Ecuador Real Estate laws should be part of the information you will research before moving to this country. It is important that you understand the specific laws that apply to Real Estate in Ecuador and that you will comply with once you live in a new country. Regardless of where you plan to retire or relocate, you must be a law-abiding resident to avoid any unfortunate incidents with the local government.
Foreigners often need to understand the rental laws in their host country because most of them like the flexibility that comes with this type of living arrangement. It is important to be aware of this so that you can avoid any adverse incident with your future landlord or landlord or perhaps even a Real Estate purchase in Ecuador. You want to avoid violating any of the local laws and, at the same time, you want to know your rights as a tenant and as an owner of Real Estate in Ecuador.
4 clauses of the Ecuador rental law that you should be aware of and how it affects real estate in Ecuador
You should be happy to know as a tenant that Ecuador real estate laws regarding rental housing are tenant friendly.
To give you a brief understanding of your rental rights in Ecuador, here are the 4 important details to know.
In the lease period.
Most rental contracts, according to Ecuador Real Estate laws, are valid for one year. However, the tenant has the right to request a two-year lease. During this time, the landlord or landlady cannot increase the rent. So if you know you can stay in a home for at least 2 years, you may want to ask the owner for a two-year lease. If they agree, but they still raised his rent in his second year, then he can file a complaint with the rent court (Tenancy Judge). If the court rules against the owner, he will be fined for violating the Real Estate law in Ecuador.
About the termination of the contract.
In case of early termination, notice is expected from the party that initiated the termination of the Real Estate contract. If initiated by the landlord or owner, the tenant must be given at least 3 months’ notice so that he has enough time to find another house to move into. If the tenant or lessee started it, he must give the landlord at least one month’s notice before the date he is moving out. There may be some owners who force tenants to pay the remaining months in the contract but the latter is not obliged to comply.
About the rental price.
The laws of Ecuador on the rental of homes and Real Estate in Ecuador, the landlord or lessor can only collect rent based on the value and current condition of the home. The law cites a formula that determines the percentage of the rent. That means if you’re renting a big house and in an affluent neighborhood, expect to pay more in rent compared to houses in more modest communities. If the landlord wants to increase her rate beyond what is allowed, she must file a petition in rent court. You also need to know that current law does not allow landlords to make automatic annual increases in rent.
On the legality of the rental contract.
It is also specified in the law that the rental contract is only valid if it is duly notarized. If the lease you signed is not, then the landlord or landlord cannot take legal action against you. But if they have a copy of a notarized rental agreement, that can be presented as a valid document in court.
Important modifications to the lease law in 2012 for Real Estate in Ecuador
There have been amendments to this law and you may want to keep abreast of all of them. In 2012, the president of Ecuador vetoed the Reforms to the Tenancy Law and sent them to the National Assembly for a second debate. In February 2013, the approved text of the reformed law (Ley Amendificadora de la Ley Codificada de Arrendamientos) was sent to the President for his approval, veto or disapproval.
The main modifications are the following:
- Municipalities have the obligation to have a Real Estate Leasing Registry Office in Ecuador that has tenants and helps keep the records of the lease contracts. The landlord must obtain a record within 30 days from the date of the rental agreement. They must provide proof of a security deposit and rental certificate. Non-compliance by the landlord and late registrations will be fined up to 10% of the rental price. This office is also responsible for determining the highest rental price for a property and ensuring the tenant’s deposit.
- The rental price of any property must not be greater than 1/12 of 10% of its commercial appraisal. The landlord or landlady will be fined for any violation of this clause. Nor are they allowed to require the tenant to pay any expense that involves horizontal property regimes (or areas co-owned and used by other people). They are also not authorized to turn off the tenant’s utilities even if the rent has not been paid.
- Security deposits are allowed, but must not exceed the value of two monthly rents. This amount should not be retained by the landlord or the owner, but must be deposited at the Leasing Registry Office.
- The landlord or owner can terminate a rental agreement if the tenant fails to make two full monthly rent payments. This is true even if the payment is simply incomplete. Non-payment of utilities for more than three months is also a valid reason for termination of the rental agreement.
- In case of litigation, the reform indicates that it can be done before a location judge through a verbal procedure.
Ecuador Real Estate laws change over time, so you should be aware of what is happening around you in case you start living in this country.