Closing Costs in Ecuador
In Ecuador, traditionally, the buyer is responsible for all closing costs of a real estate transaction with the exception of any capital gains taxes, which are the responsibility of the seller.
Closing costs usually amount to 2-3% of the sales price.
The items constituting closing costs are; transfer tax, notary fees, property register fees and legal fees.
Normally the buyer hires an attorney to handle the closing. The attorney acts as legal counsel for both parties – the seller generally speaking does not have their own legal representation.
The transfer tax is 1.1% of the sales price (or assessed value, whichever’s higher) – this constitutes the largest portion of the closing costs.
The notary fees are on a scale ranging from .15 of the monthly minimum wage to 20 times the monthly minimum wage.
Here are a couple of examples:
For a property sold (or assessed) at 90,000 the notary fee is .8 of one month’s minimum wage – or at 2018’s minimum wage of $308.80.
For a $250,000 property the notary fee is equal to two months basic salaries, currently $772.
The notary fee for a $500,000 property is calculated at 4 basic salaries, currently $1,544.
As you can see the notary fee is not insubstantial.
The Property Register fee is also on a sliding scale. Up to $200,000 (sales price) costs between $15 and $250 to inscribe the deed. Over $200,000 is calculated at .2% (.002) of closing price.
So for a $500,000 property the Property Register would charge $1,000.
Legal fees range from $300-$600 (in our region) depending the attorney and how involved the closing is.
The above scenarios assume a straightforward closing.
Should there be terms involved, making a sales contract necessary, the notary fee doubles as the ‘Promesa de Compraventa’ must be notarized and the cost is calculated based off of the value of the contract.
Here are a few closing costs scenarios based off of today's costs (remember the assessed value may be higher than the actual sales price – fees are calculated based off of whichever’s higher):
Closing Price: $50,000
Transfer Tax: $550