Process of buying
Once you have got a property, a price, and a way to transfer your funds to the country legally, there are three steps that you will need to take to become a legal owner of the property.
All of them can be completed in approximately three weeks’ time but give it a month to accommodate the leisurely Latin pace.
GET A CERTIFICATE OF TRADITION AND LIBERTY
Ok, so this is a direct translation of the Certificado de Tradicion y Libertad which contains all the information about the real estate, starting with its historical ownership records, mortgage history, any work that was carried out, and so on.
You will need the help of your lawyer at this step. He/she will need to verify that the certificate is legitimate. The lawyer will also check that all municipal taxes on the property have been taken care of.
Furthermore, you will need to get the property checked out and inspected at this stage. This step will normally take a week to complete and cost you whatever your lawyer’s hourly or daily rate is.
DRAW UP THE PURCHASE AGREEMENT
Up until this point, all the verbal agreements have been non-binding, but it stops here. If you really want to purchase the real estate, a Promesa de Compraventa will need to be drawn up.
It is a binding contract where you promise to buy the property and where the owner promises to sell it to you. There will be certain conditions included in the purchase agreement:
● The exact price that was agreed upon.
● An inventory of what exactly is included in the sale.
● A down payment (normally 30%)
● A Penalty clause (10-20% of the down payment if either side pulls out of the sale)
SIGN THE PUBLIC DEED (ESCRITURA PUBLICA)
The final step in purchasing a property in Colombia involves a lengthy visit to a notary’s office. The process is very meticulous and ‘proper.’ You will spend the better part of your day in the office, signing a pile of paperwork. They will probably even bring out juice and donuts, so settle in. Signing the Escritura Publica will confirm you as the new and legal owner of the real estate. There are fees involved here too:
● 0.15% free of the total value of the property that is paid to the notary (plus VAT)
● 1% of the value of the property will also be withheld and applied towards the income tax that the old owner will now owe to the government.
● The total amount of tax for the seller is 3.63-4.79% of the total value of the property. And for you, the buyer, it is 1.65%.
Once the Deed is all paid for and signed, it will get to the Registry Office and the Cadastre of properties. You will then officially become the new owner of the property – congrats!