Transferring Ecuadorian Property Titles to Your Corporation: An Attorney's Guide to Bulletproof Due Diligence

Acquiring property in Ecuador is a significant investment. For many foreign investors, holding these assets within a legally established Ecuadorian corporation offers clear advantages in liability protection, operational efficiency, and estate planning. However, the process of transferring a property title (escritura) into a corporate entity is a legal minefield where seemingly minor oversights can lead to catastrophic financial loss and title invalidation.

As a Certified Ecuadorian Real Estate Attorney and Land Specialist, I have witnessed firsthand the costly mistakes that result from inadequate due diligence. This guide is not a generic checklist; it is a strategic blueprint designed to fortify your investment, ensure clean title (dominio y posesión), and navigate the intricate legal and bureaucratic landscape of Ecuador with precision.

The Legal Foundation: Beyond the Basics

Property transfers in Ecuador are governed by the Civil Code (Código Civil), the Land Registry Law (Ley de Registro), and the Organic Code of Territorial Organization, Autonomy, and Decentralization (COOTAD), which regulates municipal taxes and cadastral matters.

The key players are not just the buyer and seller. Every transaction is scrutinized by a Notary Public (Notario Público), the Municipal Government's planning and tax departments, the cantonal Property Registry (Registro de la Propiedad), and the national Tax Authority (Servicio de Rentas Internas - SRI). For rural properties, the National Water Secretariat (SENAGUA) is often a critical, and frequently overlooked, stakeholder.

The transfer process is not merely a contractual agreement; it is a public act that amends official records. For a corporation to be the recipient of a title, it must prove its legal existence, its good standing, and its explicit authority to execute the purchase.

The Definitive Step-by-Step Title Transfer Process

Transferring a title to your corporation is a multi-phase operation. Deviating from this sequence or cutting corners introduces unacceptable risk.

Phase 1: Corporate Fortification and Authorization

Your corporation must be legally impeccable before it can acquire assets.

1. Immaculate Standing: The company must be fully registered and active with the Superintendency of Companies, Securities, and Insurance (Superintendencia de Compañías, Valores y Seguros). This includes having an up-to-date Certificate of Good Standing (Certificado de Cumplimiento de Obligaciones).
2. Registered Legal Representative: The appointment of the company's legal representative (nombramiento del representante legal) must be duly notarized and registered with the Mercantile Registry (Registro Mercantil). Without this registration, their signature has no legal power.
3. Specific Corporate Resolution: A formal, written resolution from the corporation's board of directors or shareholders (Junta General de Socios o Accionistas) is mandatory. This document must explicitly authorize the purchase of the specific property, state the agreed-upon price, and empower the legal representative to sign all necessary documents, including the final deed. A generic authorization is insufficient.
4. Tax ID (RUC): The corporation must have an active RUC (Registro Único de Contribuyentes) from the SRI.

Phase 2: The Binding Purchase Promise (Promesa de Compraventa)

A common misconception is that a promesa de compraventa is a simple, informal agreement. In Ecuador, when notarized, it is a legally binding contract that obligates both parties to execute the final sale. It does not transfer ownership, but it secures the terms. It is essential when payments are structured over time or when the closing is contingent on specific conditions.

Crucially, it differs from the definitive deed (escritura pública) in that the escritura is the vehicle of title transfer itself, while the promesa is the legally enforceable commitment to perform that transfer.

Phase 3: Executing the Definitive Public Deed (Escritura Pública de Compraventa)

This is the central event of the transfer, executed before a Notary. The Notary acts as a delegate of the state, verifying the legality of the entire transaction. The deed must contain meticulous details:

1. Parties: Full legal identification of the seller and the buyer (the corporation, identified by its full name, RUC, and registration details). The legal representative’s details and a direct reference to the registered appointment (nombramiento) and the corporate resolution authorizing the purchase must be included.
2. Property History (Antecedentes): A chain of title tracing how the seller acquired the property.
3. Precise Description: The exact property description as it appears in the Property Registry, including the unique cadastral code (código catastral) and boundaries.
4. Price and Declaration of Funds: The final sale price and a sworn declaration of the legality of the funds (declaración de licitud de fondos), a requirement under Ecuador’s anti-money laundering laws. Transactions above a certain threshold must be documented through the Ecuadorian financial system.
5. Seller's Declarations: The seller must legally declare that the property is free of all liens, mortgages, lawsuits, and encumbrances (saneamiento por evicción), and that all property taxes are paid.

Hyper-Specific Detail 1: Required Notary Documents The Notary will not proceed without a complete file. For a purchase by a corporation in Guayas province, for example, this file must include:

• The seller's original title deed (escritura matriz).
• A Certificado de Historial de Dominio y Gravámenes from the Registro de la Propiedad del Cantón Guayaquil, issued no more than 30 days prior. This is the only document that authoritatively confirms ownership and reveals any registered mortgages, liens, or prohibitions on sale.
• A Certificado de No Adeudar al Municipio, proving all municipal property taxes (impuestos prediales) are paid to date.
• The buyer's (corporation's) registered nombramiento and the specific board resolution authorizing the purchase.

