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Buying real estate in Colombia and paying the purchase price from abroad

05 October 2022

The desired property in Colombia is found, the purchase with the seller sealed by handshake. So far so good. However, there is a seemingly trivial point that the buyer often ignores, but which can delay the further course of the transaction by weeks or months, or in some cases even bring it to a halt. This refers to the method of payment of the purchase price when it flows from abroad to Colombia. This raises several problems, which will be discussed in more detail here:

1. The Colombian regulations on foreign exchange control (régimen cambiario colombiano)

Colombia has extensive exchange control regulations. These must be observed for any transfer of funds from abroad to Colombia. In principle, the first question to be clarified is whether the buyer of the property is a foreign exchange resident (residente cambiario) or a foreign exchange non-resident (no residente cambiario). This is assessed according to whether the buyer has mainly resided in Colombia or abroad in the twelve months prior to the investment. If the buyer is a non-resident, the transfer of the purchase price must be reported to the Colombian central bank (Banco de la República) as a so-called foreign direct investment in real estate (inversión extranjera directa en inmueble). The notification is usually made by means of a form that is submitted to the Colombian bank or financial service provider that receives the transfer of funds from abroad. The form must be filled out and signed by the respective account holder and is subsequently forwarded by the bank / financial service provider to the Banco de la República. Hence, under the scenario of a foreign direct investment in real estate, the following modalities of (partial) payment of the purchase price are not eligible, among others: 1) payment through international financial service providers not authorized in Colombia and 2) importation of cash into Colombia.

2. Anti-Money Laundering Regulations

Just about everyone who has ever transferred a significant amount of money to Colombia has experienced that the Colombian bank will only release the corresponding amount after in-depth checks on the legality of the origin of the funds (origen legal de fondos). Depending on the bank and the complexity of the case, this process can take several weeks, in some cases even several months. Basically, it is a matter of convincing the bank that the amount comes from legal sources. For example, documents such as bank statements, tax returns, employment contracts, etc. from the country of origin must be presented. If the documents are not in Spanish or English, the bank may require translations of these. In this regard, some banks insist on a translation by a translator officially sworn at the Colombian Ministry of Foreign Affairs (traductor oficial). The requirements for the type and content of the necessary documents vary depending on the bank or even bank branch. It is advisable to consult with the respective bank well in advance to minimize the expected duration and effort of this often-underestimated process.

3. Exchange Rate

Fees for foreign transfers to Colombia are less of an issue with most banks. On the other hand, the most significant costs arise when the Colombian bank converts the money into Colombian pesos (COP). In any case, it is worthwhile, at least if the payment goes to a regular Colombian bank, to initiate the transfer from abroad in US dollars (USD). When converting USD to COP, banks usually offer a reasonably acceptable exchange rate. If money transfers in EURO (EUR) arrive in Colombia, the EUR must first be converted into USD, which leads to additional losses. In addition, the exchange rates offered by Colombian banks for the exchange EUR - USD are usually not very advantageous. Finally, it should be remembered that the exchange rate negotiation with the Colombian bank is done exclusively by the holder of the account where the transfer arrives. The initiator of the transfer has no influence on it. For example, if someone buys a property and pays the seller by direct transfer to the seller's Colombian account, they must know that the seller controls the exchange rate negotiation and the timing of the exchange. Also, the Colombian bank will then send the proof of the amount of COP received exclusively to the account holder / seller of the property.

4. Avoidance of advance payments

Anyone who buys a property by direct transfer from abroad to the Colombian account of the seller must be aware that this involves various risks: First, in such a case, the payment of the purchase price and the signing of the notarized purchase contract cannot take place simultaneously. This is because the process of the transfer and the subsequent anti-money laundering check by the bank usually take at least several days. However, the seller will usually not want to sign the notarized contract until he effectively sees the money coming into his account. In this case, there is a fundamental risk that, despite payment, the notarial contract will not be signed or will be delayed for various reasons. Furthermore, in this constellation it is up to the seller to negotiate the exchange rate with the Colombian bank and to submit the forms for the notification of the buyer's investment to the Banco de la República. It is in this notification that, in practice, formal errors often happen on the part of the seller or the seller's bank, which can later affect the buyer, for example, when applying for an investor visa.

5. Bank accounts vs. accounts with brokers officially licensed in Colombia

Due to the risks associated with a direct transfer to the seller, it is recommended in many cases that the buyer opens his own account in Colombia to have more control over the payment process in Colombia. However, Colombian banks generally do not open accounts for foreigners who do not hold a valid Colombian visa. Even if such accounts are opened, they may not be authorized for investment amounts for regulatory reasons, i.e., if a foreigner transfers funds from his own foreign account to his own Colombian account, he cannot have the corresponding amount reported as an investment to the Banco de la República, because such a constellation is legally considered a mere transfer of funds between accounts of the same account holder. It is often advisable to open an investment account (cuenta de inversión) with a Colombian government-authorized broker (sociedad comisionista de bolsa). Such brokers generally open accounts even for non-resident investors without a visa for Colombia and allow for proper reporting of the investment to the Banco de la República.


The complexity of paying the purchase price from abroad for a real estate investment in Colombia is often underestimated. Therefore, this point should be included in the planning of the transaction at the very beginning and an individual solution should be found.