Property Due Diligence in Medellin, Colombia: 5 Key Points to Keep in Mind When Buying a Property
t is normal to feel apprehensive when buying property in another country. Each country has different rules, and it can be overwhelming to commit your resources, savings, or investments while depending on others. This short guide will help simplify the process.
First, it is important to note that in Colombia, especially in rural properties, there is a strong tendency toward informality. For this reason, it is common to encounter properties being sold by non-owners, sales without deeds, or even entire floors built under the construction license of another house. Due to this informality, conducting a meticulous study of the legal status, nature, and history of the property is essential to identify a range of factors, including: who the legal owners are, whether the legal records match the physical property, if there are mortgages, lawsuits, foreclosures, or auctions affecting the property, or if there are squatters or third parties unrelated to the sellers who could jeopardize your investment.
Covering all the intricacies of a due diligence process would be beyond the scope of this article, so here are five specific and sometimes overlooked points that should be thoroughly reviewed when negotiating a property purchase in Medellín or elsewhere in Colombia:
1. Registered vs. Actual Property Area
In Colombia, it is very common for a property’s registered area in the deeds to be smaller than its actual physical area. For example, the purchase might involve “air rights,” a phenomenon common in certain neighborhoods of the city. It is crucial to verify that the areas match across the Horizontal Property Regime (for condominiums), the Certificate of Freedom and Title (property registry), the purchase deed, and the cadastral certificate. Failing to do so can result in fines from urban planning authorities for unregistered areas.
2. Zoning Laws and Co-Ownership Restrictions
If your goal is to buy property for investment purposes, it is important to study land use regulations and co-ownership rules (for properties within residential complexes) to determine if your investment plans are viable for the area. The most common example, though not the only one, is short-term rentals (Airbnb). Depending on the zone—and by “zone,” I do not mean the neighborhood but the property’s exact location—short-term rentals (less than 30 days) may or may not be permitted. Even in permitted zones, the co-owners’ association might have banned this practice. Therefore, before finalizing a deal, have a lawyer review these documents to confirm whether your business model is legally viable.
3. Verify the Seller’s Full Ownership Rights
In Colombia, there are legal mechanisms where a property owner may have transferred partial rights to third parties, either to secure debt payments or voluntarily. Examples include the transfer of bare ownership (nuda propiedad), usufruct rights, or joint ownership (proindiviso). These situations can mean that the seller is not the full owner, requiring all parties with rights to the property to be involved in the negotiation.
4. Conduct a Background Check on the Seller
This is a critical step where even prestigious banks in Colombia have made mistakes. Investigating the seller can reveal risks to your investment. For example, checking their judicial history might uncover pending property seizures, while reviewing their tax or administrative status can prevent money laundering risks that could lead to losing your investment.
5. Review Municipal Plans for Urban Projects
Few lawyers in Medellín conduct this check, partly because navigating the urban planning system of cities like Medellín is complex. However, this step is crucial. Municipal projects such as roads, parks, or urban renewal initiatives can result in the loss of green areas or even the entire property. A current example is the potential impact of the “Metro de la 80” project in western Medellín. Often, neither sellers nor brokers are aware of these plans, making it vital to work with a qualified lawyer.
Extra Tip: Always Verify the Property’s Physical Possession
Before starting negotiations and again just before closing the deal, ensure the property has no squatters, tenants with pending disputes, or other occupants. This prevents unexpected losses after investing.
By addressing these points, you protect your investment from common pitfalls in Colombia’s real estate market. At Start In Colombia, we conduct thorough due diligence to secure your transactions
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Navigating Colombia’s complex real estate landscape requires more than just caution—it demands expert legal guidance. A single oversight in due diligence can lead to costly fines, legal disputes, or even the loss of your investment. At Start In Colombia, our specialized real estate attorneys combine decades of local expertise with a meticulous 25-point due diligence process to safeguard your transactions. From verifying hidden liabilities to ensuring compliance with ever-evolving regulations, we turn uncertainty into confidence. Don’t risk your investment to guesswork. Contact us today for a comprehensive legal review tailored to your goals. Your peace of mind is our priority.
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