Saturday, August 14, 2010

Real Estate and Estate Planning (Ecuadorian style)

We receive notes quite frequently asking for 'advice' on finding a longer term rental or finding real estate to buy here in Cuenca.  We've posted info on the blog before, but thought we should post again.  It's an important topic.

First, we can't give 'advice'.  Even though Rich was a licensed real estate broker for many years in California and Oregon, we're not attorneys or realtors here.  But, we can share some of our experiences and observations.

The first and most important item to remember...  The real estate business (to rent or buy) in Ecuador is very different than in the US.  No MLS as we know it back in the States. No licensing of realtors, as we know in the US.  Anyone can decide to be in the real estate business.

You just can't assume anything and you have to ask a ton of questions as you go. 

Yes, some realtors speak English, but sometimes you need to also understand the 'culture' and how things get done.  Sometimes speaking Spanish is not enough to get you through all the processes.  Speaking the same language is a good thing...but it's not the only thing to make a deal go well.

Some realtors have a car, some hire a taxi to show you around...some will meet you at the property.  Some realtors charge up to $100/day to show you properties.  Sometimes the fee is applied to the sale/ sure to ask and get that commitment in writing.

It helps if you have a list of what you're looking for...view or not, porch or not, modern or not, apt/condo or house, neighborhood preferences, price range, security, parking, storage/out-buildings, fireplace?, garden? etc  If you have a list for the realtor, it kind of hones it down and doesn't waste your time. 

Some realtors will still try to show you the places that don't fit your criteria...but, stick to your guns and be firm. You're paying for the tour.

If you plan to buy/renovate a property in the historic area, it can be a little more complicated.  The historic Commission ("Patrimonial") needs to approve the work, usually before the work is begun.  It can get frustrating if you're in a hurry. 

Remember...Cuenca is a UNESCO City and it's the Commission's job to protect and preserve the nice, older buildings (inside and out).  Ask lots of questions if that's your plan. 

If you don't get the right approvals, or if you don't understand the 'rules', the Commission can padlock your property and stop the job until it all gets resolved.

Remember this picture of the Adobe renovation?  By the time a project like this one is completed, you will have interfaced with inspectors, officials, reviewers, approvers, attorneys and workers involved in the project. 

Although not absolutely necessary, we recommend you consider hiring an attorney as early as possible.

The attorneys do the property searches, write/finalize contracts and help deal with all the filings and fees.  They can also provide language translations so that you know what you're signing. 

We think it's a good idea to have an independent legal representative, not one associated with the realtor or builder, so there's no conflict of interest.  Ask for a list of all legal fees and all additional fees related to the transaction prior to going forward.

An attorney will line up a meeting with a Notary to make it all official. 

Yes, you can buy property without an attorney and close quickly...but, we don't recommend it.  Sometimes realtors/sellers will try to talk you out of getting an attorney involved.  Some see attorneys as 'deal breakers' and 'time wasters'...sometimes for good reason!  Better to know all the legal facts and get an expert, legal opinion so there are no surprises.  It's worth the money and the time to 'memorialize' all the promises and understandings that have been made to you by sellers, realtors, builders, vendors, attorneys and others.  When everything is in writing, it's 'real' and not heresay.  Memories can be short here, as they can be in the US.

If you choose to buy a new condo/apartment outside the historic area that is still under construction, be sure to ask about the Deed.  It can take up to 2 years or longer after the construction completion to obtain a Deed.  Although there may not be a Deed for you to review at the time of purchase,  there may be a builder's application for a Deed on file with the City of Cuenca.  Ask the builder/seller for a preview and a copy of the builder's application to the City  that describes the condo details.  If you don't see and agree with the preview, you could be surprised later that what you actually bought isn't what you thought you were buying. 

Another important item to discuss with an attorney here is the estate and inheritance laws.  Very different from the US.  Your US Will may not work in Ecuador.  Ecuadorian law can over-ride your US Will.  By law, your property may go to other family members  rather than your surviving spouse.  Family members could force a sale.  Be sure to ask an attorney so you're comfortable if you're planning to buy property here.

