Is There Escrow When Buying Property in Colombia?
The official sources reviewed did not show a Colombian equivalent of a neutral US-style escrow or title company. Such a company holds the price until closing. Buyers may use a fiduciary arrangement (encargo fiduciario) or a trust (fiducia). Other options include payments tied to milestones or a bank-issued cheque (cheque de gerencia). Buyers may also hold back part of the price until the new title certificate shows them as owner.
What it is
In Colombia, a real estate sale requires a public deed (escritura pública) before a notary (Decreto-Ley 960 de 1970, art. 12). Ownership passes only when the registry registers the deed. The notary is not an escrow agent. See what a notary does. The usual order is promise contract, public deed, then registration; see the step-by-step buying guide.
Steps
Payment options
| Payment option | How it works |
|---|---|
| Trust company | A fiduciary arrangement without transfer of title (encargo fiduciario) or a real-estate trust (fiducia), run by a trust company supervised by the Superintendencia Financiera (SFC). Buyers often use these in new projects. Buyers and sellers may also agree to them for a resale. See buying off-plan. The SFC says trust companies have obligations of means, not of result (SFC concept 2008068357-003). |
| Staged payments | Payments staged to milestones: promise contract, deed, registration. |
| Payment at signing | A bank-issued cheque (cheque de gerencia) or a bank transfer at signing. |
| Holdback | A holdback of part of the price until the new title certificate (certificado de tradición y libertad) shows you as owner; see the title certificate guide. |
- Ask your lawyer which receiving account is acceptable before you pay.
The promise contract sets the payment schedule, deposit (arras) and conditions. Have your lawyer read those clauses before you sign or pay.
Money from abroad
Paying for a Colombian property outside Colombia leaves no Colombian exchange record of the investment. A payment between two foreign accounts is an example. Ask your bank how it will prepare the exchange declaration (declaración de cambio) before you wire. Send the money from your own account abroad (Banrep international investment regime). See sending money from abroad and foreign investment registration.
Costs
Payment method and tax cost
Estatuto Tributario art. 90 says sums not paid through financial institutions do not count as part of a property's tax cost (Estatuto Tributario). A lower tax cost may mean a larger taxable gain when you sell; see selling and repatriating the money. Ask your certified public accountant how to pay.
Sources
- Decreto-Ley 960 de 1970, art. 12
- SFC concept 2008068357-003
- Banrep international investment regime
- Estatuto Tributario
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 how the purchase affects you there. Finding trusted services shows how to check that a Colombian lawyer is registered.
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Frequently asked questions
Is there escrow in Colombia?
The official sources reviewed did not show a Colombian equivalent of a neutral US-style escrow or title company. Such a company holds the price until closing. Buyers may instead use a trust arrangement, staged payments, a bank-issued cheque or a holdback.
Can the notary hold my money?
The notary receives, drafts and authorises the public deed. The notary is not an escrow agent. Ask your lawyer which payment method and receiving account to use.
Should I pay in cash?
Estatuto Tributario art. 90 says sums not paid through financial institutions do not count as part of a property's tax cost. Ask your certified public accountant how to pay.
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