ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
ers can enter into agreements with the municipality to increase building density or height beyond the base zoning. In exchange, the developer provides “com - pensation” to the city, which can take the form of cash payments, land for public use or the execution of specific urban infrastructure projects. As of 2026, the application of the COD has been further refined under the Organic Law on Land Use and Management ( Ley Orgánica de Ordenamiento Territorial, Uso y Gestión de Suelo – LOOTUGS) framework to provide clearer guidelines for municipal implementation. For larger developments, investors can utilise special development zones. These allow for the negotiation of specific intervention plans or partial plans, facilitating customised zoning and infrastructure co-ordination between the private developer and the local govern - ment. Additionally, public-private partnerships (PPPs), while traditionally focused on large-scale infrastruc - ture, are being used for urban renewal projects where the public authority provides land or regulatory ease in exchange for the private sector developing facilities of public interest. 2.9 Condemnation, Expropriation or Compulsory Purchase The Ecuadorian government can apply expropriation for public utility or social interest. However, it must undergo a legal process to do so: • formal declaration of public utility by the govern - ment entity; • negotiation phase based on the municipal apprais - al; and • if no agreement is reached, deposition by the entity of the appraised value in court to take posses - sion, with the final “fair price” litigated in a judicial process. 2.10 Taxes Applicable to a Transaction Real estate acquisitions in Ecuador are structured as either asset deals (direct property transfer) or share deals (transfer of equity in the holding entity), each with distinct fiscal outcomes. In an asset deal, the buyer typically pays the transfer tax ( alcabala ) and registration fees, totalling approxi - mately 1–2% of the property value. The seller is
responsible for the capital gains tax ( plusvalía ), which is generally 10% of the profit. Conversely, a share deal avoids these municipal taxes because the legal title - holder remains unchanged. In this scenario, the seller instead pays 10% income tax on the capital gains from the share disposal. Notably, a change of control via a share deal does not require updating the Land Registry, offering a more discreet and administratively simpler transition for large portfolios. 2.11 Legal Restrictions on Foreign Investors Ecuador grants national treatment to foreign inves - tors, with two critical exceptions: • national security zones – foreigners are constitu - tionally prohibited from owning land in border areas or designated national security zones; and • agricultural land – foreign entities or local compa - nies controlled by foreigners require prior authori - sation from the National Agrarian Authority to acquire rural land for agricultural or forestry pro - jects to prevent land concentration. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate The commercial real estate financing ecosystem in Ecuador has evolved through a combination of tra - ditional banking, capital markets and private equity. Standard acquisitions are typically funded via com - mercial loans, where private and public banks finance up to 80% of property value based on construction progress. In the social and public interest hous - ing segments – social interest housing ( vivienda de interés social – VIS)/priority interest housing ( vivienda de interés público – VIP) – financing can reach up to 95% of the value. The family income limit is set at approximately USD3,055 (unified basic salary ( salario básico unificado – SBU)6.34) as of 2026 (supported by government-subsidised rates of 4.99% and trust structures). For large-scale portfolios, developers extensively uti - lise real estate mercantile trusts. This structure manag - es capital from pre-sales and private equity, providing a layer of legal protection and financial transparency
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