Buying off-plan (pre-construction) in Ecuador

Buying off-plan — preventa or compra sobre planos — means committing to buy a unit that does not exist yet or is not finished, usually paying part of the price during construction. It can be a way to pick the best unit and pay in instalments, but it also shifts to the buyer risks a finished home does not carry: delays, changes to what is built or, at worst, a project that is never completed. This guide explains how the deal is documented and what to check.

How it is documented

Because the unit does not yet exist as a separate property, the final sale cannot be signed at the start. The usual instrument is a promise of sale (promesa de compraventa), by which the parties bind themselves to sign the sale later. The Civil Code (art. 1570) says a promise creates no obligation unless it is in writing — and a public deed when the promised contract needs one, as a sale of real estate does —, contains a term or condition fixing when the contract will be signed, and specifies that contract so that only the transfer or the formalities are missing.

If the project uses a trust

Some projects are structured through a commercial trust (fideicomiso mercantil): the land and the funds are transferred to an autonomous estate managed by a trust company (fiduciaria), which must carry out the purposes of the contract (Securities Market Law, art. 109). That estate is separate from the estates of the developer, the trust company and the beneficiaries (art. 118). Ask whether your money goes into the trust or straight to the developer, who the trust company is, which conditions must be met for construction to start, and what happens to your money if they are not met.

What to check before you sign

• Who owns the land: ask for the certificate of encumbrances from the Property Registry. The land should be in the name of the developer or the trust, and it helps to know whether it is mortgaged to fund the works.
• That the project has its municipal approvals: approved plans and a building permit. Ask the developer for them and confirm with the municipality; in Quito, the plot's IRM shows the land-use and building rules that apply.
• The developer's track record: projects delivered, and whether they were deeded to their buyers.
• The exact unit: number, floor, area, plans and finish specifications attached to the promise.
• The payment and construction schedule, and the date — or condition — for signing the final deed.
• Each party's penalties for delay and how money is refunded if the contract is terminated.
• If the balance will be paid with a loan: that the finished unit meets your lender's requirements; BIESS, for example, finances finished homes with its own layout and appraisal requirements.

Risks and how to reduce them

When construction ends

1. 1

   Handover and inspection

   Walk through the unit with the plans and specifications; put any observation in writing.

2. 2

   Deed of sale

   With the unit individualised, the final public deed is signed before a notary and the transfer taxes are paid (alcabala and, where applicable, profits and plusvalía), without which the notary cannot grant it (COOTAD, arts. 537 and 560).

3. 3

   Recording

   The deed is recorded in the canton's Property Registry. Only then are you the owner.