Colombia does not have information that clearly determines the legal nature of rural real estate, since there is no public database that distinguishes vacant lands – which are state- owned - from private lands. This generates legal uncertainty when investing in rural properties, since there is no certainty about the legal nature of these properties, and if these are declared vacant, any chain of title over them would be non-existent. Although Law 160 of 1994 has defined a procedure to clarify the ownership of rural properties, it requires significant probative material, which in most cases is difficult to obtain. Therefore, when investing in rural properties, it is advisable to carry out a detailed due diligence study, to mitigate the risks that may exist in the acquisition of this type of properties.
Vacant lands are State owned properties that can be allocated to peasants as part of the agrarian reform. Since these assets belong to the Nation, they are characterized for being out of commerce and, therefore, the right of ownership cannot be exercised over them until the State award them. In other words, vacant lands cannot be sold, purchased, possessed, or hold usufruct, unless they have been duly acquired and only by those who are benefited from the agrarian reform process.
Law 160 of 1994, which created the National System of Agrarian Reform and Rural Peasant Development, establishes in Article 48 the process of clarification of the ownership of rural properties and thereby regulates the conditions required to prove private ownership on rural properties.
In accordance with the aforementioned article, in order to prove the private ownership of a rural property within the clarification process, the following must be provided: i) the original title of ownership issued by the State that has not lost its legal effectiveness, or ii) the titles of ownership duly registered in the property’s good standing and conveyance certificate granted prior to the entry into force of the law (1994), in which there is evidence of a chain of titles for not less than 20 years.
Therefore, private ownership of rural properties is proven by presenting the original title of ownership, that is, the existence of an administrative act of awarding conducted by the entity that administers the vacant lands in Colombia -National Land Agency- duly executed and registered in the property’s good standing and conveyance certificate.
In the absence of such original title, which in most cases is difficult to obtain, the Law provides the alternative of presenting as proof the registration of title deeds in the property’s good standing and conveyance certificate prior August 5, 1974, which operates as a presumption of private ownership. Although this presumption reduces legal uncertainty regarding the nature of rural real estate, exhaustive due diligence is required to ensure that the proof requirements are met.
Now, beyond the mechanisms stipulated in the law to prove private ownership of rural property and as a substantive solution to the problem of legal insecurity in the domain of rural real estate in Colombia, the Constitutional Court in ruling T-488 of 2014 ordered the National Land Agency to execute a national plan to clarify all vacant land, with the aim of providing legal certainty and publicity about the nature of the rural properties in Colombia. Although actions have been taken in this direction, until this plan is fully complied with, an exhaustive due diligence must be carried out on these properties to mitigate any risk of being declared a vacant property.
