Ecuador real-estate glossary

Property paperwork in Ecuador has its own vocabulary, almost always in Spanish. This glossary explains the terms you will see in listings, contracts and certificates, with the rule that governs them where there is one.

The contract and its documents

Escritura pública (public deed)

A document granted before a notary. A sale of real estate is not complete until it is granted by public deed (Civil Code, art. 1740); mortgages are granted the same way (art. 2311).

Minuta

The text of the contract, signed by a lawyer, which the notary turns into the public deed. It identifies the parties, the property, the price and the terms.

Promesa de compraventa (promise of sale)

A contract by which the parties bind themselves to sign the sale later. To be binding it must meet art. 1570 of the Civil Code: in writing, and by public deed when the promised contract requires one, with a term or condition and the contract specified.

Arras (deposit)

Something handed over as a pledge that the contract will be made. With arras, whoever paid them may back out by losing them, and whoever received them by returning double, within the limits of arts. 1742 to 1744 of the Civil Code.

Notaría (notary's office)

The notary attests acts and grants deeds. Before granting a deed that triggers alcabala, the notary must request the municipal certificate of the property's value and require the payment receipts (COOTAD, art. 537).

Poder (power of attorney)

A document by which one person authorises another to act for them, for example to sell or buy. Check that it is sufficient for the specific act.

Registry and cadastre

Registro de la Propiedad (Property Registry)

The office in each canton where titles of ownership, mortgages and other rights over real estate are recorded. Recording takes place in the registry of the canton where the property lies (Civil Code, art. 703).

Inscripción and tradición (recording and transfer)

Tradición is the legal delivery that transfers ownership; for real estate it happens by recording the title in the Property Registry (Civil Code, art. 702).

Certificado de gravámenes (certificate of encumbrances)

A Property Registry certificate of a property's legal status: owners, how it was acquired, and recorded encumbrances, limitations, prohibitions or annotations. Depending on the canton it is also called a certificado de solvencia or de historia de dominio.

Gravamen (encumbrance)

A burden on a property, such as a mortgage, a prohibition on selling or an attachment.

Catastro (cadastre)

The municipal inventory of plots and their value. Municipalities must keep it up to date and carry out general updates every two years (COOTAD, arts. 494 and 496).

Clave catastral (cadastral code)

The code the municipality uses to identify each plot in its cadastre. You use it to request certificates and pay the predial.

Avalúo catastral (cadastral appraisal)

The property's value in the municipal cadastre: the value of the land plus the buildings (COOTAD, art. 495). It is the base of the predial and the minimum base of the alcabala.

Avalúo comercial (commercial appraisal)

Market value estimated by a valuer. Mortgage loans are calculated on it; BIESS, for example, lends a percentage of the commercial appraisal.

IRM (Informe de Regulación Metropolitana)

In Quito, the municipal report with a plot's mandatory land-use and building specifications; it is issued online, free of charge, with the plot number.

Taxes

Impuesto predial (property tax)

An annual municipal tax paid by owners of urban plots (COOTAD, art. 501). Each council sets the rate by ordinance between 0.25 and 5 per thousand of the property's value (art. 504).

Alcabala (transfer tax)

A municipal tax on transfers of ownership of real estate: 1 % of the taxable base (COOTAD, art. 535), which is the contract value or the cadastral appraisal if higher (art. 532).

Plusvalía (tax on profits and plusvalía)

A municipal tax of 10 % on the profits and plusvalía from transferring urban property, a rate an ordinance may change (COOTAD, art. 556). In everyday speech, plusvalía also means a property's increase in value.

Enajenación ocasional (occasional sale)

A sale of property that is not part of the seller's regular business. Its income is exempt from income tax (LRTI, art. 9 no. 14).

Credit

Hipoteca (mortgage)

Security over a property for a loan. It is granted by public deed and must be recorded; otherwise it has no effect (Civil Code, arts. 2311 and 2312).

Levantamiento de hipoteca (mortgage release)

The procedure to extinguish a mortgage once the debt is paid and to record that cancellation.

BIESS

Banco del Instituto Ecuatoriano de Seguridad Social: lends mortgages to IESS members and retirees.

Tabla de amortización (amortisation table)

The instalment schedule of a loan. Instalments can be fixed (French system) or decreasing (German system).

Desgravamen (credit-life insurance)

Insurance that pays off the outstanding debt if the borrower dies; it is one of the insurances on a BIESS mortgage.

Condominiums, projects and leases

Propiedad horizontal (horizontal property)

The regime of buildings and complexes in which each unit (apartment, shop, parking space) has its own owner and the common areas belong to all of them.

Alícuota

The share that belongs to each unit in a horizontal-property building; the periodic service charge for common expenses is also called that.

Preventa (off-plan purchase)

Buying a unit in a project not yet finished, usually through a promise of sale and payments during construction.

Fideicomiso mercantil (commercial trust)

A contract by which assets are transferred to an autonomous estate managed by a trust company to achieve a purpose (Securities Market Law, art. 109); some real-estate projects use one.

Canon (rent)

What the tenant pays. The Tenancy Law sets a monthly ceiling linked to the commercial appraisal in the municipal cadastre (art. 17).

Desahucio (notice to quit)

Formal notice ending a lease. The Tenancy Law sets the periods: for example, ninety days before expiry when the landlord ends it (art. 33).