Buying a property in Colombia can be a bit of a crap-shoot. We have seen cases where properties were sold off quickly at low prices – or where they languished on the market for years due to a ridiculous price.

Another item to note – is the total lack of an MLS listing in Colombia. This also muddles the waters tremendously on property values.

Fair and Honest Property Prices in Colombia

Essentially, you have the right to set your own price – within reasonable limits. One case that has always stood out to me is one particular person who has their “custom built home” on the market for over 850,000,000 COP.

Even if he does get what can be considered a ridiculously high price, it will drive the taxes up in the area he lives in. Not to mention the fact that there is an “invasion,” or homes built by poor locals – on the place which have become the property of said possessors.

Even so, much of the finish work, while pretty – isn’t the “first world” quality he thinks it is. It would be interesting to see what a professional assessor has to say about the actual value. Has it been fairly priced? Or did someone set their price according to their own perceived value?

The following was written by two accredited lawyers in Manizales, Colombia = Cristian Daza and Julian Yepes. Translation and editing by Erin Donaldson, editor of Coffee Axis Travel.

Does the Property Really Cost What the Owner Says it Does?

¿EN REALIDAD LA PROPIEDAD CUESTA LO QUE EL VENDEDOR DICE?

It is very common to hear from real estate sellers, that their property has special attributes and they must be paid the money they want because otherwise they will not sell it. While it is true that they the option of not selling and to conserving their assets, it is also true that they do not have the absolute right to collect any sum of money. Colombian regulations are in place to protect the buyer in such situations through its Civil Code.

Es muy común escuchar a los vendedores de bienes raíces, que su propiedad tiene atributos especiales y se les debe pagar el dinero que ellos desean porque de lo contrario no lo venden. Si bien es cierto que ellos están en su opción de no vender y conservar su bien, también es cierto que ellos no tienen el derecho absoluto de cobrar cualquier suma de dinero, pues la normatividad colombiana protege al comprador en dichas situaciones por medio de su Código Civil. 

The protection we are talking about is regulated in article 1947 of the Civil Code, which contemplates the enormous, or huge injury (lesion enorme) in the contract of sale. This phenomenon occurs when the seller receives an amount of money over or under the fair price (or commercial value) and the buyer suffers a huge injury when the price of the real estate is not a fair price which can ultimately result in the termination of the contract of sale.

La protección de la que hablamos se encuentra regulada en el artículo 1947 del Código Civil, el cual contempla la lesión enorme en el contrato de compraventa, expresando que ocurre este fenómeno cuando el vendedor recibe una cantidad de dinero inferior o superior del justo precio (valor comercial) y el comprador sufre la lesión enorme cuando el justo precio del bien raíz es inferior a la mitad del precio pagado por él, dando lugar a la rescisión del contrato de compraventa. 

Leaving this clarity, it is time to say that the people who can certify the fair price (commercial value) of a property, are the appraisers who are duly registered in the National Registry of Appraisers, in the National Association of Real Estate and Real Estate Colleges “Asolonjas“, in the Corporation National Registry of Appraisers of Movable and Real Property or in the National Unemployment Corporation of Appraisers (ANA), entities which are attached to the Superintendence of Industry and Commerce.

When hiring a professional in this matter it is important to review his credentials to ensure are carefully and legally obtained, since in the future such an opinion could be attacked due to lack of suitability.

Dejando esta claridad, sea el momento de decir que las personas que pueden certificar el precio justo (valor comercial) de una propiedad son los avaluadores debidamente inscritos en el Registro Nacional de Avaluadores, en la Asociación Nacional de Lonjas y Colegios Inmobiliarios “Asolonjas”, en la Corporación Registro Nacional de Avaluadores de Bienes Muebles e Inmuebles o en la Corporación utoregulador Nacional de Avaluadores (ANA), entidades adscritas a la Superintendencia de Industria y Comercio, por lo cual al momento de contratar un profesional en esta materia es importante revisar con detenimiento sus credenciales, toda vez que a futuro dicho dictamen podría ser atacado por falta de idoneidad. 

An example of the factors that must be taken into account when assessing real estate assets, are the following: location (urban or rural real estate), land use (document issued by the Urban Curators or by the Planning Secretaries of each municipality), access roads, public services that the property has (water, electricity, internet access, gas), easements, construction status, improvements, submission to horizontal property, limitations on ownership (environmental reserves, room use, commercial , etc).

Un ejemplo de los factores que se deben tener en cuenta al momento de avaluar un bien son los siguientes: ubicación (inmueble urbano o rural), uso de suelos (documento expedido por las Curadurías Urbanas o por las Secretarías de Planeación de cada municipio), vías de acceso, servicios públicos con los que cuente el inmueble (agua, electricidad, acceso a internet, gas), servidumbres, estado de las construcciones, mejoras, sometimiento a propiedad horizontal, limitaciones al dominio (reservas ambientales, uso de habitación, comercial, etc).

