The Perilous Trap of "Rights of Possession" in Ecuadorian Real Estate

As an Ecuadorian lawyer specializing in real estate and foreign investment, I have seen far too many expatriates arrive in our beautiful country only to be ensnared by one of the most perilous traps in our property market: land sold with "Rights of Possession" (Derechos de Posesión). These deals, often found in rural areas or on the fringes of cities like Cuenca, promise an affordable entry into property ownership but deliver a legal nightmare. My goal is not merely to warn you, but to arm you with the specific legal knowledge needed to distinguish a secure investment from a catastrophic mistake.

The fundamental conflict arises from the misinterpretation of two distinct legal concepts under Ecuadorian law: Dominio (Ownership) and Posesión (Possession). True, legally defensible ownership (Dominio) is established only through a public deed (Escritura Pública) that has been formally recorded (inscrita) in the local canton's Property Registry (Registro de la Propiedad). This is the only way to secure title.

Possession (Posesión), as defined in Artículo 702 of the Ecuadorian Código Civil (Civil Code), is merely the holding of a thing with the intention of being its owner. It is a state of fact, not a registered legal right. While our laws do provide a pathway to convert long-term possession into ownership through a lawsuit known as prescripción adquisitiva extraordinaria de dominio, this is a complex, costly, and uncertain judicial process. Simply "buying" possession from someone is not a transfer of ownership; it is, at best, the purchase of a potential, and often weak, legal claim.

The Mirage of a Bargain: The True Cost of "Rights of Possession"

The primary allure of these properties is their drastically reduced price. However, this discount is a direct reflection of the immense legal risk you are inheriting. Here’s a breakdown of the specific dangers:

1. No Legal Title or Security: This cannot be overstated. Without a registered title, you are not the legal owner. You are an occupant. Your claim can be challenged at any time by the true title holder, their heirs, or the State. You cannot legally mortgage the property, use it as collateral, or freely sell it with a guaranteed title.

2. The Impossibility of a Simple Title Transfer: The document you receive when "buying" possession is typically a private agreement, sometimes notarized for a veneer of legitimacy, often titled Cesión de Derechos Posesorios. This document is not registrable at the Property Registry. It does not grant you title. To gain title, you would need to initiate a full-blown lawsuit, proving to a judge that you (and potentially your predecessors) have held uninterrupted, peaceful, and public possession for a minimum of fifteen years, as stipulated by Artículo 2411 of the Código Civil. This is a high evidentiary bar to clear.

3. Vulnerability to Eviction and Total Loss: The registered owner can appear at any time and initiate legal proceedings to reclaim their property. Because their ownership is recorded and yours is not, the law is overwhelmingly on their side. You could be evicted, losing not only what you paid the "seller" but also any investment you made in improvements or construction.

4. Inability to Obtain Financing or Permits: No Ecuadorian bank will issue a mortgage against a property without a clear, registered title. Furthermore, obtaining municipal permits for construction, renovations, or even business operations is impossible without being the registered owner. You will be unable to formalize your investment.

5. Inheritance Nightmare: Passing on a property held only by possession rights creates a legal quagmire for your heirs. The property cannot be included in a standard probate process, forcing your loved ones into a complex and costly legal battle to prove their inherited claim to possession, which may ultimately fail.

6. Prevalence of Fraud: The murky nature of these transactions is a magnet for fraud. A common scheme involves sellers presenting a minuta (a draft legal document) signed before a notary. This fools many buyers into believing the transaction is official. However, a notarized minuta that is never elevated to a public deed (Escritura Pública) and registered has no legal effect in transferring ownership. It's a worthless piece of paper against the claim of a true owner.

Actionable Steps for a Secure Property Purchase in Ecuador

My advice is unequivocal: Do not purchase any property that is offered solely with "Rights of Possession." The risks are simply too great. Focus exclusively on properties with a clear and registered title.

Here is the essential due diligence checklist I use with my own clients:

1. Demand the Escritura Pública: The seller must provide a copy of their registered public deed. This is non-negotiable.

2. Engage an Independent Ecuadorian Attorney: Your lawyer's first step will be to conduct a comprehensive title search at the local Registro de la Propiedad. This involves obtaining two critical documents:

   • A Certificado de Gravámenes (Lien Certificate). Hyper-Specific Tip: Do not settle for a simple certificate. Insist on the Certificado de Gravámenes con Historial de Dominio de los últimos 15 años (Lien Certificate with a 15-Year Ownership History). This will reveal the complete chain of title and expose any old mortgages, liens, lawsuits, or easements that could affect the property. The approximate cost for this certificate at the Cuenca registry is $15.00.
   • A copy of the property's registration file to verify the details match the seller's deed.

3. Cross-Reference with the Municipality (Municipio): Your lawyer must verify the property's details at the municipal cadaster office (Catastro). This includes obtaining:

   • The Ficha Catastral, which shows the official property lines, valuation, and construction details. A common and costly mistake is discovering after purchase that the physical fences or walls do not align with the legally registered boundaries.
   • A Certificado de No Adeudar al Municipio, proving that all property taxes (impuesto predial) are paid in full. No legal sale can proceed without this certificate.

4. Confirm Seller's Identity and Capacity: Verify that the person selling the property is the same person listed on the title and has the legal capacity to sell (e.g., if married, spousal consent is often required).

⚠️ Legal Red Flags: When to Walk Away Immediately

STOP the process and consult your attorney if you encounter any of the following:

• The seller uses phrases like "venta de derechos y acciones" or "venta de derechos posesorios" instead of "venta de cuerpo cierto."
• The seller cannot produce a registered Escritura Pública and instead offers a private document, a notarized minuta, or a story about an ongoing titling process.
• You are pressured to pay in cash to a private individual without the formal signing of a public deed before a Notary Public. Hyper-Specific Tip: In a legitimate closing, the final payment is typically exchanged at the Notary's office simultaneously with the signing of the Escritura Pública, often through a manager's check (cheque de gerencia).
• The price is significantly below the market rate for comparable titled properties in the area. This isn't a bargain; it's a warning.

Conclusion: Security is the Only True Bargain

Real estate in Ecuador can be a fantastic investment and a gateway to a wonderful life. However, that dream can quickly sour if not built on a solid legal foundation. The perceived savings of a "Rights of Possession" property are an illusion that masks the profound risk of total financial loss.

As an attorney on the ground here in Cuenca, I have witnessed the devastating consequences of these deals. Prioritize legal certainty above all else. Insist on a registered title, conduct exhaustive due diligence with qualified legal counsel, and build your future in Ecuador on the bedrock of secure, legal ownership.