We just can't stress this step enough...being informed upfront may save you time, money and head and heartache later.

Some folks will tell you it's 'customary' or 'typical' to pay a buyers commission, or other processes are 'customary' ...  be sure to ask if a topic is 'customary' or the law.  Again, an attorney can help.  Could make a huge difference. 

 If you agree to pay a commission, be sure to determine the purchase  price on which the commission is based and hold to it.  Some realtors may come back and try to collect additional monies on improvements or additions that you have negotiated with the builder/seller after the purchase price of the unit has been established.  Every time you hear the words 'customary' or 'typical', it is generally not the law, and it's an area that can be negotiated. 

For renting longer term places, there are web sites out there and realtors, but we often hear that some of the best places are rented by word of mouth.  Folks 'pound the pavement' looking for signs in windows in the neighborhoods they like. 

Some have found ads in the newspapers, too.  If you don't speak Spanish, you can hire a translator at about $10/hour who can read the ads for you and may be able to arrange a showing. 

Some doormen/guards in larger buildings may know of places in their building for rent/sale, too.  Worth asking.  But, ask everyone you come keepers, friends, restaurant staff, etc.

Yes, you may find really cheap places to rent, but many will be unfurnished and may not be in areas you'd like to live.  Remember...'unfurnished' can mean no hot water heater, no appliances, no window treatments, no light fixtures...we've even heard of one older apt in town without water and without electricity.  Utilities and condo fees may be included, may not be.  Be sure to ask so you know what's included. 

One friend assumed that his preferred internet access was available in the new rental.  He found out it wasn't available after moving in.  Another question to ask and go to the source...don't take the landlord's or the realtor's word for it, if it's really important to you. 

Ask about what's included in a sale, too.  Get everything in writing. Do your 'due diligence' with vendors and landlords...Be sure to ask about painting the place if that's important....  Check it all out before signing and moving in.

If you find the perfect place, consider leaving a deposit before you leave the site.  Money talks here. We've heard of a couple who lost out on their perfect place as they didn't know to leave a deposit.  They went back to the US to wire money and thought they had the place, based on a handshake and a conversation and a quickly drafted 'agreement' (not notarized or reviewed by an attorney).

One friend took a day to get money out of the Bank for a deposit and advance rent...In that short time of a day, the apt was rented to another party with cash on the spot.

If you give a realtor, an attorney, a builder or anyone else any money, get a receipt and make notes.  Keep a log of money out and any promises made that day.

We don't want to be negative or dissuade you, just want to share this info to help make it easier for you.   The main thing to remember is that things are different's Ecuador!  Ask lots of questions and don't assume anything.  Better to not feel rushed....  better to not cut corners.  If any aspect of a deal doesn't feel right to you, be ready to walk away.  The train isn't leaving the station.

Good properties come and go here and there will always be another 'perfect' place for you.  Can be confusing and frustrating and yes, it can seem to take 'forever'!, but most everything can be time...

All of this written 'in our humble opinion'.....Hope this helps.

Happy hunting!


  1. Bravo! Bravo! Excellent summation! And I loved the picture of Chuck and Nancy!

  2. This should be required reading for everyone contemplating a move to Cuenca. Too many folks "drink the Kool-Aid" and rashly commit to a property without doing a single thing you so wisely recommend.

  3. Hi Rich and Nancy...
    You have provided a great service to wannabes...this write up of the pitfalls and procedures is excellent. Some of the best we have seen anywhere.
    The only thing we might add is that every website that most wannabes read also sells real estate, and, of course they will minimize the steps necessary to get the deal you want, to stay the way you want it.
    Keep up the good work,
    Bob & Rox

  4. OMG!!! This is such a wonderful post N&R. I know your wisdom was a tremendous help for us. Everyone needs to read this, and everyone needs to learn to ask questions. Looking forward to getting back to Cuenca and seeing all of our wonderful friends there.