Now, what to do when a huge injury occurs? In the case of the buyer, the seller must complete the fair price by adding the one tenth to the value, and when it comes to the seller, he may consent to the rescission (or return) of the excess value received over what is deemed to be the fair price, and increased by one tenth.

Ahora bien, ¿Qué hacer cuando se presenta la lesión enorme?  En el caso del comprador este debe completar el precio justo restándole a este la décima parte, y cuando se trata del vendedor este podrá consentir en la rescisión o restituir el exceso del valor recibido sobre el justo precio, aumentado en una décima parte. 

For example, if the purchase was made for one hundred million pesos ($ 100,000,000) and the commercial value (fair price) is forty million pesos ($ 40,000,000) there is a huge injury for the buyer, and he has the right to ask for the return of sixty-six million pesos ($ 66,000,000). This is in accordance with article 1948 of the civil code, where the seller may consent to the rescission or return the excess of the value received over the fair price, increased by one tenth.

Por ejemplo, si la compra se hizo por cien millones de pesos ($100.000.000) y el valor comercial (justo precio) es cuarenta millones de pesos ($40.000.000) hay lesión enorme para el comprador y éste tiene derecho a que se le devuelvan sesenta y seis millones de pesos ($66.000.000), esto porque de acuerdo con el artículo 1948 del código civil, el vendedor podrá consentir en la rescisión o restituir el exceso del valor recibido sobre el justo precio, aumentado en una décima parte. 

This hypothesis is valid in the case where the parties want to continue with the business through mutual agreement. If this is not their wish, the contract must be terminated, and everything will be returned to their point of origin, with the respective return of the money and the real estate, but this will be the subject of another article.

Esta hipótesis es válida en el caso en que las partes quieran continuar con el negocio, pero si este no es su deseo se debe rescindir el contrato, buscar que las cosas vuelvan a su punto de origen, con la respectiva devolución del dinero y el bien inmueble, pero esto será objeto de otro artículo. 

An important point to keep in mind is that there is a 4-year term limit, from the purchase, to file a termination action for a huge injury. After this time the opportunity to sue will no longer be effective.

Un punto importante a tener en cuenta es que existe un término límite de 4 años a partir de la compra, para interponer una acción de rescisión por lesión enorme, luego de este tiempo la oportunidad de la persona que desea demandar ya no puede hacerse efectiva. 

There are particular cases where the property that was negotiated, after the contract of sale was made, where it has changed too much, due to new constructions or improvements. This is a situation that forces us to look at the case in greater detail, but without affirming that the termination is not impossible. There is a process the proof, of how the property was at the time of the sale, and in what state it is at the moment in which the decision to attack the contract for huge injury is made, after which the changes/fixes that the buying party has done.

Hay casos particulares donde la propiedad que se negoció, luego de realizarse el contrato de compraventa, ha cambiado demasiado, debido a nuevas construcciones o mejoras, situación que obliga a mirar el caso con mayor detenimiento, pero sin afirmar que la rescisión no sea posible, pues ya en el proceso deberá aportarse la prueba de cómo estaba el inmueble al momento de la compraventa y en qué estado se encuentra en el momento en el cual se tome la decisión de atacar el contrato por lesión enorme, luego de los arreglos que la parte compradora le haya hecho. 

However, as we say most of the time, each particular case has points that must be analyzed carefully before initiating a judicial process. The intent of this article is to inform people who may have the right to complain because their case is framed in a situation of abuse, either by the buyer or by the seller. Remember, not knowing your rights is almost the same as not having them.

Con todo, como lo decimos la mayoría de las veces, cada caso particular tiene puntos que deben ser analizados con detenimiento antes de iniciar un proceso judicial; lo que se pretende con este artículo es informar a las personas que pueden tener derecho a reclamar porque su caso se enmarque en una situación de abuso, sea por parte del comprador o por parte del vendedor, no conocer los derechos es casi lo mismo que no tenerlos. 

Conclusion

It is easy to consider foreign investment as an opportunity to sell higher. And, this has already happened. On the other hand, a little bit of greed can cause a lot of damage – and it can come back to haunt your pocketbook. The weight and responsibility is on YOU to ensure that your property is priced fairly and justly, even as the buyer MUST do his own due diligence.

Written by Cristian Camilo Daza & Julian Yepes.

Attorney at Law | Manizales, Colombia

Crisitian Daza is an established attorney and together with his team is ready and willing to help you organize your Real Estate Purchase in Colombia for the best possible outcomes. You can schedule an appointment with him via phone or WhatsApp: +57 320-572-4423 Office: 20 A street No 21 -30 Manizales Office #603 Spanish and English.

LinkedIn: linkedin.com/in/cristian-camilo-daza-lópez-97ab6413b/