Phase 4: Inscription at the Property Registry (Registro de la Propiedad)

Signing the escritura pública is not the final step. Ownership is only legally perfected and enforceable against third parties once the deed is physically inscribed (inscrita) at the Property Registry of the canton where the land is located. The Registry reviews the deed for legal conformity. Any error can result in rejection, forcing a costly and time-consuming amendment (escritura aclaratoria). Upon successful registration, a new Certificado de Historial de Dominio y Gravámenes can be issued, now showing your corporation as the undisputed owner.

Phase 5: Tax Obligations and Municipal Updates

1. Transfer Taxes: The buyer is responsible for paying the municipal transfer tax (impuesto de alcabala) and often a portion of the capital gains tax (plusvalía). These must be paid before the deed can be registered.
2. Seller's Capital Gains: The seller is responsible for their income tax on the capital gain. The notary often withholds a portion of the sale proceeds to ensure this is paid.
3. Cadastral Update: The municipal cadastral records (catastro) must be updated to reflect the corporation as the new owner for future property tax assessments.

Critical Risks and Expert Insights

• Coastal & Border Zone Restrictions: Foreign-owned corporations acquiring property within 50 kilometers of Ecuador's coastlines or national borders fall under the National Security Law (Ley de Seguridad Nacional). This requires obtaining a special authorization from the Ministry of National Defense. Furthermore, Article 604 of the Civil Code establishes that a non-privatizable 8-meter strip of beach above the high-tide line is public property. Building or claiming ownership over this franja de playa is illegal and can result in demolition orders.
• The Proindiviso Trap: Be extremely wary of purchasing derechos y acciones (rights and actions). This means you are buying a percentage share of an un-subdivided property (proindiviso), not a physically defined parcel. You become a co-owner with others, unable to build, sell, or mortgage your "portion" without the consent of all other owners. Resolving this through a judicial partition (partición) is a long and expensive legal battle.
• Water Rights are Not Automatic: For agricultural land, water is life. A property title does not guarantee water rights. These rights are granted and regulated by SENAGUA.
  • Hyper-Specific Detail 2: Verifying SENAGUA Rights: To verify a water right, you must formally request a Certificado de Uso y Aprovechamiento de Agua from the relevant regional SENAGUA office (Demarcación Hidrográfica). This process requires submitting an application with the property's cadastral information. Transferring an existing water use authorization is a separate administrative process (traspaso de la autorización) that must be approved by SENAGUA and is not automatic with the land sale. Many buyers learn too late that the water they thought they bought belongs to someone else.

Attorney's Due Diligence Mandates

Before your corporation signs anything, this is your non-negotiable checklist:

• Title Study: Obtain and have your attorney analyze the Certificado de Historial de Dominio y Gravámenes for the last 20 years to identify the chain of title and any recurring issues.
• Physical vs. Legal Boundaries: Commission a licensed surveyor to perform a boundary survey (levantamiento planimétrico) and compare it against the official municipal cadastral map. Discrepancies are a major red flag.
• Water Rights Audit (Rural): Execute the SENAGUA verification process described above.
• Municipal Compliance: Obtain a Certificado de Línea de Fábrica from the municipality. This official document details all land use regulations, zoning restrictions, building setbacks, and potential future public works that could affect the property.
• Tax Solvency: Verify the seller has paid all property taxes for at least the past five years. Unpaid back taxes can become a lien on the property.
• Litigation Search: Your attorney must conduct a search in the judicial system's database (Sistema Automático de Trámite Judicial Ecuatoriano - SATJE) for any lawsuits involving the property or the seller.
• Access Rights: Confirm legally registered road access and any easements (servidumbres) that may encumber the property.

Hyper-Specific Detail 3: The Unregistered Possession Risk In rural areas, it is common to find sellers who possess land via an old, un-registered sales document (documento privado) and have never completed a formal title transfer. While they may have occupied the land for decades, they are not the legal owners in the Property Registry. Transferring such a property to your corporation would be a transfer of mere possession, not legal title, leaving your investment vulnerable to claims from the last registered owner or their heirs. This is a critical distinction that only a deep title study can reveal.

⚠️ Title Risk Warning: The Legal Abyss

The gravest error is assuming the process is merely transactional. Ecuadorian property law is designed to protect recorded title. Any unrecorded lien, unresolved inheritance claim, or boundary dispute can cloud your title for years. The seller's legal guarantee to defend your title (saneamiento por evicción) is only as good as their ability and willingness to do so. Proactive, expert-led due diligence is not an expense; it is the fundamental insurance policy for your entire investment.

Conclusion

Transferring an Ecuadorian property title into your corporation’s name is a high-stakes legal procedure that demands professional execution. Every document, every signature, and every registration is a critical link in a chain that establishes secure and defensible ownership. By approaching this process with the rigor and strategic foresight outlined here, you move beyond the role of a simple buyer to that of a sophisticated investor, ensuring your corporation's assets in Ecuador are built on a bedrock of legal certainty.

Secure your investment. Mitigate your risk. Contact our legal team for a comprehensive due diligence consultation before you sign any agreement.