ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
6.13 Restrictions on the Use of Real Estate Under the principle of freedom of contract in the Civil Code, a landlord can explicitly define and restrict the use of the property. Any use contrary to the contract constitutes a breach and a legal ground for termina - tion. • Zoning and municipal restrictions: Regardless of the contract, the municipality imposes land-use restrictions through the PUGS. A tenant cannot use a residential property for industrial purposes even if the landlord agrees, as this requires a Uni - fied Economic Activity Licence ( Licencia Única de Actividades Económicas – LUAE). • Condominium regulations: If the property is part of a building or complex, the Internal Co-ownership Regulation may impose further restrictions, such as on noise, operating hours or the types of commer - cial activities allowed. 6.14 Tenant’s Ability to Alter and Improve Real Estate Under the Tenancy Law, subleasing or assigning the lease is prohibited unless the landlord provides express written authorisation. Most commercial con - tracts include a strict “no-sublease” clause. 6.15 Specific Regulations Real estate leases in Ecuador are categorised by use, balancing the Tenancy Law’s rigid protections for residential housing – such as mandatory two- year terms – with the greater contractual freedom afforded to commercial and industrial assets. While office and retail leases often utilise complex hybrid models under the Commerce Code, industrial “built- to-suit” arrangements are primarily governed by the Civil Code, allowing for sophisticated negotiations on infrastructure and liability. Specialised sectors like hotels fall under the Tourism Law, which treats occupancy as a commercial ser - vice to facilitate expedited evictions. As of 2026, the temporary pandemic-era protections of the Humani - tarian Support Law have fully expired, restoring the standard legal framework and ensuring predictable enforcement across all property classes.
6.16 Effect of the Tenant’s Insolvency Most commercial leases in Ecuador include a default clause stating that the filing for insolvency, bankruptcy or liquidation by the tenant is a ground for automatic termination or allows the landlord to terminate the lease unilaterally. Under the Companies Law and the Civil Code, the following applies: • stay of executions – if a tenant enters a formal reor - ganisation ( concordato ), there may be a temporary stay on eviction proceedings to allow the company to survive; • preference of credits – unpaid rents have a certain level of priority (fourth-class credits), but they rank below labour claims and taxes; and • trust advantage – if the lease is managed through a mercantile trust, the asset is shielded, but the cash flow would still be part of the tenant’s estate if they are the ones paying. Practical Outcome In practice, landlords often seek to terminate the lease as soon as signs of insolvency appear to avoid the property being locked in a lengthy liquidation process. 6.17 Right to Occupy After Termination or Expiry of a Lease Insolvency does not automatically terminate a lease. However, the bankruptcy of the tenant is a legal cause for the landlord to request termination of the contract under the Tenancy Law. The landlord becomes a “priv - ileged creditor” for unpaid rents. 6.18 Right to Assign a Leasehold Interest The legal framework for leasehold alienation in Ecua - dor is primarily defined by the Tenancy Law, which establishes a restrictive default position regarding the transfer of leasehold interests. Unlike jurisdictions that allow free assignment unless specifically prohibited, Ecuadorian law requires express authorisation to pro - tect the landlord’s right to control who occupies their property. Consequently, the validity of a sublease or assignment hinges on formal written consent, the absence of which constitutes a material breach of the agreement.
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