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HOW TO BUY A HOME IN COLOMBIA

Buying a home in Colombia is a complex process, since it is not regulated in a very detailed manner, therefore, it is necessary to emphasize the care that must be taken when managing a successful real estate sale and to be accompanied by lawyers specialized in real estate law.

Colombia provides special protection to real estate consumers with the consumer statute (law 1480 of 2010), the safe housing law (decree 1203 of July 2017), law 338 and the single circular of the Superintendence of Industry and Commerce. However, the real estate profession has many legal loopholes that prevent it from being practiced properly.
Nowadays, real estate agents do not have a law that regulates them and provides them with certain protections at the time of real estate brokerage, therefore we will outline the documents and steps necessary to carry out a successful management in terms of sales and leasing of real estate.
To buy a house in Colombia we must have the following documents:

  1. Promissory purchase agreement
  2. Brokerage agreement
  3. Power of Attorney
  4. Confidentiality agreement
  5. Exclusivity agreement or pact (optional)
  6. Real estate brokerage collaboration agreement
  7. Receivable or invoice depending on each case

And they should be integrated as follows:
Step 1: as a first step, it will be necessary to obtain the real estate property to be sold. To achieve this, recruitment and marketing strategies must be used, which will not be discussed in this article. Subsequently, it is very important to sign a brokerage contract with the owner of the property, in which the payment of the commission is assured. We must make clear the bank account number in which the money will be deposited in case the business is closed.
Step 2: likewise, an agreement or exclusivity pact may or may not be signed with the owner of the property, in order to obtain the exclusive brokerage right over the property in question, in other words, to be the only person authorized to offer said property.
Step 3: to subscribe a power of attorney to receive the money in case the essential condition of the brokerage contract is fulfilled, that is, the property is sold as a result of our intermediation, in order to prevent the owner from receiving the money and not paying the commission.
Step 4: After the prospective buyer of the property, he/she must sign a confidentiality agreement with the real estate agent, with an indemnity clause established by mutual agreement, in case of improper use of the information provided.
Step 5: it is very common in the real estate sector that properties are sold through 2 or more agents, for which there will be the agent that captures the owner and the agent that captures the buyer. In order for the agent who recruited the owner to remain in control of the transaction, it is necessary to sign a confidentiality agreement with the agent who recruited the buyer to keep the information confidential, under penalty of paying a mutually agreed compensation.
It is also necessary to sign a real estate brokerage collaboration agreement with the buyer’s agent, so that if the buyer decides to purchase the property, the buyer’s agent will receive part of the commission.
Step 6: After the buyer’s decision to purchase the property, it is necessary to draw up a promise of sale contract in which the prospective buyer agrees to make payments to the owner for the future purchase of the property. This promise of purchase and sale is fundamental because it is the one that will give security to the real estate intermediaries at the time of receiving their commission. The same promise of purchase and sale establishes the commission percentages for the capturing agent or capturers (if there are 2 or more). It should be noted that in order for the prospective buyer to sign this contract, it is necessary to demonstrate the ability to pay for the purchase of the property and to have credit approved by the financial institution if necessary.
Step 7: In most cases, it is of great value and importance to carry out a title search of the property, in order to determine whether or not there are any obstacles to its tradition or acts that may jeopardize the future ownership of the buyer and also, since we live in a country that has suffered so many years the scourge of drug trafficking and armed conflict, it is valuable that the study reviews each person mentioned in the certificate, in view of the Risk Management System for Money Laundering and Terrorist Financing.
Step 8: after the signing of the promise, there will already be a term established for the deed in notary of the property in favor of the prospective buyer, it is necessary to have a collection account or invoice, where the owner of the property undertakes to pay the value of the commission to the intermediaries involved. This document has the value of an enforceable title and will be much easier to be collected by legal means, both in terms of evidence and in terms of the time it takes for the procedure to be completed.
 
Prepared by: Justo Diaz Pinto
Edited by: Santiago Pinzon Sosa

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