ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
combining a base rent with a percentage of gross sales to ensure income remains directly correlated to the property’s commercial success. 6.6 Determination of New Rent In the case of rent being either changed or increased, the new value is usually determined by: • a fixed percentage (commonly between 3% and 5% annually); • the consumer price index ( índice de precios al con- sumidor ) of Ecuador; and • market review clauses for long-term leases (over five years). 6.7 Payment of VAT Under Ecuadorian Law, commercial, office and indus - trial leases are subject to 12% VAT (or the current rate, which is 15% in 2026). Residential leases are exempt from VAT. 6.8 Costs Payable by a Tenant at the Start of a Lease Other than rent, there are costs that are applicable to a tenant at the start of a lease. These include: • security deposit – usually equivalent to two months of rent; • first month’s rent paid in advance; and • legal/notary fees – for the recognition of signatures or registration of the contract. 6.9 Payment of Maintenance and Repair Concerning the need for maintenance and repair of areas used by several tenants, the law states that these costs are covered by the condominium fees. While the landlord is legally responsible for these as the owner, commercial leases typically transfer this cost to the tenant as an additional monthly payment. 6.10 Payment of Utilities and Telecommunications Utilities and telecommunications that serve a property occupied by several tenants are paid either by indi - vidual services or common areas:
• individual services – electricity, water and internet are usually paid directly by the tenant through indi - vidual meters; and • common areas – electricity and water for common areas are included in the condominium fees. 6.11 Payment of Property Taxes Under Ecuadorian law, the landlord is legally respon - sible for paying the real estate tax and any other taxes related to the ownership of the property. Commercial Practice In commercial, industrial or retail leases, it is com - mon to include a contractual clause where the tenant agrees to reimburse the landlord for the cost of the property tax as part of the “additional rent” or “service charges”. However, before the tax authority (munici - pality), the landlord remains the sole debtor. 6.12 Insurance Issues In the Ecuadorian commercial leasing market, the standard practice is for the landlord to maintain an “all-risk” property insurance policy, the cost of which is typically passed through to the tenant via com - mon area maintenance fees or direct reimbursement. These local policies provide comprehensive coverage including fire, lightning and natural disasters, such as earthquakes or volcanic eruptions, as well as specific protections against strikes and civil commotion. It is also customary for lease agreements to mandate that tenants maintain their own third-party liability insur - ance and separate coverage for their specific inven - tory and interior improvements. Regarding business interruption and rent recovery dur - ing the pandemic, the experience in Ecuador was sig - nificantly restricted, as most standard policies require physical damage to the property as a trigger for cov - erage. Although some larger corporations attempted to claim under infectious disease extensions, insurers generally denied these claims by citing global exclu - sions or arguing that government-mandated closures did not constitute physical damage. As of 2026, while the pandemic is no longer a driver for active claims, its legacy has led to the inclusion of much more precise pandemic exclusion or inclusion clauses in new com - mercial contracts to provide clarity for future events.
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