The Seller Died Before Final Closing in Ecuador. What Happens to Your Deposit and the Deal?

Navigating a real estate transaction in Ecuador demands meticulous attention to detail. When the unforeseen occurs—such as the seller passing away after you've signed a preliminary agreement and paid a deposit—the situation requires immediate, expert legal intervention to prevent a financial and bureaucratic nightmare. As a licensed Ecuadorian Real Estate Attorney specializing in land acquisition, I have managed these exact scenarios. This guide provides an authoritative legal perspective on your rights, the binding nature of your contract, and the precise steps required to protect your investment.

The core of this issue rests on the interplay between Ecuadorian contract law and inheritance law (derecho de sucesiones). Your legal standing is determined almost entirely by the strength and validity of your preliminary purchase agreement, known as the Promesa de Compraventa.

The Legal Power of the Promesa de Compraventa When a Seller Dies

In Ecuador, a real estate purchase is a two-step process: the Promesa de Compraventa (Purchase Promise) and the definitive Escritura Pública de Compraventa (Public Deed of Sale). The Promesa is far more than a simple agreement; it is a legally binding contract that, if properly executed before a notary, obligates both parties to complete the transaction under the agreed-upon terms.

When a seller dies after executing a valid Promesa de Compraventa, their legal obligations do not die with them. Under the Ecuadorian Civil Code, heirs inherit not only the assets of the deceased but also their contractual obligations (obligaciones transmitibles).

Key Legal Principles:

• Binding on the Estate: The seller's estate, represented by their legal heirs, is legally bound to honor the Promesa de Compraventa. The intent to sell has been formally and legally established.
• Heirs' Obligation to Fulfill: The heirs step into the seller's shoes and are required to complete the sale. They cannot arbitrarily cancel the contract or change the terms simply because the original signatory has passed away.
• The Posesión Efectiva Process: Before the heirs can legally sell the property, they must first complete a judicial or notarial process called posesión efectiva. This formally recognizes them as the new owners of the deceased's assets. This process is the primary source of delays and must be monitored closely by your attorney.

Your Deposit (Arras): Securing Your Investment

The deposit, legally termed arras in the contract, is your primary point of financial exposure. Its fate is directly tied to the enforcement of the Promesa.

• If the Sale Proceeds: The deposit is credited toward the final purchase price at closing, as originally intended.
• If Heirs Dispute or Delay: The situation becomes adversarial if heirs are uncooperative, cannot be located, or dispute the contract's validity. Your right to either compel the sale or recover your deposit (often with a penalty against the estate, if stipulated in the contract) is enforceable in court.
• Hyper-Specific Detail 1: The Power of a Registered Promesa. A standard notarized Promesa de Compraventa is a strong contract. However, for maximum security, your attorney should insist on having the Promesa registered with the Registro de la Propiedad (Property Registry) of the canton where the land is located. This registration acts as a public lien (gravamen) against the property. It legally prevents the heirs from selling the property to anyone else while your contract is in effect, providing you with powerful leverage and title security.

A Specialist’s Protocol for Protecting Your Investment

Upon learning of the seller’s death, a precise and immediate sequence of actions is required.

1. Cease Direct Communication; Engage Counsel: Do not attempt to negotiate with grieving family members directly. Immediately retain an experienced Ecuadorian real estate attorney. This is not optional; it is a mandatory step to secure your position.
2. Formal Notification to the Estate: Your attorney will draft and deliver a formal, notarized notification (requerimiento) to the known heirs. This document will:
   • State the existence of the binding Promesa de Compraventa.
   • Affirm your readiness to close the transaction per the agreed terms.
   • Formally request that they proceed with the necessary inheritance paperwork (posesión efectiva) to enable the final closing.
3. Verify the Heirs and Estate Status: Your attorney will independently verify the legal heirs. This is determined by a will (testamento) or, in its absence, by the laws of intestate succession (sucesión intestada) as defined in the Civil Code. This process confirms who has the legal authority to act on behalf of the estate.
4. Monitor the Posesión Efectiva: This is the critical waiting period. The heirs must complete this process to legally transfer title. Your attorney's role is to monitor its progress and apply legal pressure if it stalls, ensuring your transaction remains a priority for the estate.
5. Execute the Final Escritura: Once the posesión efectiva is registered and the heirs are the legal owners, they can sign the final Escritura Pública with you before a notary, finalizing the transfer.

When Heirs Are Uncooperative: Legal Recourse

If the heirs refuse to comply, your attorney can initiate a lawsuit (juicio de cumplimiento de contrato) to seek specific performance. This legal action asks a judge to compel the estate to honor the Promesa de Compraventa and execute the sale. While effective, this process is time-consuming and costly, making it a last resort. Alternatively, you can sue for breach of contract to recover your deposit, plus any contractually stipulated penalties (cláusula penal).

⚠️ Pre-emptive Due Diligence: Your Best Defense

The strongest position is one built on meticulous due diligence before signing the Promesa. An expert review mitigates risks that can be catastrophically amplified by a seller's death.

• Hyper-Specific Detail 2: The Certificado de Historial de Dominio y Gravámenes. Do not accept a simple property tax record (pago predial). You must demand a Certificado de Historial de Dominio y Gravámenes issued directly by the Registro de la Propiedad for the specific canton (e.g., Salinas, Cuenca, Manta). This document, typically valid for 60 days, is the only official proof of title. It details the complete ownership history and must explicitly state "NO REGISTRA GRAVÁMENES VIGENTES" to confirm there are no active mortgages, court-ordered liens, or prohibitions against selling the property.
• Hyper-Specific Detail 3: Rural Water Rights & SENAGUA Verification. For rural properties, water access is not guaranteed by land ownership. Water use rights are granted by the Secretaría Nacional del Agua (SENAGUA). The seller must provide the administrative resolution (resolución administrativa) that grants the water right. Your attorney must then verify this right's active status and transferability directly with the relevant SENAGUA regional office (demarcación hidrográfica). A verbal promise of "plenty of water" is legally worthless and a massive red flag.
• Hyper-Specific Detail 4: The Risk of Undivided Co-ownership (Proindiviso). Be extremely cautious if the title certificate reveals ownership is in proindiviso. This signifies undivided co-ownership, common in inherited family properties. You would be purchasing a percentage of a larger parcel, not a physically demarcated lot. A valid sale requires the notarized, voluntary signature of all co-owners. If one co-owner dies, their heirs now enter the picture, exponentially complicating the transaction. Acquiring a proindiviso share without a formal, court-approved partition (partición) is a high-risk venture.

Conclusion: Your Contract is Your Shield

The death of a seller is a serious complication, but in Ecuador’s legal system, it does not invalidate a well-drafted Promesa de Compraventa. Your agreement remains a powerful legal instrument that is binding upon the seller's heirs. Your ability to enforce your rights, protect your deposit, and ultimately complete the purchase depends entirely on proactive, expert legal strategy from the moment the issue arises. Swift action, formal communication through legal counsel, and a foundational understanding of Ecuadorian property and inheritance law are your keys to successfully navigating this challenge.

Secure your investment. Schedule a professional due diligence consultation with a licensed Ecuadorian Land Specialist to review your specific transaction and mitigate risk.