1 The Process

The services of a notary in Colombia real estate are essential to the transaction and a transaction cannot be concluded without a notary. In Colombia, notaries are well respected and often are considered equal to any attorney. The notary not only prepares the buy/sell contract but they are responsible for finalizing the transaction including verification of all required paperwork and confirming all applicable fees are paid.

Real estate agents in Colombia receive no specific training, require no specific testing and follow no specific rules or regulations. When choosing an agent look for one who is experienced as knowledgeable in their field and the region they work. There are many good real estate agents in Colombia and there are just as many bad ones, so take your time choosing.

Whether you’re buying a home to rent as an investment or one to live in the process is the same. First, you’ll need to locate a property. For this you may decide to use the services of a real estate agent. There are two ways to utilize a real estate agent in Colombia. First, if the seller pays the entire commission he could effectively have two agents…his own and the one you’ve used to locate the property. This may not be in the best interest of the buyer as both agents are required to represent the seller’s best interest, when the seller pays all commission. However a buyer can pay the commission of his own agent. Often, this amount can be deducted from the price of the home. Paying a buyer’s agent will ensure the buyer is protected and the agent will have his client’s best interests as his goal.

Once a property has been located your agent will contact the seller’s agent and negotiations can begin. After all terms and price have been agreed upon the buyer and the seller will sign the buy/sell contract. The signing usually takes place in front of a notary. At this time the deal is solidified with a good faith down payment of the agreed upon amount. This amount is usually 10%-20% of the purchase price. The buyer will present a cashiers check to the seller. This is the customary time to pay your real estate agent as well. Commission is usually 3% total and will be paid by the party determined in the contract. The contract will also include a cancellation fee. This fee is generally 50% of the purchase price and is paid by the canceling party. This clause alone usually deters any last minute reconsidering, so be very sure before you sign any contracts.

After the contract signing there is usually a time period of as little as 5 days and up to 60 days, before the transaction will be completed. During this time the buyer will make arrangements to have an international wire transfer to a Colombian bank or if the buyer is purchasing new construction from a builder the buyer may choose to transfer the money to the builders trust account which is similar to an escrow account. This is a much simpler process than transferring money to a Colombian bank account for the first time.

During this period the seller will have time to move and bring the property to the agreed upon condition.

When the contract time period has ended the buyer and the seller will meet with a notary to complete the transaction. The seller will be required to pay the sales tax. The buyer has already wired payment to the sellers account or will have a cashiers check as payment with him. Once all remaining paperwork has been completed and all fees paid the title will be recorded based on the information provided by the notary. This process will take about 48 hours.

The fees paid in a real estate transaction can be divided according to negotiations. Real estate agent commissions may be paid by either party or each may pay their respective agent, and should be negotiated in advance. Normally the seller pays his sales tax. The notary fees will be shared by the buyer and the seller. The buyer will pay taxes and title fees and these fees usually run about 2% of the purchase price.

There can be difficulty bringing money into Colombia and the Colombian government goes to great lengths to establish the money you will be using to purchase property is clean money rather than money obtained illegally. The process can be lengthy as banks internationally will have to interact to determine your money is clean. Providing specific documentation to the Colombian government including tax returns, proof of income and bank statements will help the Colombian government determine your money is clean and verify you as a lawful and honest person. This is very important in Colombia.