Managing Ecuador Property Risks. When navigating property transactions in Ecuador as an expat, one critical piece of advice stands out: do not sign a Power of Attorney (POA) unless it’s with someone from your trusted inner circle, ideally family. I emphasize trusted family because, unfortunately, even familial ties can be tested by greed. Here in Ecuador, the circle of trust can become very small indeed.
You might wonder why a POA is often suggested, or what you’re told you need it for. A common scenario involves expats who want to sell their property but are unable to stay in the country. A “trusted” attorney might suggest you sign a POA, promising to handle the sale and advising you to go enjoy your life. But beware; this can lead to disastrous outcomes. Just recently in Canoa, a man signed a POA to sell his lot, only for the attorney to abscond with the $40,000 sale proceeds. The buyer received the deed, but the seller was left without his money, dealing with a legal quagmire between him and the attorney.
Congratulations, you now own property in Ecuador! However, you still need to complete the registration with the municipality, which in Bahia takes about 1-2 days, though it might vary elsewhere.
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If you’re planning to sell your property, consider listing it and appointing someone local, perhaps a realtor or a friend, to manage showings for a commission. You can then return to handle the sale personally if a serious buyer emerges. Before you commit to flying back, secure some earnest money to confirm the buyer’s commitment. This not only shows their seriousness but also covers your travel expenses should the deal fall through.
Another critical point for expats is the lack of escrow or trust accounts here, unlike in the U.S., where such accounts ensure funds are securely held until all conditions are met. An incident in Manta involved a buyer transferring $150,000 into what he believed was an escrow account, set up by an attorney through a Power of Attorney (POA), only for the money to vanish without the property changing hands. Pursuing such financial discrepancies in Ecuador, especially on the coast, can be an incredibly daunting and lengthy legal battle. I’ll tell you right now, it’s just not worth the time and stress it will cause you.
From my perspective as a seller, when someone shows interest in a property I have listed now at $249,900, I require earnest money—$10,000 in this case. This step initiates a process where we aim to close within seven business days. During this period, I gather necessary documents from the municipality to prove no outstanding debts, which might take 2-3 days. I share these documents with the buyer to keep everything transparent.
I have someone I use to put the closing contract together. Once all paperwork is in order, we schedule a notary appointment. On the day of closing, the buyer must provide proof of bank transfer. Only after seeing proof of transfer of the funds do I sign off on the documents at the notary. At that moment, the buyer will be given his property deed.
Here’s a piece of advice everyone should heed: be very cautious with Power of Attorney (POA). It’s a common issue. The process of buying and selling property isn’t inherently complicated, so take the time to educate yourself—it won’t take long. When it comes to attorneys or lawyers, my experience has shown that approximately 90% either don’t know what they’re doing or will attempt to take advantage of you, sometimes even resorting to fraud. However, there are some good ones out there; you just need to do your due diligence. Ask around, especially among our Experienced Expats, for recommendations.
