Title Study in Colombia
The title search is an essential process that must be done prior to the purchase of real estate. It is mainly regulated by Law 675 of 2001, also known as the Horizontal Property Law, but there are also other rules and decrees that regulate it.
It consists of reviewing the legal documentation and records of the property to ensure that the person selling it is the legitimate owner of the property and that there are no liens, encumbrances, debts or legal limitations on the property that could affect its value or use. It has a cost of approximately 0.12% of the commercial value of the property.
This study should be performed by an attorney specializing in real estate law and should include a review of the following documents as a minimum:
- Public deed of sale: proves the transfer of ownership of the property from the seller to the buyer.
- Certificate of freedom and tradition: it is issued by the Public Registry Office and contains information about the history of the property, including any limitation or encumbrance that may affect its value or use, such as a mortgage.
- Tax clearance certificate: proof that the seller has paid all taxes related to the property up to the date of the sale.
- Certificate of good standing of administration: proof that the seller has paid all the administration fees due, applies only when the property is located in a complex or building.
In addition to these documents, other documents such as blueprints, construction licenses and permits, and lease agreements in case the property is leased may also be reviewed. This process is carried out in the following stages:
- Documentation review: this is the initial stage in which all documents related to the property are reviewed in detail.
- Verification of ownership: once the documents are reviewed, it is verified that the seller is indeed the owner of the property and that the property is free of any limitations that may affect its ownership or use.
- Analysis of encumbrances and debts: we check if there are any encumbrances or debts on the property such as mortgages, liens or any other type of encumbrance affecting the property.
- Verification of permits and licenses: it is verified that the property has the necessary permits and licenses for its use, such as construction permits and commercial activity licenses.
- Review of urban planning restrictions: the property is analyzed with respect to the urban planning regulations applicable to it, such as construction restrictions, zoning, permitted uses, among others.
Once the title search is completed, the specialist issues a detailed report indicating whether or not the property is free of liens or legal problems and whether or not it is safe to purchase. In case it is determined that the purchase of the property is not safe, legal actions or negotiations with the seller may be carried out to resolve them before the purchase of the property is executed.
A title search is essential to avoid fraud and scams, so it is essential to do it before buying real estate. This ensures that the property is in good commercial condition and that your purchase is safe and will not generate legal problems later.
During 2020, 212,656 public deeds of sale of real estate were filed, which represented a decrease of 17.4% compared to 2019, when 257,606 were filed. This decrease was due to the crisis caused by Covid-19.
In the first 9 months of 2021, 168,722 public deeds of purchase of real estate were filed, this represented an increase of 30.7% over the same period of 2020.
Additionally, in Colombia in 2020, 7,899 investments by foreigners were registered, of which 22.5% corresponded to the real estate sector, reaching an invested value of US$539 million.
References:
- Law 675 of 2001 – Horizontal Property Law. (2001, August 4. Senate Secretariat. http://www.secretariasenado.gov.co/senado/basedoc/ley_0675_2001.html
- What is a title study? (2022, January 6). Square meter. https://www.metrocuadrado.com/noticias/guia-de-compra-y-venta/que-es-un-estudio-de-titulos-3928/
- Sotelo, J. G. S. (2022, 26 January). What is a title study? https://blog.properati.com.co/que-es-un-estudio-de-titulos-en-colombia/#:~:text=Un%20estudio%20de%20t%C3%ADtulos%20es,documento%20para%20continuar%20el%20proceso
- Study of titles: requirements, responsible parties and importance. (n, f.). Fincaraíz. https://fincaraiz.com.co/blog/consejos-de-vivienda/estudio-de-titulos-requisitos-responsables-e-importancia/
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