Emily and I are continuing our search for a place of our own. Since our arrival in Ecuador, we have looked at over one hundred lots and structures, trying to determine what we like, where we want to live and what accommodations we want to have. We've determined that these are some of the characteristics of the property that we want to own:
- Property on the ocean front
- A three bedroom house for ourselves
- A smaller one-bedroom house (una casita) for guests/rentals
- Small-town location
- A workshop for gardening and other projects
- A pool
Of the properties that we've visited, about a half-a-dozen met those parameters. The ones that qualify are too expensive; the ones that don't qualify are either not in a desirable location or will require too many repairs to justify. As a result, we've decided to purchase property (either with structures or without) and build to our own vision. Having said that...
Stand by for news!
We currently have offers extended on three different properties. They are all within 45 minutes of Puerto Lopez (https://maps.google.com/?ll=-1.560037,-80.805917), both north and south. All three are empty lots with enough space to do what we want. However, each of the three illustrates a different challenge in purchasing property here.
Before getting into more detail about the properties, there are a couple of background items to discuss.
Measurements
All measurements here, of course, are metric. (I now even own a metric measuring tape!) Land area is specified in square meters (or hectares - 10,000 square meters per hectare for large parcels). Here are some guidelines for converting metric measurements to standard:
- This blogging tool doesn't do superscripts, so I'll represent a square meter as "m2".
- 1 m2 = 10.8 square feet
- 1 acre = 4047 m2
- 1 acre = 43,560 square feet
- A typical suburban lot in the US is about 8000 square feet (roughly 1/5 of an acre) or about 800 m2
Property Ownership
Since we are not interested in a condominium or living in a gated community, I don't know the parameters of ownership in those situations. For individual lots, there are two types of property ownership: comuna and escritura (titled).
Comuna land, as the name implies, is land that is owned by a community, and the owner of the lot is determined by the comuna leadership (both residential or commercial). In most cases, a family has been on a given lot for years and has built a house or other structure, but they do not own the land. The comuna has granted a "right-of-usage" to the family that can be revoked at any time, although this is extremely rare. Purchasing right-of-usage on comuna land, especially for ex-pats, is not recommended.
(It is possible to convert comuna land to private ownership, but that's a topic for another day.)
Property that has an "escritura" has a private title and a specific ownership group. This deed, the associated property tax records and the registration with the canton are necessary for a complete transfer of ownership to another private property. These are the only properties that we are considering.
Inheritance
This next section may sound a little weird (it certainly is to me!), but it is how I understand the law to be here.
When property is purchased by an individual or a company, they are the sole owners of the land. When it is purchased by a married person, however, it is automatically owned evenly by both spouses. So far, so good.
When one spouse dies, however, the surviving spouse continues to own 50% while the other 50% is distributed evenly among the children. The surviving spouse retains a "right-of-usage" on the children's ownership shares (the children can't evict the parent, say), but the property ownership cannot be changed/transferred without the agreement of all parties. Once the surviving spouse passes, full ownership is distributed evenly among all surviving children.
(Without going into too much detail, it gets even stranger if there are no children. Ownership transfers first to the surviving parents if they are alive; otherwise, it will go to the siblings of the spouse that died. If there are no surviving siblings, it goes to nieces and nephews. It gets pretty arcane; it seems like a goat might eventually own the land.)
The premise of these laws is founded in the comuna community and is intended to ensure that the property stays in the family and that a person will always have a place to live. The intention is noble and good, but (in my opinion) does not transfer well to today's global economy and is a challenge that is being addressed by a country that is modernizing.
What about a will? It doesn't matter. A will (such as we have in the United States) does not apply here; the law of inheritance supersedes the wishes of the owner.
The only way around this practice is to have the property owned by a company. In this situation, the directors of the company determine what happens with the property and how ownership is determined. If the company sells the property to a private party, however, it's back to step A. Once we purchase property, Emily and I are planning to form a company to control ownership of the land. (We've started businesses and corporations before. It will be just another challenge of living here!)
(Remember the Manglaralto white house from a previous post? That's a direct result of this scenario.)
And now, the rest of the story...
At the top, I mentioned that we had made offers on three properties. They are all still viable, but they are going in three different directions.
Property One:
This is a 1800 m2 lot with 50m of beach front north of Puerto Lopez. It consists of two sections (beach front and back lot) with a road dividing them. The owner is willing to sell them separately but will drop the price 30% if they are sold as a unit. We made a verbal offer to buy the package.
A background check of the previous owners created a red flag, however. Two or three owners prior, someone had made a claim to the back lot. We were told that the claim had been settled verbally (insert Pinocchio's nose here) and that the title was clear. This purchase is on hold until the claim is fully resolved and a clear escritura is available.
Property Two:
This one is a smaller lot (about 750 m2) in the middle of a very charming small town south of Puerto Lopez. There is a malecon (road) between the lot and the beach, but nothing can be developed in front of it. Our intention is to buy and hold this lot for future use.
With this property, however, the inheritance law is getting in the way. The lot is currently owned by a woman and her four children. They all want to sell, but they can't agree on the price. The woman and three of the children want to sell for X; the fourth child wants to sell for X times 2. Until they can agree, the sale can't move forward.
Property Three:
This is a 800 m2 property north of Puerto Lopez with 40m of beach front. Finding the owner of the property was a challenge, however. The agent that we've been working with was spectacular in getting this information.
Just down the street from this lot is an elderly man who helps the local fishermen: selling supplies, fixing nets, etc. When our agent asked him if he knew who owned the property, he said that he wasn't sure but that we should ask at the blue house just past the second park going into town. (Yes, this one of those "turn-left-where-the-big-oak-tree-used-to-be" scenarios.)
Forty-five minutes later, we found the blue house. Our agent went in and asked about the property. They didn't know the owner, but they had a calendar from his business with a phone number at the bottom. A call to that number determined that he was in Guayaquil (four hours away) but that his wife was in town and that she had all of the paperwork. Her house was, "at the top of the hill, behind the park that's next to the church". (That's not verbatim, of course. There are no contractions in Spanish.)
We found the church and our agent set off on foot. A half hour later, we heard the good news.
The escritura, tax records and registrations were all in order. He hadn't really considered selling the lot, but if someone gave him X, he would take it. Our agent made a counteroffer, and it was verbally accepted.
Earlier this week, we returned to get the paperwork. We have forwarded this information to our attorney for review, and we are optimistic about the sale happening. (I should probably say, "cautiously optomistic". Nothing's over 'till it's over.)
Selling our house in the States was so much easier than this. Pick an agent, search MLS, have an open house and choose an offer; the next thing you know, you're in escrow! I guess it's just part of the fun and learning experience of living in a rapidly developing country. Hopefully my next entry will be describing the actual sale and title transfer!
Scott in Ecuador...
Good Day!
No comments:
Post a Comment