Any foreign national can now purchase and own real estate in Colombia. Former constitutional provisions entitling the government to expropriate foreign-owned property without compensation were liberalized by the new Colombian law (Decree 241) making procurement processes much easier and granting full legal rights to foreign buyers/investors.

Investing in real estate in Colombia involves the following essential requirements:

1. A preliminary public deed (“Minuta”) is drafted and executed between the buyer and seller, which is further on finalized by a notary public’s registration and sealing.

2. A purchase/sale contract to be contained in a public deed must be executed between the two parties (buyer and seller) at the Real Estate Office Records in Colombia (Departamento de Bienes Raíces). Specific data contained in such contract include: full names and ID’s of both parties, the property’s specifications and boundaries, the sale price, method of payment, and the property real estate number and commission plan, if a broker is used.

3. A third party representative, who must be a certified Colombian notary public, can act on behalf of the buyer through a Power of Attorney signed by the buyer before a notary public. In case the Power of Attorney is made and signed abroad, it must be legitimized by the Colombian Consul in the country where the document is made. A power of attorney that is signed abroad is considered valid if legalized by the Ministry of Foreign Affairs.

4. Both the property’s ownership history and a no-lien certificate (Certificado de Tradición y Libertad) dating back no longer than one month are required so as to verify the property’s real ownership by the seller and its clearance from financial attachments or other liens. The documents in question are issued by the local Public Instrument Records Office (Oficina de Catastro) in the area where the property is located and should be requested to include the property’s real estate registration number, the owner’s address or ID as well as the certificate issuance pay receipt.

5. A balance or account statement of the property issued by the local Treasure-Office (Oficina de Información Fiscal) is also required as showing taxes clearance.

6. The documents required for the purchase or sale of public deed include:

• Power of attorney signed by the selling party, if applicable.

• Certificate of payment of the value-gain taxes.

• Certificate or copy of the latest paid tax return statement of the property.

• In case of condos or homes in a residential complex, the property is subject to a condominium regime that requires a certificate stating up-to-date maintenance payments and other fees. As an alternative, a notarized copy of the public deed containing the property’s condo rules may be provided by the purchaser.

Financial Terms

The money used for real estate investment in Colombia is required to be “clean, non-laundered money”. The funds, not subject to any taxes if registered as Foreign Investment, are to be deposited into the seller’s account by completing the Central Bank’s Form #4 within 2 months (60 days), however, if the purchaser wants to exercise his foreign exchange rights such as transferring the money abroad when reselling the property, he/she must register (using Form #11) the foreign investment with the Central Bank and attach the property’s ownership history and no-lien certificate.

Full payment of the sale price agreed has to be made to the seller. An initial down payment of twenty (20) to thirty (30) percent of the sale price is required when the property has a lien. This down payment will ensure that the seller clears the lien(s) and other existing debts such as unpaid taxes and unpaid municipal utilities.

The current interest rate in Colombia, in case of property loans, fluctuates between twenty (20) and (25) percent annually.

Foreigners interested in buying real estate in Colombia should consult an experienced local broker.

Other Relevant Information

The taxes and additional charges that apply when buying real estate here in Colombia as well as important documents are generally taken care of by the buyer such as history certificates of the property with detailed title information and two free and clear city certificates (Paz y Salvo), Predial (city taxes) and Valorización (Value-Gain), which states that all city taxes on the property have been paid.

The cost of registering the public deed at a notary public’s office usually equals 2.7 per each thousand of the total price of the sale. This cost is usually split 50-50 (percent) between the buyer and the seller.

Tax of 1%, paid by the seller only if it is an individual, of the total sales amount as withholding tax will be deducted at the source. The purpose of this is that the income does not leave Colombia without paying taxes.

The Registration of the purchase/sale public deed must be done in the Public Instrument Records’ Office (Catastro) which has a cost that corresponds to registration tax of 1% of the total sales price, and also the registration fee that equals to 0.5% of the total sales price.