How to Buy Foreclosed or Distressed Land In Colombia

At Tycoon, we’re always on the lookout for good land deals in Colombia. This often means we need to look for foreclosed or distressed land for sale. In this blog post, we’ll dive deeper into the distressed land acquisition process in Colombia.

In Colombia, when negotiating for distressed land (or any property for that matter), you’ll likely be negotiating with one of three people: The owner, the landlord or the current tenant.

In most cases, you’ll want to ensure that the person you’re dealing with is the actual owner of the land or property for sale. In some cases you might begin your negotiation with the landlord, but at some point the conversation and negotiation will need to formalized by the owner. because When dealing with landlords, there will be a greater risk of losing the property due to judicial problems. As a foreign buyer, you need to ensure that the property in question has the proper documents. To ensure this, you will want to ensure you’re dealing directly with the owner. And obviously, in no case should a purchase be made with a tenant. There are times where a tenant might be the first person you get in contact with and the tenant might even help show you around the property. But very rarely will a tenant have any legal authority over a property and therefore, it’s important that after the initial inspection, that you ensure you get in contact with the owner directly.

Foreclosed land for sale Colombia

Why do Colombian Properties Get Foreclosed On?

Property becomes distressed and is at risk of being foreclosed on for many reasons. In Colombia, most of the causes for foreclosure are similar to the reasons for foreclosure in other countries. Let’s go over some of the most common reasons that land gets foreclosed on in Colombia:

It is under a mortgage (money is owed on it).
It is affected by an urban restriction (restrictions on height, commercial use, or demolishing in the case that the property has historic significance). View our blog post on land usage rights in Colombia here.
It is under lease (complete documents of the property are not available).
It is part of a lawsuit (that is in court proceedings).
It has been seized by court order.
It has an ownership issue, such as a trust or easement.
It is in an inheritance process (i.e. the owner died and the owner’s heirs are selling it).
It is in the process of ownership expiration auctions. (because it was the result of crimes or was used for crimes).

Where to Find Foreclosed Properties in Colombia?

Okay, so now you know the most common reasons why a property might be foreclosed on in Colombia. But how can foreigners find these properties? Well, there are different ways to find foreclosed properties in Colombia.

First, search for foreclosed land for sale in Colombia on our site here. Not all of the land you find for sale on our site is foreclosed land, but some of it is!
Search for land in judicial auction processes in local newspapers in the judicial edicts section.
Search government entities responsible for the management of this type of property such as the SAE (special assets company) or CISA.
Sometimes it’s possible to get in contact directly with the seller of distressed land. These can be harder deals to find, but if you work with a company like us at Tycoon, we always have our ear to the ground. We even put up ads in small rural towns around Colombia offering to buy distressed land from land owners. This approach requires MUCH more work, but the payoff can be huge.

A Few Worlds of Caution When Buying Distressed Land or Properties

Below are some useful tips about what not to do when buying troubled properties:

Do NOT a purchase without reviewing the property documents with a trusted attorney. The review process is called a “title study”. Make sure this is done thoroughly by an experienced lawyer. We have an entire blog post dedicated to the step by step process of purchasing land in Colombia, and we go into the title study process in more detail in that blog post.
Do NOT make a purchase where the property has a dissolving condition pending. This means that you need to ensure that you’re not buying a property where there is the risk that the property could be lost by a future court decision.
Do NOT make a purchase where the documents are not notarized.
Do NOT make a purchase by verbal agreement only. There is a culture of informality within Colombia. Do not get lured into the ease of these transactions. Being informal can lead to huge headaches down the road.
Do NOT make a purchase where external elements such as cables, gas pipelines, or oil pipelines will change places.
Do NOT make a payment for the land (or any property type) before the legalization of the documents.

Buying foreclosed properties Colombia

What are the advantages of buying properties with complications?

If you’ve made it this far, you might be thinking to yourself that the risks for buying distressed (or soon to be foreclosed on) land in Coombia seems like too big of a risk. In some cases, that might be true. However, there are some huge gains to be made for land investors who know how to navigate the risks involved. Some of the biggest upsides for buying distressed land in Colombia include:

Lower prices: See our post regarding the cost of land / hectare here.
Less competition: Often foreigners (even locals) don’t know how to find land deals in Colombia. The fact that not many people know about these types of investments creates a huge opportunity for foreign land investors.
Strategic locations: Properties located in strategic locations in the city such as those sold by SAE (special assets company).
Special conditions: Properties with special conditions that may be beneficial to the property and the property owner. An example of such a property would be any property that would be declared a historical or heritage site. This type of special condition will guarantee that the architectural environment will not change over time. Another example might be land or properties near forest reserves or natural parks. This land would be unique because it would be known that the land would have the special condition of never having neighbors as builders are not allowed to build within national parks.

Which Properties to Avoid?

Below is a list of the types of properties that should be avoided for either ethical or legal reasons. In our experience at Tycoon.to, these are some of the most common property deals where foreign investors lose part or all of their investment.

Land affected by expropriation due to urban need. For example, if your land exists in an area where the government needs to build a new road or bridge, you’ll likely be forced to sell you land for a fair market value.
Land of “invasion”. This means that those “occupying” the land may try to sell it, even if they are not the owners. In some cases, the original owners are not known. In some cases, land investors see these as great deals (as they tend to be much less expensive). That said, the risks associated with these types of deals is huge.
Land declared high risk in POT or PBOT. This type of land is often located next to rivers, or very steep mountains. Landslides or other types of natural disasters can happen any time in Colombia. The legal authority may order the eviction and in some cases the value of the property will not compensated.
Land of armed groups: Do not buy land that was taken from peasants by armed groups. In most cases, these types of properties can enter into the processes of land restitution and be returned to the original owners.

Should You Buy Foreclosed Land in Colombia?

In Colombia, land or property with complications can result in land investments that yield a high return on investment. However, as we’ve outlined in this post, there will be times when the risk is just too high. There will be other times when there will be ethical implications that will need to be considered.

It is always wise to conduct a study of the property titles with a lawyer specializing in properties in your regions of interest. It is also essential to carry out the registration proceedings quickly when the property is purchased because if it is not done quickly the property can be sold again. This might seem strange, but there have been situations in Colombia where this has happened. This causes complex judicial problems where a property can be lost. Therefore, it is important to carry out such proceedings as quickly as possible.

If you’d like to own land in Colombia, be sure to get in contact with us today. We have land scouts on the ground searching for the best Colombian land deals. Not only does Tycoon.to help with sourcing the best land deals in Colombia, but we also offer owner financing land deals allowing you to pay a small down payment and then reasonable monthly payments after that.

We’ll hold your hand through the entire land purchase process.

Thanks for stopping by today!