Requirements for Expats Wanting to Buy Property in Colombia

Having been an expat in Colombia for many years, and after having had the experience of buying and selling a home in Bogota myself I can truly say that sometimes it's just better to pay someone to do all the leg work for you. Only if that someone is highly reputable of course.

However, I know that many people like to do things on their own. I know this because I own a real estate listings portal with many Colombia, and Bogota properties and I get asked these types of questions all the time. No, I'm not in the business of providing this legwork for you. In fact I let anyone list their properties or services on my portal for free, just like you can here at poorbuthappy, so I'm not trying to sell you anything.

So Here is for You Do it Yourselfers

I am simply going to outline the requirements, plus tell you what you have to do in order to buy your home and legally obtain the title to that property. At the end you can decide for yourself whether or not you want to go the self-help route or hire a company. And If you want to check out some Colombian properties or Bogota Real Estate (http://www.vivareal.net/colombia/bogota/) that people have recently uploaded feel free to do so. Also, if you have a property for sale or rent, go ahead and upload it.

How you pay for the property is important

Like they say, there are many ways to skin a cat and in Colombia you might get away with just about anything, but you also might not.

Here are the rules for foreigners making payments on Colombian real estate and here are also the consequences for not following them, if you get caught:

1. Foreigners investing in Colombian real estate are required to use a legally authorized "Intermediario Cambiario" to fund the purchase.

What's an Intermediario Cambiario?

Basically a bank or financial institution which has been duly authorized by the Colombian Government to legally bring money into the country and convert it into Colombian Pesos.

You can get more information on Intermediarios Cambiarios from the Colombian Superfinaciera (http://www.superfinanciera.gov.co/ConsumidorFinanciero/educa-adqdivisa...) which is the government entity that regulates them.

Bypassing this requirement has hefty penalties

Many times people try to save a couple of dollars by buying Pesos at black market money exchange houses or might just go ahead and pay for their home in dollars, euros or any other currency but this is illegal. If caught, the fines could actually be greater than the value of the property itself.

2. You must fill out and Sign a Form 4 (Formulario No. 4) Stating the Origin of the funds.

A "Formulario No. 4" is a document that you sign under penalty of perjury which testifies that the money you are using to make the purchase is clean and was obtained through legal means. It also has a bunch of other personal financial questions.

You can get a form 4 from an Intermediario Bancario.

3. You will need to fill out a Formulario No. 11 also called a Registro de la Operacion Cambiaria

In order to obtain and fill out this form you must personally go to the "Banco de la Republica" or the "Departamento de Cambios Internacionales". In the event that you are not able to go personally you can send someone with a power of attorney that is legally authorized to act on your behalf. After filling out a Formulario No. 11 you must attach to it the following document(s):

A "Certificado de tradición y libertad"

A Certificado de tradición y libertad is the official document showing the background and history of the property. It includes information on all previous owners, when the home was built and registered, as well as any liens and mortgages that may be attached to the property, etc.

You can get the Certificado de tradición y libertad at the "Oficina de Registro de Instrumentos Públicos".

If you are not able to obtain this certificate and are in a hurry to buy you can temporarily attach an alternative buy/sell contract (contrato de promesa de compraventa) but the first option is the safest route.

Deadline for Filing Formulario No. 11 is 3 Months after filling out Formulario No. 4

Keep in mind that you are required to complete the Registro de la Operacion Cambiaria or Formulario No. 11 within 3 months after having filled formulario No. 4. If it is impossible to do so you fill out a Furmulario No. 17 (extension request) which will extend the filling time for 3 additional months. This form can be obtained from the Banco de la Republica.

Fines

Not following these instructions can get you fined pretty heavily. The fines can actually be as much as 200 percent of the amount of your real estate investment. So be really careful.

Conclusion

Doing things yourself is indeed possible and may or may not be worth your while. It's up to you to decide whether or not hiring someone to do the leg work for you may be a better alternative. However, for the lazy crowd, I recommend getting help. After doing some research I decided to hire a real estate broker. I was pleased with how they managed the transaction and despite the 3% commission, I felt it was well worth it. Good luck!

