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Buying Off-Plan Property in Colombia: What to Check

Colombia Ready · Skystone Properties LLC

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Educational information, not legal or tax advice. Rules change; confirm with a licensed Colombian lawyer or certified public accountant, and with a licensed tax professional in your country of residence and, where relevant, a licensed lawyer in that country.

Foreigners may buy off-plan (sobre planos) in Colombia. Buyers often pay before the unit exists. The main risks concern who holds the money and what the contract says. In pre-sales, buyers often pay a trust company (fiduciaria). Colombia's financial supervisor, the Superintendencia Financiera (SFC), supervises that company. In general, the company releases the money to the builder only after the contract conditions are met.

Each project has its own terms. This guide does not recommend a project or structure.

What it is

What are the usual stages?

The typical phases are:

  1. Pre-sales.
  2. The break-even point (punto de equilibrio).
  3. Construction.
  4. Handover (entrega).
  5. The public deed (escrituración) and registration.

The break-even point is the required sales or financing level. The project must reach it before the trust company releases construction funds. Order and names may vary by project. Ownership passes only upon registration of the deed. See the step-by-step buying guide.

Where does your money sit before construction?

  • Pre-sale payments often enter a fiduciary arrangement without transfer of title (encargo fiduciario). Another option is a real-estate trust (fiducia inmobiliaria). An SFC-supervised trust company runs the arrangement.
  • In general, the SFC requires the trust company to invest pre-sale funds. In general, it can release funds to the builder only after the contract conditions are met. Trust companies have duties of care, called obligations of means. They do not guarantee the project or its result (SFC concept 2008068357-003).
  • The SFC's Circular Básica Jurídica (Parte II, Título II, Cap. I, num. 5.2) requires checks before builders use buyers' money. The trust company checks the land title and licences. It checks the builder's solvency, financing sources and insurance. It also checks that the break-even point does not put the project at risk. These are some of the required checks.
  • If the project misses the break-even point, the contract governs refunds, timing and returns. Read that clause with your lawyer before you pay.

Steps

What should you read closely with your lawyer?

  1. Review: The delivery date, and what happens if it slips.
  2. Review: Price adjustments or indexation.
  3. Review: The tolerance for changes in area, and the finishes.
  4. Review: What you are buying: the unit, parking, storage unit (depósito) and their registration folios.
  5. Review: The handover inspection, and how to claim defects after delivery.

The promise contract guide covers deposits, penalty clauses and conditions, including the condition that the builder finishes the project. An architect or structural engineer may also help you read the technical documents.

Costs and taxes

Money from abroad and tax cost

Off-plan purchases may have many installments. Handle and declare each payment from abroad in the same way. See sending money from abroad and foreign investment registration (Banrep international investment regime). Estatuto Tributario art. 90 excludes payments outside financial institutions from the property's tax cost (Estatuto Tributario). Ask your certified public accountant how to pay.

Documents

What must the developer show you?

  • A housing developer must file (radicar) documents with the municipal authority that oversees housing sales. The file includes a recent registration folio (folio de matrícula), model contracts and the project budget. It includes the licence, with a legal exception for sales before the licence. Mortgaged land also needs a mortgage-release commitment. Buyers must have access to these documents at all times (Ley 962 de 2005, art. 71). Ask to see them.
  • New housing needs a technical occupancy certificate (certificación técnica de ocupación) before occupation. An independent supervisor issues it (Ley 1796 de 2016, art. 6). For projects with five or more housing units, certain structural failures within ten years of that certificate trigger cover. It covers owners' financial losses. The builder or seller must provide that cover. It can use its own assets, bank guarantees, financial products or insurance (Ley 1796 de 2016, arts. 8 and 9, for projects with five or more housing units). Ask how that cover is provided.

Sources

Educational information, not legal or tax advice. For your own purchase, ask a Colombian real estate lawyer (abogado inmobiliario) and a certified public accountant (contador público). Ask a tax professional and a lawyer in your home country about the effects there. Finding trusted services shows how to check that a Colombian lawyer is registered.

Take the free quiz.

Frequently asked questions

Is it safe to buy off-plan in Colombia?

The project and contract determine the risks. Pre-sale buyers often pay an SFC-supervised trust company. In general, it releases money to the builder only after the contract conditions are met. The financial supervisor says the trust company does not guarantee the project.

What happens if the project does not reach its break-even point?

The contract governs refunds, timing and returns. Review that clause with a Colombian lawyer before payment.

What documents can I ask the developer for?

A housing developer must file documents with the municipal authority overseeing housing sales. These include a recent registration folio, model contracts, project budget and licence. The law has an exception for sales before the licence. Buyers must always have access to the file under Ley 962 de 2005, art. 71.

Is there a guarantee against structural defects?

For new housing projects with five or more units, Ley 1796 de 2016 requires cover for certain structural failures. This applies within ten years of the technical occupancy certificate and covers owners’ financial losses. The builder or seller must provide it. Ask how that cover works.

Not sure which topics to raise? Take the quiz. The Colombia Owner Kit (US$79, instant download) turns this guide into a checklist, a calendar entry and a question list: see what’s included. Or start with the free sample: Chapter 4, the due-diligence checklist.