What is a real estate fund and what is it for?
A real estate fiduciary is a financial tool that offers security and transparency in real estate transactions, making it an attractive option for buyers and investors due to risk mitigation, professional fund management, and legal protection for all parties involved. It is a good option for security in a market as dynamic as real estate. Here we explain what a real estate fiduciary is and what it is used for.
What is a real estate fund?
A real estate fund operates under a contract that establishes the responsibilities, rights, and duties of all parties involved. It is an agreement whereby a person (trustor) transfers assets to the trust company (trustee) to administer, manage, and execute the resources according to the instructions and goals established in the real estate project, protecting the people involved in the agreement.
Who is involved in a trust?
Trustor This is the individual or legal entity that grants the trust the responsibility of managing the resources to achieve the objectives established in the real estate project.
Trustee This is a third party chosen by the trustor to manage the construction of the project or the real estate assets. In Colombia, in 1990, it was established that trust companies are subject to supervision and inspection by the Financial Superintendency.
Beneficiaries These are the parties who receive the benefits established in the trust agreement. According to Article 1235 of the Commercial Code, the beneficiary has the right to “require the trustee to fulfill their obligations and enforce their responsibility for compliance.” Likewise, they must protect the interests of the trustor and the beneficiaries of the trust.
