An Ecuadorian Attorney’s Definitive Guide to the Impuesto a la Alcabala (Alcance Tax) and Securing Your Property Title

Purchasing land in Ecuador is a venture rich with opportunity, but its legal framework demands meticulous, expert navigation. As a certified Ecuadorian Real Estate Attorney and Land Specialist, I've seen firsthand how misunderstanding local laws can jeopardize significant investments. Among the most common points of confusion for foreign buyers is the allocation of closing costs, particularly a municipal transfer tax known colloquially as the "Alcance" tax.

This guide provides an authoritative breakdown of this tax, its legal basis, and—most importantly—integrates it into a comprehensive due diligence framework. My goal is to equip you with the specific, experience-based knowledge necessary to move beyond generic advice, secure your title, and mitigate financial risk.

Deconstructing the "Alcance" Tax: The Impuesto a las Alcablas

While widely called the "Alcance" tax, its formal legal name is the Impuesto a las Alcablas. Governed by Articles 526-537 of the Código Orgánico de Organización Territorial, Autonomía y Descentralización (COOTAD), this is a municipal tax levied on the legal transfer of real estate ownership (dominio de bienes inmuebles).

It is fundamentally different from:

• Impuesto Predial: The annual property tax paid to the municipality.
• Plusvalía: The municipal capital gains tax levied on the seller's profit.

Payment of the Alcabala is a non-negotiable prerequisite for registering the sale. Without proof of payment, the local Registro de la Propiedad (Property Registry) will not inscribe the new Escritura Pública de Compraventa (Public Deed of Sale), meaning the legal transfer of title to your name is not complete. The calculation is based on a percentage of the higher of two values: the sale price stated in the Escritura or the official municipal property valuation (avalúo catastral). The exact percentage is set by each municipal government and varies across the country, reinforcing the need for localized verification.

Who Bears the Cost: Legal Custom vs. Contractual Obligation

By long-standing custom in Ecuador, the buyer is responsible for paying the Impuesto a las Alcablas. This is because the tax is directly associated with the administrative act of formalizing and registering the buyer's new ownership rights.

However, custom is not law. This responsibility is fully negotiable between the parties. A motivated seller may agree to cover this cost to incentivize a sale. The critical point is that whatever you agree upon must be explicitly and unambiguously memorialized in the legal contracts governing the transaction.

This negotiation typically occurs in two stages:

1. The Promesa de Compraventa (Promise to Buy and Sell Agreement): This is a preliminary, notarized contract that locks in the terms of the deal, including price, deadlines, and the allocation of all closing costs. It often involves a down payment (arras). A well-drafted promesa is legally binding and provides a powerful tool to enforce the agreed-upon terms.
2. The Escritura Pública de Compraventa (Public Deed of Sale): This is the final, definitive document that transfers title. The terms outlined in the promesa must be perfectly mirrored here. The notary public will draft this deed, which, once signed and registered, becomes the ultimate proof of your ownership.

Expert Warning: Never rely on verbal agreements. If the seller agrees to pay the Alcabala tax, but the Escritura does not state this, the legal and customary obligation will fall back on you, the buyer.

The Professional Due Diligence Process: Mitigating Risk Beyond the Basics

As your legal counsel, my process goes far beyond a simple title check. We must preemptively identify and resolve issues that could encumber your property or block the title transfer. Here are the hyper-specific steps we take.

Step 1: In-Person Verification at the Cantonal Offices

Your first action is not with the seller, but with the government. With the property's cadastral number (número de catastro or clave catastral), we visit two key offices in the canton where the property lies:

1. The Municipal Finance Department (Dirección Financiera Municipal): Here we request a Certificado de no Adeudar al Municipio. This document confirms that the Impuesto Predial (annual property tax) and any other municipal fees are paid in full. No property transfer can be registered with outstanding municipal debt. At this office, we will also obtain the official Alcabala tax rate.
2. The Property Registry (Registro de la Propiedad): This is the most crucial step for title security. We request an Certificado de Gravámenes y Prohibiciones de Enajenar (Certificate of Liens and Prohibitions on Sale). This is the only document that authoritatively reveals:
   • Gravámenes: Mortgages, liens, or other financial claims against the property.
   • Prohibiciones de Enajenar: Court-ordered prohibitions preventing the owner from selling.
   • Demandas: Whether the property is the subject of an active lawsuit. This certificate must be recent (actualizado), typically issued within 30-60 days of the closing, to be valid.

