ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
urban bureaucracy. The main ongoing proposals and reforms are as follows. Updates to PUGS and Eco-efficiency Regulations (Municipal Level - DMQ) Proposal There is an ongoing review and reform proposals with - in the Metropolitan Council of Quito aimed at making territorial intervention zones more flexible. Probability and enforcement it is highly probable and that the proposal will be auc - tioned, subject to progressive implementation. Met - ropolitan resolutions adjusting these parameters are debated and updated annually, with strong pressure from the construction sector to transition the approv - al processes from several months to an automated approval system under the responsibility of a profes - sional. Consolidation and Expansion of Tax Incentives Proposal Following the recent implementation of economic effi - ciency laws that reduced VAT to 5% for certain con - struction materials and allowed VAT refunds for real estate developers, there are proposals from industry guilds to elevate these incentives into long-term state policies. Probability and enforcement It is very probable that the proposal will be auctioned. The central government considers the construction sector a pillar for job creation; therefore, Internal Reve - nue Service ( Servicio de Rentas Internas – SRI) resolu - tions to expedite these refunds are being continuously adjusted in the short term.
• Ownership: The absolute right to enjoy and dis - pose of a property, provided it does not contravene the law or the rights of others. • Mortgage: The most common security interest in commercial and residential markets. It grants the creditor the right to pursue the asset, sell it at pub - lic auction and be paid with the proceeds in case of default. • Usufruct: A right to use and enjoy a third party’s property while preserving its form and substance. It divides ownership into bare ownership and usu - fruct (right to rent and use). • Easements: Charges imposed on a property for the benefit of another. Common examples include tran - sit, aqueduct and utility easements. • Trusts: Though regulated by the Stock Market Law, this is the preferred vehicle for large-scale develop - ments. 2.2 Laws Applicable to Transfer of Title The transfer of real estate is a formal and solemn pro - cess regulated uniformly across the country. • The Civil Code: Governs the “title and mode” theory. The title (sale, exchange, donation) must be executed via public deed before a notary. • The Law of Registry: Establishes that property transfer is only perfected and opposable to third parties once the deed is recorded in the Land Reg - istry of the canton. • The Organic Code of Territorial Organization: Regu - lates municipal taxes ( alcabalas and plusvalía ) and empowers Municipalities to manage urban plan - ning and land use. • Special considerations: While the transfer process is identical for all asset types, specific laws may apply: (a) the Horizontal Property Law – requires a “no- debt” certificate from the condo administration for units in buildings or shopping centres; and (b) the Organic Law on Rural Lands – imposes restrictions on the concentration of agricultural land and requires state authorisation for trans - fers in border or national security zones. 2.3 Effecting Lawful and Proper Transfer of Title Transferring title in Ecuador is strictly formalistic.
2. Sale and Purchase 2.1 Categories of Property Rights
In the Ecuadorian jurisdiction, real estate rights are strictly regulated by the Civil Code (Book II) under a numerous clauses principle. The main categories are as follows.
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