After years of experience running a real estate agency in Medellin Colombia, and owning the law firm Colombia Legal & Accounting, i have organized a list of very important items to watch out for in a Colomiban Real Estate deal. Keep in mind Colombia has many rules and laws in place to control money laundering and tax evasion due to the endemic money laundering and socio economic, and cultural problems the country has to deal with. Once you get past this Colombia is a very friendly country for foreign investors.
We have organized our tips for a successful foreign investment into 11 areas, which we will now explain to you in the video.
1 Verify Colombian Wire Transfers Forms
- Incorrect wire transfer forms can result in fines up to 4 times the value of the wire in some cases.
- Incorrect ID/passport number, vales or concept code numbers can disqualify you for visas.
2 Verify Purchase Price on Title at Signing
Common practice in Colombia is to record a lower value on a title, However there is a very strict financial law which went into effect January 1st, 2019 which lets the government fine you up to 4 times the value of your property if you under declare the real sale value.
3 No Cash Transactions:
- Colombia has a new Financial Law which went into effect January 1st, 2019 to Control Sales of Property using cash transactions to Avoid Taxes.
- Cash Transactions are illegal under the new financial law.
4 Filed Bank Transfer Form
- Always ask your bank or financial institution for copy of the 'FILED' (radicado) wire transfer form.
- Banks often make clerical errors that must be corrected.
- Bank wire transfer forms can be easily corrected.
5 No Cash Transactions:
- This is negotiable, and normally it equals amount of penalty clause. Some foreigners offer a small initial deposit as payment to hold the property while the buyer organizes an internatinoal wire for full required payment.
8 Penalty Clause: Do not sign document without having a clause to protect you from a bank not opening or clearing your wire transfer Normal Penalty clause is for 10-20%.
9 NO LETTER OF INTENT - Letters of intent are not customarily used in Colombia as they are in the United States: The only binding document is a purchase or pre-purchase sales agreement .
- Do not wire directly to a seller without having a purchase agreement signed at notary (best to avoid this option).
- Wire directly to your own personal account in Colombia.
- Bank Account Wires Must be Planned in Advance or you May lose your deal or Violate yogur Purchase agreement.
11 If you’re a foreigner you probably want to buy in an estrato 4 or higher
Social economic income coding for neighborhoods usually ranges from 1-6, the higher numbers represent higher class neighborhoods, and usually have higher security and sanitation attention, but are also more expensive when it comes to public utilities, and taxes. Outside of major cities this is not as much of an issue.
Ther professional services which we recommend before buying a property in Colombia include:
■ Obtaining a property survey from a civil engineer
■ Obtaining a property inspection performed by a civil engineer
■ Requesting an investigation of the property administration association.
Specifically reviewing proof of the administration’s:
■ Financial reports certified by independent auditor
■ Property bi-laws
■ Residential & commercial zoning laws
■ Insurance coverage
■ Verification Property is not on Government Clinton List
■ Commercial Escrows & Construction Trusts
More foreigners living in Colombia choose COLOMBIA LEGAL & ACCOUNTING S.A.S as their law firm to assist in purchasing a property in Colombia for personal and commercial reasons. Also, we are among the most experienced firms when it comes to negotiating property rental contracts, both commercial and residential.
We strongly suggest that you discuss all of the information you receive with your attorney BEFORE signing a contract to purchase real estate in Colombia. At COLOMBIA LEGAL & ACCOUNTING S.A.S we will complete the due diligence necessary to ensure that your real estate transaction goes smoothly, and all of your questions are answered. Finally, we will educate you on the entire process of how to buy real estate in Colombia, with complete transparency at the highest level.
CLICK HERE to ask any questions or make an appointment to speak directly with one of our real estate professionals today.
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