Closing procedure and closing costs in Colombia
Making the closing is the proverbial "signing on the dotted line." Prepare to pay for closing costs.
Closing procedures will vary according to buyer and seller wishes. In some cases, the buyers and sellers (as well as their Real Estate Agents) will all attend the closing. In other cases, each one present separately. The closing will take place at a Notary’s office. In general, though, the closing will be attended by all of the buyers involved and their Real Estate Agent, who has reviewed all of the components of the sale contract and who is the one who will say "sign here" more times than you have ever heard in your life.
To get everything ready before attending the closing, the following documentation has to be delivery at the Notary's office to elaborate the final deed:
- Certificate of tradition updated no greater than 30 days. When buying new home from developers they must provide this information.
- Photocopy of buyer’s and seller’s ID.
- Power of attorney issued by the buyer, if applicable
- The Purchase agreement or sales contract
- Tax free property certicate (Paz y Salvo Predial) which indicates that all municipal taxes on the property have been paid.
- Tax free value gain property certicate (Paz y Salvo de Valorización) which indicates that all taxes related to the increases in the value of the property due to improvements at the local area have been paid.; generally levied by all municipalities.
- If the property is subject to a condominium regime (in the case of condos or houses in a residential complex) a payment certificate saying that all maintenance and other fees are up to date. Alternatively, the seller may submit a notarized copy of the public deed that contains the condominium or association rules governing the property.
- For used properties, the effective document of deed of the property.
Do you think is quite paperwork? Don’t worry. If you have done things properly since the beginning, all those papers come alone in the process.
Besides, you already have a professional bilingual real estate agent by your side. Right?
So you just have to worry about arranging of the trip and coming to sign.
Notary office takes 1 to 2 business days preparing the deed. After this time, the document is ready to be signed and you had the time for collecting closing costs.
The notary's office gives both parties about 8 to 10 business days to sign it.
Be sure that your name and I.D is well written before you signing it. Any mistake in the deed will give rise to make a correction so come back to the Notary office and sign again.
At the Notary’s office:
- Both Seller and Buyer sign and finger print.
- The Buyer must be ready to pay Seller balance of the sales price. Normally buyer has already paid to seller before meeting at the notary’s office the total amount, via a money transfer, Cashiers Check drawn on a Colombia bank, or cash.
- Seller pays for, and presents to the Notary, the proper amount of Sales Tax
- Buyer pays the notary’s fees agreed in the purchase agreement.
Within a time maximum of 48 hours the Notary's office usually sends off Three copies of the deed. One of this is for the legal Registration at the Government’s Registry Office.
Closing Costs And Related Fees
You have to reserve some extra money for closing costs and related fees. They are about 2% to 2.5% of the agreed upon Sales Price.
Closing costs includes:
√ Notary expenses
They are 0.5% upon deal value (It includes notary's fees, authentic copies, IVA sales tax, etc.)
√ Register fees (0,5%)
√ Local Taxes and other charges (1%). This includes municipality taxes (Boleta Fiscal).
√ Income Tax (Only for the seller 1%)
This costs are usually split in both parties, or it could be agreed.
The following are the costs that normally each part have to assume:
To the Buyer
√ Title enquiry
√ Appraisal if needed
√ Notary's office fees as agreed
√ Register's fees as agreed
√ Mortgages costs. If you are buying using a mortgage loan, notary and register fees must be paid and are calculated according to the amount of the mortgage.
To the Seller
√ Tax free property certicate (Paz y Salvo Predial) which indicates that all municipal taxes on the property have been paid.
√ Tax free value property certicate (Paz y Salvo de Valorización) which indicates that all taxes related to the increases in the value of the property due to improvements to the property or area have been paid.
√ Notary's office fees as agreed
√ If the seller is an individual, then 1% of the sales price is deducted as withholding tax (Retencion en la fuente).
It is deducted at the source with the objective that the income does not leave the country with out being taxed.
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