By Req on Feb 4, 2009, 13:49 in Buy, Sell & Rent.

Req says on Feb 4, 2009, 14:16:

thanks

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Gator says on Feb 4, 2009, 14:50:

Can't argue with an excellent, informative post but be SURE and not miss any required filing deadlines.

It can be complicated and expensive THAT is the reason we use an attorney well versed in real estate transactions and a GOOD contador público. A policy we have followed religiously in selling and buying a lot of property and land.

"Bene, cum Latine nescias, nolo manus meas in te maculare" .

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Req says on Feb 4, 2009, 14:53:

Glad you liked the write up. Yes, having a good attorney and accountant are crucial. It is a good feeling when you have trusted people on your team that have you best interest in mind.

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drvannostren says on Feb 4, 2009, 15:53:

It sounds like it can be lots of work, but for the price of places, quality of life, weather etc etc etc if i can find a viable way to make an average income, ill be on my way, because for what my apartment in canada is worth in colombia i can have a smaller place for way less or a way bigger place for the same amount. Great post.

No matter where you go, the Korean tour bus isn't far behind.

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calipro says on Feb 5, 2009, 05:24:

Very good post but I'm with Brians on this one.....I have yet to find an attorney in Cali that knows his ass from a hole in the ground when it comes to forms 4 or 11 so it's pretty much do it yourself or don't do it at all.

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aztec says on Feb 5, 2009, 07:07:

Brians is right on target with his observations. Every Colombian lawyer, agent and bank manager will swear they know the rules and that you are mistaken if you challenge them. There are qualified people who can help but you will need to be careful in the selection.

We ran into the exact some problem with the construction contract taking longer than the 60 days and therefore not being able to acquire the necessary paperwork. We finally were forced to cancel the contract (before 30 days) and return the money to the States.

That action alone resulted in a demand two years later from the government to show cause. We were already in the States and my wife had to return to "explain" what happened.

It is my understanding the construction complication has been recognized by the government and procedures are available to handle it,

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lampltr says on Feb 5, 2009, 16:26:

Great post but I feel for you guys up north.

I also say WTF!!!!!! We have 3 houses, 1 business, and 2 different banks both with a business/Savings account without the hassles you all are going through...network people, network!! Have all the required documents in order with 1/2 the hassle listed above.

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aztec says on Feb 5, 2009, 16:48:

We also have a Colombian checking and savings account. That does make it much easier to move funds back and forth. Just be sure you are following the rules. Transparency is the goal.

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fecherklyn says on Feb 5, 2009, 17:08:

Reg,

CAUTION. Your well intentioned post is correct to the best of my knowledge EXCEPT with regard to one specific matter which could lead an expatriate investor into ERROR with SERIOUS COST REPERCUSSIONS.

This exception concerns the manner funds are brought into Colombia for property acquisition purposes. As you have explained it Formulario 4 & 11 MUST be used in all cases. THIS IS NOT CORRECT.

The Colombian Exchange Control Regulations DISTINGUISH between TWO TYPES OF FOREIGNERS WHO WISH TO PURCHASE PROPERTY IN COLOMBIA: NON-RESIDENT foreigners & RESIDENT foreigners.

The use of Formulario 4 & 11 is restricted to NON-RESIDENTS (People who have spent LESS than 6 continuous months in Colombia (in most cases people who are INTENDING to reside in Colombia)

RESIDENT foreigners (foreigners who have spent MORE than 6 continuous months in Colombia) must use Formulario 5 to bring funds into Colombia (Certain other Formulario can also be used in specific cases).This applies to expats ALREADY residing in Colombia and who decide to purchase property AFTER a certain period.

THE USE OF THE WRONG FORMULARIO CAN LEAD TO A FINE BY THE BANCO DE LA REPUBLICA OF UP TO 200% OF THE AMOUNT OF FUNDS DECLARED IN THE MISUSED FORMULARIO. I know this because of personal experience when I used form 4 (instead of the form 5 I was supposed to use) and had a devil of a job getting the Banrep to exonerate me from the fine. I know of another expat who has made the same mistake and is going through the same process at the moment.