Step 2: Specialized Verifications for Rural and Coastal Land

Generic due diligence is insufficient for rural and coastal properties, which are subject to complex national regulations.

• Hyper-Specific Detail #1: Water Rights (MAATE). For any rural parcel, water is worthless without a legal right to use it. The governing body is no longer SENAGUA; it is the Ministerio del Ambiente, Agua y Transición Ecológica (MAATE). The process involves visiting the ministry's Zonal Directorate with the property's title history and survey. We must verify if the property has a registered Autorización de Uso y Aprovechamiento de Agua. An informal irrigation ditch (acequia) or a well on the property confers zero legal water security without this official registration. Securing a new authorization can be a multi-year bureaucratic process.

• Hyper-Specific Detail #2: Coastal & National Security Zones. Foreign ownership near coastlines and national borders is restricted.

  • The widely-held belief of a "5-kilometer" restriction is incorrect and dangerously simplistic. The primary rule is that the franja de playa y bahía—a strip typically 8 meters wide from the high-tide line—is inalienable public property (bien de uso público). No private ownership is possible here.
  • More critically, under the Ley de Seguridad Pública y del Estado, foreigners are prohibited from owning land in "zones of national security" (zonas de seguridad nacional) without explicit authorization from the Comando Conjunto de las Fuerzas Armadas (Joint Command of the Armed Forces). These zones often include border areas, islands, and strategic coastlines. Purchasing without this permit can render the sale void.

Step 3: Scrutinizing the Chain of Title for Hidden Risks

We must analyze the history of the property's ownership by reviewing previous Escrituras. A common and severe risk we look for is shared, undivided ownership.

• Hyper-Specific Detail #3: The Peril of Proindiviso. This legal term refers to a property owned by multiple parties where no individual owns a specific demarcated portion, but rather a percentage of the whole. This often occurs through inheritance. Selling a property held en proindiviso requires the unanimous, written consent of every single co-owner. If even one co-owner refuses to sign—or cannot be found—a sale is impossible. Sometimes, sellers will attempt to sell their "rights and actions" (derechos y acciones), which does not give you title to a physical piece of land and embroils you in the shared ownership problem. The only legal remedy to divide the property is a costly and lengthy partition lawsuit (juicio de partición).

Finalizing the Transaction: From Notary to Registry

With due diligence complete and all terms codified in the Escritura, the final steps are executed in a precise order:

1. Notarization: All parties sign the Escritura before a Notario Público.
2. Payment of Taxes: The buyer (or as per the contract) pays the Impuesto a la Alcabala at the municipal office. Other minor transfer taxes are also paid.
3. Registration: The notarized Escritura, along with receipts for all tax payments, is submitted to the Registro de la Propiedad. The Registrar reviews the documents and, if everything is in order, officially inscribes the deed. Your ownership is only legally perfected against the world upon this final registration.

⚠️ A Lawyer's Warning on Title Security

The single greatest mistake a foreign buyer can make is assuming the deal is done upon signing the Escritura and handing over payment. Your ownership is not legally secure until that deed is inscribed in the Registro de la Propiedad. Any lien, lawsuit, or prohibition that appears between the issuance of your Certificado de Gravámenes and the final registration can halt the process and encumber your new property. This is why a swift and professionally managed closing process is not a luxury, but a necessity.

Conclusion

The Impuesto a las Alcablas is more than a simple tax; it is a critical checkpoint in the complex process of securing legal title in Ecuador. By understanding its function, negotiating its payment transparently, and integrating it into a rigorous, hyper-specific due diligence process, you transform a potential liability into a step towards a secure and confident investment. True peace of mind comes not from hoping for the best, but from engaging expert counsel to prepare for the worst.