How to rent in Ecuador: a guide for tenants and landlords

In Ecuador, leases of premises within urban limits are governed by the Tenancy Law (Ley de Inquilinato) and, where it is silent, by the Civil Code and the General Organic Code of Procedures (arts. 1 and 2). It is a protective law: tenants' rights cannot be waived (art. 22), so a clause that cuts them back is void even if it was signed. This guide sums up what each side of the contract should know.

The contract

• It can be verbal or written (art. 27), but if the monthly rent exceeds one unified basic wage (salario básico unificado) it must be in writing and the landlord must register it before a notary within thirty days of signing (art. 29).
• A written term binds both parties, but the tenant is entitled to a minimum duration of two years, except for hotels and boarding houses, lets to people who live elsewhere and are passing through, and premises for short-lived purposes such as exhibitions or shows (art. 28).
• Without written authorisation the tenant may not sublet or assign the lease (art. 36), and the law prohibits subletting homes except for occasional lets of up to three months (art. 38).
• If the premises are let furnished, the inventory and value of the furniture must be in writing (art. 24).

The rent

The law sets a ceiling: the monthly rent may not exceed one twelfth of ten per cent of the commercial appraisal recorded for the property in the municipal cadastre, and of the municipal taxes on urban property (art. 17). Municipal Lease Registry offices — or the cadastre department — set the maximum rent for each property and issue a certificate (arts. 8 to 10). In Cuenca, for example, the Dirección General de Avalúos y Catastros issues a "certificado de canon de arrendamiento", also online.

For homes whose rent does not exceed two salarios mínimos vitales, automatic increases may not be agreed during the minimum term; such a clause is treated as never written (art. 18). Charging more than the set rent is punished with a fine and the refund of the excess (art. 19).

Each party's obligations

How a lease ends

1. 1

   At the end of the term

   The landlord must give at least ninety days' notice of the decision to end the lease; otherwise the lease renews for one year, once (art. 33).

2. 2

   Before the term, on a legal ground

   The landlord can only demand early vacating on the grounds in art. 30: two months' unpaid rent, risk of collapse, disturbances or brawls, illegal use or use other than agreed, damage, unauthorised subletting, unauthorised works, demolition for a new building with a municipal permit, or the owner's justified need to live in the property.

3. 3

   At the tenant's choice

   In written leases with no term and in verbal leases, the tenant can end the lease at any time with at least one month's notice (art. 35).

4. 4

   If the property is sold

   A transfer of ownership ends the lease, but the new owner must give three months to vacate, and if notice is not served within one month of the recording the lease continues; recorded public-deed leases are respected (art. 31).

Tenancy disputes follow the summary procedure before the tenancy judge (art. 42). To sue, the landlord must attach the rent certificate or the registration declaration, and the registered contract or a sworn statement (art. 47).

Taxes

Leasing property used exclusively as housing is a zero-rated VAT service (Internal Tax Regime Law, art. 56). Rental income from real estate is taxable income reported in the income-tax return; landlords should check their obligations with the SRI.

Quick checklist for tenants

• Ask to see the deed or the certificate of encumbrances: make sure whoever lets to you is the owner or is authorised.
• If the rent exceeds one unified basic wage, insist on a written lease registered before a notary.
• Sign a record of the property's condition, with photos, when you move in and out.
• Ask for a receipt for every payment.