ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
quarterly risk ratings, further increasing annual com - pliance expenditure.
the tenant can waive – but the landlord must respect unless a legal cause for termination exists. Rents In theory, the Tenancy Law limits the annual rent to 10% of the municipal appraisal of the property. In practice, for commercial, office and high-end retail, parties freely negotiate market prices, often bypassing the statutory limit through “service” or “maintenance” additions. 6.4 Typical Terms of a Lease In the Ecuadorian commercial real estate market, lease terms for business premises are structured to balance operational stability for the tenant with asset protection for the landlord. These agreements typi - cally follow standardised industry practices regarding duration, maintenance responsibilities and payment cycles. • Length: Typically three to five years for offices and retail, often with renewal options. • Maintenance: The landlord is responsible for structural repairs and keeping the property fit for its intended use. The tenant is responsible for “loca - tive repairs” (minor wear and tear and damage caused by daily use). • Frequency: Rent is almost exclusively paid month - ly, usually within the first five days of the month. 6.5 Rent Variation Rent stability in Ecuador is governed by contractual freedom within the framework of the Tenancy Law. While rent is presumed fixed for the duration of a lease, adjustments are permitted if explicitly stipulated in the written agreement. Consequently, it is standard practice to include annual escalation clauses to coun - teract inflation or market review provisions for long- term institutional leases, ensuring the rent reflects fair market value through formal appraisals. The legal framework also distinguishes between fixed terms and indefinite extensions. If a tenant remains after a lease expires with the landlord’s tacit consent, the arrangement converts into an indefinite term, which can complicate future rent increases without a new contract. In the high-end retail sector, landlords often mitigate this by using a variable rent model,
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The Ecuadorian legal system provides several mecha - nisms to utilise real estate without full ownership. The most prevalent is the lease agreement, a consensual contract governed by the Civil Code and the Tenancy Law, where a lessor grants temporary use in exchange for rent. Beyond standard leases, the usufruct is a for - mal “real right” that must be granted via public deed and recorded in the Land Registry. Unlike a lease, it allows the holder to both occupy the property and perceive its “fruits” for a fixed term – or for life. For gratuitous use, the commodatum serves as a “loan for use” without rent, commonly employed between related corporate entities or in PPPs. Finally, modern commercial hubs often utilise right of use or space schemes. These arrangements combine lease elements with service-level agreements, offering high operational flexibility and shared common area man - agement while avoiding the rigidities of traditional ten - ancy regulations. 6.2 Types of Commercial Leases Legally, there is a distinction based on the location and purpose: • urban leases – governed by the Tenancy Law, this applies to most offices and retail spaces; • rural leases – governed by the Civil Code and agrarian regulations, specifically for agricultural or industrial land outside urban perimeters; and • commercial/business leases – while not a separate “legal category” in the Code, they are treated as urban leases but with broader contractual freedom for corporate parties. 6.3 Regulation of Rents or Lease Terms In Ecuador, rents or lease terms are usually freely negotiable. However, the Tenancy Law establishes a statutory minimum of two years for all leases, which
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