Cuenca Real Estate Closings

Cuenca Real Estate Closings with Xavier (Local Agent)

Have you ever wondered what happens during a real estate closing in Cuenca? Leave all of those expectations at the door, because I’m going to bet that it’s wildly different from what you’re used to. Today, I’m exploring this topic with YapaTree Properties Realtor, Xavier. Vamos.

Real estate is the core revenue-generating activity at YapaTree. As such, we have multiple years of experience navigating the closing process for our clients and it can be full of surprises. Joining us today is a local real estate agent with over 20 years of experience in Cuenca, Xavier. Welcome, Xavier. Let’s get stuck into some of those questions.

The Four-Step Closing Process in Cuenca

When we first started working together, one of the things that struck me was how involved Xavier is in the closing process. In Australia, where I’ve bought and sold properties, agents aren’t as hands-on. So, I asked Xavier to walk me through the key parts of the closing process in Cuenca.

“A closing process in Cuenca, well, in Ecuador, is actually a very simple, simple process,” Xavier begins. Here’s the breakdown:

  1. Promissory Note: This initial step involves creating a contract that outlines the terms of the sale, protecting both the buyer and the seller. It includes the price, time frame, penalties, and other conditions like repairs or modifications.
  2. Title Search: This crucial step checks for any liens, mortgages, or legal issues with the seller. Ensuring a clear title is essential to avoid future problems.
  3. Notary Involvement: After the title search, you make the payment, sign the deed, and the notary records the transaction. Notaries in Ecuador play a much more significant role than just rubber-stamping documents; they ensure everything is legally sound.
  4. Recording the Deed: Finally, the deed is recorded at the only recording office in town, making the transaction official.

“In some cases,” Xavier explains, “transactions can skip the promissory note and go straight to the deed if we already have a title search done and if your payment is going to be fully in cash, which is the case for most expats.” This approach is suitable if the property is ready to be delivered without issues. Unlike in the US, Ecuador doesn’t use escrow accounts, so the promissory note serves as a safeguard for both parties.

Escrow and Inspections: Safeguarding Your Investment

One major difference in Ecuador is the lack of escrow accounts. “How do we safeguard those deals in Ecuador to basically do not the exact same function as escrow, but ultimately give peace of mind to the buyer?” I asked Xavier.

“The laws are different here. One of the tools we use is the promissory note,” Xavier explains. It can be very specific to include conditions like repairs or modifications that need to be done before the sale is finalized.

Inspections are also handled differently. Instead of a standard inspection, buyers can hire licensed engineers or contractors to check the property. “You can hire a licensed engineer or a proper licensed plumber or a contractor,” says Xavier, although he warns against some practices where unqualified individuals are used to funnel more money into the transaction.

Challenges and Time Investment in the Closing Process

Xavier’s involvement in the closing process is substantial. “On a normal process, it takes me let’s say four hours per step,” he says. This time can increase if there are complications.

As an agent, Xavier spends about 30-35% of his time ensuring deeds are done correctly. “I have to supervise what they’re doing,” he notes, referring to the lawyers involved in the process. The manual nature of the process in Ecuador means Xavier often spends time physically moving documents from one office to another.

Costs Involved in the Closing Process

Understanding the costs involved is crucial for buyers. Here’s a breakdown:

  • Title Search: $13 fee at the registration office plus $25 for the person to handle it.
  • Recording Fee: Up to $500.
  • Buyer’s Tax: 1% of the property value.
  • Notary Fees: For a $100,000 house, expect around $2,500 in total closing costs, including the promissory note, deed, title search, and registration.

There’s minor paperwork costs between $150 and $200,” adds Xavier. The exact amounts can vary depending on how the previous deed was written and whether there are multiple deeds for things like parking spots and storage units.

The Adventure of Real Estate in Cuenca

Buying property in a new country is an adventure. It’s filled with excitement, but also with challenges that can test your patience and resolve. Today, I’m sharing a detailed case study that highlights some of the potential pitfalls and the meticulous efforts required to navigate them successfully. Our story involves a particularly tricky closing process that Xavier and I had to handle recently.

The Case Study: A Rollercoaster Ride

Let’s start with a real-life example to illustrate the complexity of some real estate transactions. We recently dealt with a house in downtown Cuenca. It was a beautiful, move-in-ready property with a surprising twist—hidden complications in the deed registration.

Uncovering Hidden Issues

The house originally belonged to a couple who had passed away, leaving it to their seven children. We thought everything was in order until the registration office rejected the deed. Why? Because an eighth sibling, who had passed away years ago, wasn’t accounted for properly in the paperwork. This meant we had to pause everything to complete an “effective possession” for the deceased family members, a process that was manual and painstakingly detailed.

The Deed Debacle

To add to the confusion, the house had three different repertory numbers due to multiple mortgages and other transactions recorded over the years. Imagine trying to decipher 60-year-old handwritten documents in Spanish! We had to collaborate closely with the registration office to clean up these records, ensuring that only the correct details were recorded.

Xavier’s Expertise: The Key to Success

Xavier’s role in this process was crucial. He tirelessly researched, negotiated, and coordinated with legal experts to resolve these issues. It took a full month, but he managed to fix everything without going to court—a route that could have taken a year and a half with no guarantee of a favorable outcome.

Avoiding Legal Quagmires

One important lesson here is that avoiding court whenever possible is usually the best path. The Ecuadorian legal system, like many others, can be slow and costly. By addressing issues directly with the registration office and using thorough research, Xavier saved us time, money, and stress.

Common Issues in Real Estate Closings

While our case study was exceptional, it’s important to recognize the more common issues you might face during real estate closings in Cuenca.

  • Missing Stamps and Signatures: In Ecuador, every document needs the right stamps and signatures. A missed stamp can delay the process by a week or more. It’s a small but critical detail that Xavier always double-checks.
  • Family Disputes: Properties inherited by multiple family members can be tricky. If even one member doesn’t agree to the sale, it can halt the entire process. It’s essential to ensure all family members are on the same page before proceeding.
  • Liens and Mortgages: Mortgages are common and generally straightforward to handle. However, legal liens are a different story. These require court intervention to clear, which can be a lengthy and complex process.

Practical Tips for Buyers

To wrap up, here are some practical tips to ensure your real estate closing in Cuenca goes smoothly:

  • Patience is Key: The process can take anywhere from a few weeks to several months. Be prepared for this and stay patient.
  • Do Your Due Diligence: Work with qualified professionals to conduct thorough title searches and appraisals. This will help you avoid unpleasant surprises.
  • Avoid Legal Battles: Whenever possible, resolve issues outside of court. It saves time, money, and stress.
  • Beware of “Gringo Pricing”: Ensure you’re getting a fair deal by consulting with trusted local experts.
  • Verify Every Detail: From signatures to stamps, double-check every document to prevent delays.

Wrapping Up – Embrace the Process

Navigating the real estate closing process in Cuenca can seem daunting, but understanding the steps and costs involved can help ease the journey. Xavier’s expertise and hands-on approach ensure that every detail is meticulously handled, providing peace of mind for buyers. If you’re considering buying property in Cuenca, partnering with an experienced agency like YapaTree Properties can make all the difference. Happy house hunting!

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