Navigating Corporate Ownership: Expert Due Diligence for Buying Land from an Ecuadorian Company

Purchasing land in Ecuador is a significant investment. When the seller is an Ecuadorian company—such as a Compañía de Responsabilidad Limitada (Ltda.) or a Sociedad Anónima (S.A.)—the due diligence process acquires layers of complexity that are frequently underestimated by foreign investors. As a certified Ecuadorian Real Estate Attorney, my objective is to provide you with the specialized legal framework required to navigate this terrain, secure clear title, and mitigate financial risk. This guide details the essential, non-negotiable due diligence protocols for acquiring property from a corporate entity.

The Corporate Veil: Verifying Authority and Legal Standing

When you purchase land from a company, you are transacting with a legal entity, not an individual. The core risk is twofold: a) the individual signing the documents may lack the legal authority to do so, and b) the company's own financial or legal troubles could encumber the property in ways not immediately apparent on a standard title search.

Your investigation must begin at the company’s foundation, overseen by the Superintendencia de Compañías, Valores y Seguros (Supercias).

Indispensable Corporate Documents

Certificate of Legal Existence & Compliance (Certificado de Cumplimiento de Obligaciones): This is your starting point. Issued by Supercias, this certificate confirms the company is legally constituted, active, and current with its financial reporting and legal obligations. An inactive or non-compliant company cannot legally sell assets.
Registered Appointment of the Legal Representative (Nombramiento del Representante Legal): This is arguably the single most important corporate document. You must obtain a notarized and currently registered copy of the Nombramiento for the individual who will sign the sale documents. This document explicitly grants them the power to act on the company's behalf. Verify that the appointment is still valid and has not expired or been revoked.
General Shareholders' Meeting Minutes (Acta de Junta General de Socios o Accionistas): The sale of a significant asset, such as real estate, requires explicit authorization from the company's owners. You must secure a certified copy of the shareholders' resolution that specifically approves the sale of the property in question.
- Hyper-Specific Detail #1: The resolution must be unambiguous. Best practice dictates that the Acta explicitly identify the property by its address, cadastral code (clave catastral), and registration number from the Property Registry. It must also name the legal representative authorized to execute the sale and sign the final Escritura Pública (Public Deed). A vague authorization is a major red flag for future legal challenges from dissenting shareholders.
Company Bylaws (Estatutos Sociales): Review the bylaws to ensure the sale does not violate any internal company rules regarding asset disposal, pre-emptive rights of other shareholders, or required voting majorities.

Beyond the Title: Uncovering Hidden Property and Corporate Liabilities

A clean property title is necessary but insufficient when dealing with a corporate seller. The company's own liabilities can attach to its assets, including the land you intend to purchase.

Comprehensive Lien and Encumbrance Search

Property Lien Certificate (Certificado de Gravámenes y Prohibiciones de Enajenar): This is the foundational title search document. It must be requested from the Registro de la Propiedad (Property Registry) of the specific canton where the land is located. This certificate reveals not only mortgages (hipotecas) and liens (gravámenes) but also any legal prohibitions against selling the property (prohibiciones de enajenar), such as court-ordered embargos resulting from lawsuits against the company.
Tax & Municipal Solvency: You must obtain certificates confirming the company is current on all tax obligations. This includes a Certificado de Cumplimiento Tributario from the Servicio de Rentas Internas (SRI) and a certificate of no outstanding debt for property taxes (impuestos prediales) from the local Municipio. A tax debt can result in a government-placed lien on the property.
Labor Liabilities (Pasivos Laborales): A company with a history of employees could have significant unresolved labor liabilities. Under Ecuadorian law, former employees can place liens on company assets for unpaid severance or judgments. While harder to trace, inquiries into the company's history of employees and potential lawsuits are a prudent step, particularly if the company shows signs of financial distress.
Undivided Co-ownership (Proindiviso):
- Hyper-Specific Detail #2: Be extremely vigilant for properties held in Proindiviso. This means the company owns an undivided percentage share (derechos y acciones) of a larger parcel, not a physically demarcated lot. The title will state the company is owner of, for example, "50% of the rights and shares." This is a critical title defect. You cannot build on or exclusively use a specific portion without a formal, legally-registered partition (partición) agreed upon by all co-owners. Purchasing a proindiviso share without a clear path to partition is buying into a potential legal quagmire.

Resource Rights & Regulatory Compliance: The Land Itself

Regardless of ownership structure, the physical land is subject to strict state and municipal regulations.

