Real Estate Investment Methods:

In Colombia, for real estate purposes, paying in cash with foreign currency is the most common way to buy.

Let's now assume you decide on a property you like and want to move forward from there….?

Once you've agreed upon the price with the Seller, then a sales contract is made…. However, it is generally preferred to use a typical Real Estate4 Purchase Agreement (Contracto de Compraventa de Inmueble) even when presenting the first offer to the Seller to begin the negotiation process to establish a final sale/purchase price between the parties… so that all of the other terms and conditions of the purchase are spelled out and understood by all. Then, it is easy to have an attorney draw up the more formal Spanish 'Promise to Purchase' Agreement (Promesa de Venta).

In Colombian verbal and written agreements have the same enforcement, but in real estate purchase transactions it is always better to have a written agreement to assure Buyer's rights.

With a Purchase Agreement, both parties can define the terms of the negotiation and it will serve as a model for the final deed (escritura).

It should include at least:

1. Buyer's and Seller's I.D. numbers
2. Agreed price
3. Title recording instructions
4. Timing and manner of payment with all details. Down payment is usually 10%, or more, of the agreed upon purchase price.
5. Property description and boundaries, size of lot and construction, etc.
6. A penalty or default clauses in the event of either the Buyer or the Seller breaks the deal
7. Commission plan if a real estate agent is used.
8. Buyer and Seller's full contact information

To sign a purchase agreement gives the Seller time to prepare all of the necessary documents and pay any past due taxes, and take care of any contractual contingencies, etc.

The Buyer uses this time to complete a title study (Estudio de titulos)**, prior to arranging for deposit transfer, and preparing for a trip for the closing, or name someone else to act as his/her Power of Attorney (POA) or representative to complete the sale.

** One of the most important things to do before buying real estate anywhere is, of course, to check the title records to ensure that the property actually belongs to the person selling it and that it is not subject to any liens or other financial attachments, etc. Your real estate agent and / or attorney will assist you with this process. Also, it is generally stipulated in the purchase agreement that the Seller is required to provide the property's ownership history and a no-lien certificate (Certificado de tradicion y libertad), which should date back not more than one month. This includes the property's real estate registration number, owner's name, and the property's record summary. Additionally, the clearance of taxes can be ensured by obtaining an account statement of the property from the treasure office (Oficina de Catastro) of the city or district where the property is located. If there are no liens against the Title, the sale can proceed. If there are liens against the title, you can commit the Seller to clean up the property's liens before you proceed further with the purchase.

Again, The Buyer can sign either directly or through a third party representative. In the latter case, the Buyer must provide a special power ofattorney to his or her attorney or agent or notary, who must have a proof of certifiable Colombian indentification to sign the contract on the Buyer's behalf.

The power of attorney needs to be signed by the Buyer before a public notary unless made abroad in which case you have to go to the nearest Colombian Consulate in your home country to legalize the document and your signature.