CAN A FOREIGNER BUY A PROPERTY IN COLOMBIA WITH NO RESTRICTION?
Yes, foreigners can buy and take a clean title with no restrictions provided they fulfill the civil, commercial, tax, and exchange regulations. In fact, foreigners have the exact same property rights as Colombian citizens. It’s not too complicated if you know the process, but most foreigners prefer to engage a qualified Colombian real estate attorney in the process. Since 2007 Primavera Realty Medellin, and its predecessor companies, have closed more than 500+ properties for foreigners where the title was delivered within 30-45 days.
ARE ESCROW ACCOUNTS UTILIZED?
No. Escrow accounts for real estate transactions do not exist in most parts of Central and South America, and for practical purposes, they are unnecessary. As directed by you, your local bank or brokerage firm will make disbursements on your behalf that are paid directly to the seller and other parties involved, like a financial institution for a mortgage payoff or for property taxes.
HOW DO I TRANSFER MONEY FOR THE TRANSACTION?
Foreign purchasers typically open a brokerage account in Colombia to bring money into the country. Buyers are free to select whatever brokerage firm they wish but Primavera Realty Medellin (PRM) highly recommends Acciones Valores, Colombia´s oldest brokerage firm, established in 1959. Buyers open their accounts online and at no cost. The process takes 2-4 weeks, so buyers are advised to start this process early. Your PRM realtor can assist you with an introduction to Acciones Valores.
DOES A REAL ESTATE INVESTMENT QUALIFY A PERSON FOR A VISA?
Foreign investors can qualify for two types of investor visas with minimum investments of either 350 X the Colombian minimum wage ($95,000 USD at a 3700-exchange rate) or 600 X the minimum wage ($176,000 USD at a 3700-exchange rate). To qualify, the investment must be made in the name of a natural person, not an entity such as an IRA, Trust, LLC, Corporation, etc. A qualified Colombian real estate attorney can assist in this process and a visa can be obtained in as little as 30 days after closing.
WHO PAYS THE PROPERTY TAXES?
The annual city property taxes are prorated between the seller and the buyer for the calendar year at the time of closing.
IS OWNERSHIP AND THE INVESTMENT REGISTERED WITH THE GOVERNMENT?
Yes. Your lawyer will prepare all necessary registration documentation forms and submit them for proper acceptance and recording with the Central Bank. Upon recording, your ownership becomes a part of the public record and credits you as the legal owner.
DO I NEED TO GRANT A POWER of ATTORNEY (POA) TO MY LAWYER?
No, you do not but it is a good idea if for any reason the buyer does not wish to attend the closing in Colombia. A buyer can execute a POA for his attorney (or another third party) while in Colombia or at any Colombian consulate in the United States or other country where domiciled.
WHAT ARE THE CLOSING COSTS?
The closing costs for both buyers and sellers are 1.80% of the sale price, plus prorated property taxes, HOA fees, and utilities.
WHEN DO I GET MY TITLE?
Once the purchase deed is signed by both buyer and seller (closing) your legal Title to the property is granted in a Public Notary. After closing, your title is submitted to the Public Registration Office where it is officially recorded and a public certificate is issued recognizing you as the legal owner. This process typically takes 3-5 weeks and is managed by and through your lawyer.
CAN I TAKE TITLE AS A TRUST, LLC, OR OTHER BUSINESS STRUCTURE?
Yes, you may. You will need to provide all documentation, EIN, and other info to verify the good standing and legality of the entity.
ARE DOCUMENTS PROVIDED IN ENGLISH?
No. All legal documentation is provided in Spanish. Since the majority of PRM clients utilize a qualified bi-lingual attorney there really is no need for a written translation. But, clients can translate documents through free online translation services such as Google, Babel, etc. If for some reason buyers wish to have all documents professionally translated into English, a transcription service company can be hired at an additional cost.
WHAT IS THE COST FOR A REAL ESTATE ATTORNEY TO ASSIST THROUGH THE ENTIRE REAL ESTATE PROCESS?
Any attorney can provide a quote for services. PRM recommended attorneys typically will be in the $1,000 USD range which will cover services such as telephonic and personal meetings, answering questions, mediating with seller´s attorneys, assisting with registering all funds brought into Colombia with the Central Bank, reviewing the term sheet submitted by the real estate company, obtaining and reviewing the Certificado de Libertad, preparing the Promesa (sales contract), doing a title search, preparing closing documents and prorations, attending the closing and assisting in obtaining a final copy of the title, amongst other things.
IS THERE TITLE INSURANCE AVAILABLE? HOW DO I KNOW IF THE TITLE IS CLEAN?
From the Owner/Broker of PRM, Rich Holman:
“Prior to my coming to Medellin I was a mortgage broker in SW Florida. I was always befuddled about the need for title insurance, how expensive it was, and why it was always necessary, i.e., why for new home developments.
When I came to Medellin, I was pleasantly surprised to see something better. The Certificado de Libertad. This document is issued by the Government and must be presented for executing sales contracts and closings. The Certificado also must be current, within 48 hours of issuance. The Certificado shows the matricula number for any property, parking spaces, and storage closets, etc. It has the address, property description, chain of title, and lists any liens or mortgages.
In this country, you cannot do a contract, lien, mortgage, sales contract, or closing without using the services of quasi-governmental offices called Notarias. And the Notarias are required by law to report all related transactions to the Government. It is a system that works very well and I think better than the US.
The cost for title insurance in the US can typically vary from $2,000 to $5,000 USD.
The cost for a Certificado is about $4 USD, and that cost is covered in your real estate attorney´s fee.
About 99% of closings in Medellin are between Colombians and other Latinos. Maybe 5-10% of them use attorneys. Most just go to the Notaria and use the Notaria services for sales contracts and closings.
Most foreigners do not have that trust level, nor are they bi-lingual, plus they need other help like registering funds, so they employ a bilingual real estate attorney to assist in doing an additional title search where the attorney reviews and analyzes all applicable documents, including the Certificado de Libertad.
After 500+ closings in 15 years we have experienced only two instances of title searches revealing any errors or changes; both involved the property description (one was the unit number and the other was the size of the apartment). We have never had a problem with clouded titles, encroachments, or ownership disputes¨.