The Purchase Process
Find out about the steps involved when buying a house or apartment in Colombia…
The first step when buying a property in Colombia is to carry out due diligence. This includes a visit to the property to establish its general condition, and obtaining a Certificado de libertad y tradición, which must have been issued in the last 30 days. This document includes a history of ownership of the property and a chain of title. It is recommended to have this certificate checked by a lawyer to find out if there are any impediments to the sale of the property and to confirm that the use of land complies with the local land use ordinance (Plan de Ordenamiento Territorial – POT).
Promise to Purchase
If the lawyer confirms there are no impediments to the sale after checking the certificate, the next step is to sign a Promise to Purchase agreement (Promesa de Compraventa). This document includes the terms agreed on by the buyer and seller, in particular regarding the price and method of payment.
The Promise to Purchase must include:
- Personal details of the seller and buyer
- Description and location of the property
- Price, date and method of payment
- Date of the final signature of the deed
- Conditions of payment of the fees and costs generated by the contract and its registration
- Contact detail of the parties
There are a number of accompanying documents, which include:
- Proof of payment of utilities, administration fees and taxes
- The Certificado de libertad y tradición
The Promise to Purchase must be signed in front of a notary, and the signatures must be authenticated. There is no cost for this document, but it is common at this point for the buyer to make a payment (arras) of between 10% and 20% of the total value of the property. It important to note that the amount paid will be lost if the buyer pulls out of the purchase of the purchase.
Once the conditions established in the Promise to Purchase agreement have been fulfilled, both parties can sign the final deed. The process between the initial signing of the Promise to Purchase agreement and the final deed can range from a few days to several months, depending on how long it takes both parties to fulfil their obligations, as outlined in the initial agreement. In order to transfer the title of ownership to the buyer, the notary will need:
- Proof that the seller has paid the Predial and all property related taxes - this is known as Paz y Salvo
- Proof of payment of the building administration fees (when the property is subject to horizontal property regime)
- Copies of both parties’ ID.
- If the purchase is subject to a mortgage, a form with the loan information from the bank, and a copy of the Chamber of Commerce registration of the bank
- Payment of notary fees
The notary will draft the public deed, which is then approved and signed by the parties in front of the notary.
The final step is to register the deed at the Oficina de Registro de Instrumentos Públicos. Once the deed has been signed at the notary office, the registry tax payment receipt must be filed with the Registry Office in the area (Localidad) where the property is located, and the fees for the registration of the property and mortgage must be paid.
Registration takes between 8 and 30 days. It is advisable to request a new Certificado de libertad y tradición, to check that the property has been correctly registered.