Buying Communal Land without Papers

The “spread” is getting bigger.

In other words, the difference between the lowest-priced and highest-priced properties in the same areas is getting larger.

That’s the first thing I noticed this week as I began my newest property search on the coast of Ecuador. For instance, in the area I was looking near Olon on the southern coast, one property, a 270 sq. meter lot with a three story wooden house, right on the beach, was for sale for $500,000. Yet in the same area, one block back, I found a nice 220 sq. meter vacant lot for $30,000, meeting my current budget.

Good location with an ocean view from the second story of a house if I were to build one. Great, quick resell value, especially if I constructed a house… creating instant equity…the problem… the property has been in the same owner’s family for decades, and the owner himself has never bothered to do the legal paperwork to get the official deed/title to the property. A common problem of the best deals in Ecuador.

You see, the smaller communities in Ecuador are run by “comunas” or local governments that control local matters including property sales and zoning.

So half my morning one day this week was spent sitting in a local “comuna” or local community administration office talking to the president of the “comuna”.

He explained to us the process of legalizing the property. First, the current owner has to register himself as part of the “comuna” which costs $20 annually and needs to be passed by the board which could take up to 15 days. Then, almost immediately… because the owner is well known in the community… he’ll get issued an official “Right of Possession from the Comuna”. Then, the sale can be made. And with that “Right of Possession” the new owner can go to the Municipal’s office in Salinas, the capital of the province, and apply for and get the office deed/title. Of course, the local “comuna” will ask for a few thousand dollars in transfer fees… a glorified kickback.

The whole process is NOT a sure thing, but in this case may be worth the risk, just be sure not to give any deposit money until the papers are in order, and use a local lawyer when in doubt!

Additionally, the current owner is a local fishermen who’s never used a computer and doesn’t seem too motivated to see the process through… so, I think I’m going to have to keep searching, and we’ll see what happens by next week.

The stakes are rising! Big money is to be made if you know how to look for property in Ecuador like a local, which I cover in depth in my buyer’s guide, see more here… http://ecuadorrealestate.org/SalesInsiderGuide.html

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