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How to Buy and Rent Property in Colombia
What kind of requirements and factors should be taken into account when renting or purchasing property? What kinds of licenses must be obtained in order to carry out certain commercial activities?
Sebastián Vallejo, investment climate lawyer at Invest in Bogota, presents the “Acquisition and Leasing of Real Estate Properties” form the 2019 Bogota’s Foreing Investment Guide.
Colombia operates a unified treatment in terms of the acquisition and rental of property and makes no distinction based on the nationality of the renter or purchaser.
The sales contract for property gives rise to a public deed submitted to a notary. In order for it to enter into full force and meet the duty of disclosure, this document must be registered in the Public Instrument Records Office.
The process must be carried out in due form, following these steps:
- Preliminary stage – Due diligence: Verifying the existence of the property and the seller, the ownership of the person who is selling the property and checking that the land use matches the intended use and other relevant issues.
- Study of title deeds: Studying the chain of title and determining whether there are any existing charges on the property, in such a way that its free availability can be verified.
- Integrity analysis of the previous titleholders of the property: Performing a study on public and business databases, public registers, websites, and other mediums, in order to verify the good standing of the seller.
- Land use study: Checking the land use in order to accommodate the investor’s expectations and prevent any unforeseen events from occurring in the projects.
- Promise to purchase: Usually, a promise to purchase contract is signed to ensure the execution of a deal that is being postponed while each party carries out the corresponding procedures. The contract must include the details of the purchaser and the seller; a description of the location of the property; the price and form of payment; the date and form of delivery; the date, time and place the deed was signed; conditions precedent; and the signatures and authentications before a notary public.
Additionally, the rental of property must take place through a rental contract, which is concluded by setting a rental price and specifying the good that is subject to the rental, the forms of payment and the payment period. Other details are widely recommended, but not essential.
Keep in mind
- The municipal authorities in Colombia are free to issue their own land use plans (POT), which establish the uses of land and are the basis for applying for planning permission for the construction of new buildings.
- Land is classified as urban, urban expansion, rural, suburban and protected, with each having its own restrictions and permitted uses.
- The possibility exists of entering into a fiduciary deal to enable a fiduciary company to carry out a real estate project on the property that is delivered by the trust founder.
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