Water Rights (Derechos de Agua):
- Hyper-Specific Detail #3: Water rights are not automatically included with a land sale; they are a separate, state-regulated concession. The governing body is the Ministry of Environment, Water, and Ecological Transition (MAATE), which absorbed the former SENAGUA. You must verify the existence of an Autorización de Uso y Aprovechamiento del Agua. Crucially, you must determine if the water right is a permanent, transferable right (derecho real) that can be legally deeded to you, or merely a temporary, precarious permit (permiso precario) that is non-transferable and can be revoked. This distinction dramatically impacts the value and viability of agricultural or development land. The verification process requires submitting a formal request (oficio) to the local MAATE office.
Zoning and Coastal Regulations: You must obtain a Certificado de Uso de Suelo from the local municipality to confirm the property's zoning. This document dictates what can legally be built.
- Hyper-Specific Detail #4: For properties near the coast or national borders, additional federal laws apply. The Ley Orgánica de Tierras Rurales y Territorios Ancestrales and related security regulations place restrictions on foreign ownership within the Zona de Seguridad Nacional. While direct prohibitions have eased, acquiring property within this zone—typically extending several kilometers inland—may require additional vetting or approvals from entities like the Ministry of Defense, especially for large tracts or strategic locations. Failure to comply can jeopardize the legal validity of the title.

The Contractual Process: From Promise to Registered Title

The purchase process with a company requires precise legal documentation to be binding and secure.

Promise to Buy and Sell (Promesa de Compraventa): This is a formal, binding preliminary contract signed before a Notary. It locks in the terms and obligates both parties to proceed to the final sale, contingent upon successful due diligence. The Promesa can (and should) be registered at the Property Registry to prevent the company from selling the land to another party while your due diligence is underway.
Public Deed of Sale (Escritura Pública de Compraventa): This is the final, definitive transfer document. It is executed before a Notary and must be signed by the legally authorized representative of the company, whose authority you have already verified. The Escritura does not, by itself, transfer ownership.
Registration (Inscripción):
- Hyper-Specific Detail #5: Legal ownership of real estate in Ecuador is only transferred upon the registration (inscripción) of the Escritura Pública in the cantonal Registro de la Propiedad. The moment of signing is not the moment of ownership transfer. Until the deed is formally inscribed in the public record under your name, the company legally remains the owner. This final step is non-negotiable and is the culmination of the entire acquisition process, perfecting your title.

Legal Due Diligence Checklist: Corporate Land Acquisition

I. Corporate Verification (Supercias & SRI):

[ ] Obtain current Certificado de Cumplimiento de Obligaciones from Supercias.
[ ] Obtain and review the registered Nombramiento del Representante Legal.
[ ] Obtain and review the notarized Acta de Junta General authorizing the specific property sale.
[ ] Review Company Bylaws (Estatutos Sociales).
[ ] Obtain Certificado de Cumplimiento Tributario from the SRI.

II. Property Title & Liens (Registro de la Propiedad & Municipio):

[ ] Obtain a current Certificado de Gravámenes y Prohibiciones de Enajenar.
[ ] Scrutinize the title for any mention of Proindiviso or derechos y acciones.
[ ] Obtain certificate of no outstanding property taxes from the local Municipio.
[ ] Verify property boundaries (linderos) against a recent survey.

III. Resource & Land Use Verification (MAATE & Municipio):

[ ] Verify registered water rights (Autorización de Uso y Aprovechamiento) with MAATE.
[ ] Obtain Certificado de Uso de Suelo (Zoning Certificate).
[ ] If applicable, confirm compliance with Zona de Seguridad Nacional regulations.

⚠️ Title Risk Warning: The Critical Corporate Oversight

The most catastrophic error foreign buyers make is focusing exclusively on the property's title while ignoring the seller's corporate health and authority. A "clean" title is worthless if the sale itself was fraudulent or unauthorized. This can happen if the signatory's Nombramiento had expired, the shareholders never passed a formal resolution to sell, or the company was legally insolvent. These corporate defects create a voidable transaction, leaving your investment exposed to years of litigation from shareholders, creditors, or government agencies. Securing clear title from a company is a two-front battle: you must validate the property and the entity selling it with equal rigor.

Acquiring land from an Ecuadorian company requires a forensic level of legal scrutiny. By meticulously verifying corporate authority, investigating hidden liabilities, and confirming all resource and land-use regulations, you can transform a complex transaction into a secure and valuable investment.

To ensure your investment is protected by comprehensive, expert-led due diligence, schedule a direct consultation with a licensed Ecuadorian real estate attorney.