CONCLUSION. You must take great care on WHICH FORM TO USE. You must also take care in giving guidance unless you are sure of what you are saying. Others may depend on your guidance (as I did regarding previous advice on this site) and suffer the consequences of any errors you have made.

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Req says on Feb 5, 2009, 18:01:

fercherklyn,

Thanks for the clarification. This is why I love the internet so much...collective knowledge. I bet you had a really tough time dealing with the Banco de Rep.

Buying real estate in Colombia is definitely a complex task to attack on your own. I am definitely not an expert on the topic this is why I decided to hire someone to help. The devil is in the details! I'm glad that it is stated here for others to learn from. I will see if I can edit this post so that those that come across it read all the way down the comments and get the full scoop.

Gracias.

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Req says on Feb 5, 2009, 18:05:

I couldn't find a way to edit the post :(

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cedritos says on Feb 6, 2009, 08:52:

Mmm how about this scenario......

Wife (Colombian) and me (British), living in UK, buy a plot in Colombia. Each of us owns 50%. Full payment through her funds in Colombia. I then pay her my 50% in the pounds equivalent here. Can I still be a part legal owner?

I was going to citibank transfer my funds over but the 'pounds equivalent' looks like the simpler option.

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fecherklyn says on Feb 6, 2009, 15:17:

Cedritos,

Tough question...you really need some reliable local legal advice on this.

My wife is Colombian and I am British also...so we this in common. As we were not married with any pre-nuptual agreement our marriage is subject to Colombian Civil Law as concerns any assets we possess in Colombia. THUS, ANY assets acquired in Colombia since we were married are deemed jointly owned and will be treated as such when disposing of them or if one of us dies.

Both of you are apparently living outside Colombia at present so any assets you now acquire will be deemed acquisitions by NON-RESIDENTS. So, IF you were making the purchase with funds brought in from abroad you would do so under the Formulario 4 & 11 procedure.

To the best of my knowledge there is reason why foreigners, or Colombians living abroad, cannot acquire assets in Colombia....hence the "Foreign Investment" scenario put in place using the forms 4 & 11.

But all of the above assumes a "foreign investment" is made using funds from abroad. In your proposal you are considering using funds already located in Colombia but held in your wife's sole name. This complicates matters as the Civil Law seems to refer to any assets acquired since the marriage. But what if the funds used (held by your wife in Colombia) already existed prior to your marriage. Would this mean these funds (or equivalent) would legally remain her sole property despite the later marriage? I D'ONT KNOW.

Best to get it properly sorted out before you take the plunge.

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lampltr says on Feb 7, 2009, 04:11:

Cedritos, I would take it that your wife still has ties there, passport, cedula etc correct...if yes she can do everything while you send her the dough. If bank to bank wire, she will need to add your financial institution to the roster of where the funds are coming from (transparency) and the average expected amounts.
However, and again I say however...only make sure you deal directly with the director of the financial institution for a safety net as no employee's can be trusted (If you know what I mean).
For the transaction of buying real estate, and you trust the family much, you can give a limited power of attorney to the wife/brother in law to act on your behalf etc. Is a bit risky if there is the slightest doubt, then do not do that but go through the formalities.
I completed same and there is no mention of my name anywhere, but at the same time I am living in the middle of a quiet war trying to keep the family out of harms way...not an easy task but so far so good. Majority of you do not have this problem then I say go the correct route.

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cedritos says on Feb 9, 2009, 00:56:

Thanks. Yes, my wife still has a Colombian passport and is picking up a new cedula this weekend from the Consulate. I think I'll give my mother in law power of attorney.

As for the funds that will be used to pay for the plot, these are from a recent sale of another lote my wife bought before we got married [I then pay her back in £s]. We got married in Colombia and in the UK.

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Patlex says on Feb 24, 2009, 02:18:

Great post, could anybody elaborate on the following situation :

colombian property owned by resident or not-resident foreigner, selling to non-resident foreigner.

Can the payment happen outside colombia ? e.g. buyer pays owner from his foreign account on the foreign account of owner and money doesn't pass through Colombia ?

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