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THE 10 LEGAL TOOLS MOST USED BY BUILDERS IN COLOMBIA

Currently, the Colombian legal system, despite its weakness in the regulation of the real estate and construction sector, provides builders with a series of tools for the achievement of their objectives; these tools give dynamism to the projects and confidence to future buyers of real estate units.
There are more than 10 tools, but these are the ones that our experts in real estate and urban planning law consider most important:
1. Pre-sales fiduciary assignment: this fiduciary modality, in simple terms, is where the trustor (or promoter of the project) delivers a letter of instructions and the technical conditions for the achievement of the break-even point to the trustee, where the latter , by means of a binding contract with the beneficiaries of the project (off-plan buyers) collects the money and once the break-even point established in the technical conditions by the trustor has been reached, will disburse the money to the aforementioned trustor. After the disbursement of the money, the responsibility for the administration of the project’s money falls on the trustor. This tool usually provides limited confidence to the beneficiary or future buyer of the real estate units, since it protects him only until the break-even point is reached.
Integral real estate trust: in this modality an autonomous patrimony is constituted and the trust not only manages the money until the break-even point is reached, but it is disbursed according to the progress of the work and it is pending that the money of the beneficiaries is used in the project for which the resources are destined. In the real estate trust, the trust accompanies the beneficiary until the deed of the real estate units of the project in question is executed; however, this may vary according to the agreement with the beneficiary and the contract with the trustor.
3. Purchase of construction rights: which we will explain with the following example: let’s say a lot, the urbanistic norm only allows to build a tower of 10 floors, but if the builder wants to build more than 10 floors, he needs authorization from the public administration, for which he must pay money so that the use is increased. The purchase of rights is completely legal and must be established in the municipality’s land use plan or, failing that, in the EOT or PBOT.
4. Transfer of construction rights: let’s suppose that the builder wants to build a ten-story tower on a lot, but the regulation only authorizes him to build five stories. In this case, the builder goes to planning and realizes that there is a zone that allows him to transfer those construction rights over 5 more floors. He requests the transfer and will be able to build the 10 floors later.
5. Works for taxes: which is applicable to legal entities taxpayers of income tax and complementary taxes that in the taxable year or period obtain gross income equal to or greater than 33.610 UVT, may pay up to fifty percent (50%) of the tax payable determined in the corresponding income tax return, by allocating such amount to direct investment in the execution of feasible and priority projects of social importance in the different municipalities located in the Zomac, which are duly approved by the Agency for the Renewal of the Territory ART, after approval of the National Planning Department (DNP), related to the supply of drinking water, sewerage, energy, public health, public education or construction and / or repair of  road infrastructure.
6. Zones receiving urbanistic obligations: Every construction license grants some charges and benefits, the benefits are defined as the economic contribution that the project gives you, such as the sale or lease of a certain number of real estate units, the charges are the obligations that the builder has as a result of these works, such as: the urbanistic equipment and public space. Let’s say that for a certain construction you have to give a strip of land from your lot to the state, it is not convenient for you to give that strip of land because it is not profitable, however, in the land use plan there are some zones that receive urban obligations and you choose to give a strip of land from another lot that is less profitable.
7. PUG or general urban planning approach: Which means to freeze the urbanistic norm of an area of land in order to later lot in stages and for each stage an urbanistic license with the norm frozen in time. The PUG is widely used in macro projects that require a lot of time and funding to structure, manage and complete.
8. Ecotourism licenses: Suppose you have a 10,000 square meter lot, you want to build 10 cabins and you have the budget to do so, but the regulation only allows you to build 3 per hectare. In this case you can apply for an ecotourism license, this license does not allow you to sell the 10 cabins (you can only sell 3), but it will allow you to build the 10 cabins to rent them to visitors or tourists who come to the site. This tool is used in the hotel and tourism sector for projects where the urban use is low, but allows the construction of more real estate units.
9. Urban development licenses: The success of a construction depends on them in legal terms, under penalty of incurring demolition and fines ranging from 30 to 500 minimum monthly salaries in force, without excluding the respective police actions.
10. Land management plan: Finally, the most important tool is the land management plan, which is where everything related to the urban planning regulations and their use depending on the polygon or location of the properties is consigned, the POT, PBOT and EOT are practically the planning instruments that give the value to the land and is the most important starting point in the pre-feasibility and feasibility study of a real estate project.
As you can see, in Cuadro Legal we have a wide and extensive knowledge in real estate and urban law. And we are an excellent option for those who require advice in their real estate projects.
 
Author: Justo Diaz Pinto.
Editor: Santiago Pinzón

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