How does this all work?
Here we will explain the basic legal structure and processes behind a new group land buy. This means we gather a group of like-minded folk and buy a property together.
For information on purchasing a share in an existing liberty homesteads property, please check out our future blog post called “buying a share of land.”
First things first: Register a business entity (SAS)
Before even buying the property, we (including you) form an SAS entity (simplified share society) and register it with the superintendent of companies in Ecuador. This is a type of limited liability corporation that costs only a few hundred dollars to set up, and can be done remotely with your electronic signature.
The owners/shareholders of the SAS are the buyers of that specific property. There is one SAS for each Liberty Homestead property. Aside from being a registered business, the primary purpose of each SAS is simply to hold the property in the name of the owners.
Why not just put a bunch of names on a land title? The legacy property registry system is too clunky for our needs. It was never designed for 10+ co-owners and small shares being constantly bought and sold. The closing process is long and expensive and requires a power of attorney document to go through a maize of notarization/authentication/translation processes.
The SAS GROUP LAND ownership structure provides the same degree of legal security as the legacy property registrY system, even as far as inheritance law.
As you can see in the above diagram, you own a share in the SAS (Simplified Share Society), and the SAS owns the land. The only shareholders in the SAS are the landowners themselves.
What legal documents do I receive?
- Notarized land title that shows the property was purchased by your SAS
- Property registry certificate from the local property registrar that shows the property is currently owned by your SAS
- Share transfer certificate issued by the Superintendent of Companies that shows the correct percentage share of the SAS is owned by you
All listed documents will be provided in digital form (PDF) and are verifiable remotely by any Ecuadorian lawyer. Should you require originals, we can send notarized original copies at a small additional cost.
How do I sell my share?
- We list your share for sale on the Liberty Homesteads website. You may also advertise it privately any way you like.
- When there is an interested buyer, we have both of you sign a promise of sale contract
- You use your electronic signature (registered with the Ecuadorian government) to sign the share transfer document, which is submitted to the Superintendent of Companies where the share transfer is registered
What about my homestead?
The Community Contract (between all co-owners of each property) will show the GPS coordinates of your homestead and a map. It will also have basic rules for peaceful relations between neighbors, and management of the community areas, roads, and various shared utilities such as the water system. It will detail any existing easements. Think of it like an HOA agreement. It will also establish voting processes for the budget to maintain the common elements.
Read an example of this document here. One contract will be specially tailored to each co-owned property, and will be updated each time a new owner buys in.
One thing we don’t want to have at Liberty Homesteads, is an annoying over-bearing HOA. So, the contract is designed to give lot owners as much freedom as possible, while still giving your neighbors leeway to complain if you start blasting loud music right next to them at night or adopt 20 dogs that run around like crazy and attack people.