The Importance of Land Due Diligence in Colombia
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October 04, 2024
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The land in Colombia remains one of the most contested resources, driven by a complex history of internal armed conflict, displacement, and illicit activity. Colombia’s decades-long internal conflict has led to the forced displacement of millions, leaving vast areas of land vulnerable to illegal sales and ownership disputes.1 These challenges have created a landscape where land due diligence is not just a legal formality but a critical necessity for companies and individuals alike.
Today, land ownership in Colombia is fraught with risks. Illicit actors, including criminal organizations, have exploited the displacement of rural populations to engage in illegal land sales, complicating legitimate land acquisition.2 Additionally, unclear land titles and overlapping claims have further muddied the waters for businesses looking to invest in the country’s rich agricultural and natural resources.3 A large percentage of rural land lacks formal titles, with estimates suggesting that up to 60% of land in these areas is either untitled or unregistered.4 Without proper due diligence, these challenges can lead to costly legal battles and reputational damage for foreign investors.
While the situation remains precarious, businesses that understand the importance of thorough land investigations and the geopolitical realities can navigate these complexities and tap into the potential of Colombia's land assets.
Historical Context of Land Disputes in Colombia
Land disputes in Colombia are deeply rooted in the country’s history, starting with the Spanish colonial system, which centralized large portions of land in the hands of a few elites which continues to happen in the present.5 In Colombia, 14% of landowners control 80% of the land, ranking the country 11th globally for unequal land distribution.6 Over time, this land inequality worsened, contributing to social unrest and fueling the internal armed conflict that spanned over five decades.7 During this period, guerrilla groups such as the Revolutionary Armed Forces of Colombia (“FARC”), paramilitary forces, and the Colombian government clashed over land control, turning it into one of the central issues in the conflict.8
As the conflict intensified, rural farmers and Indigenous communities were often caught in the crossfire, with many losing their land to illegal seizures or being forced to abandon it altogether.9 According to official figures, approximately more than 6.8 million hectares of land were forcibly taken or abandoned during the armed conflict.10 This displacement has left a legacy of unresolved land ownership claims, further complicating the country’s already fragmented land registry system.
Impact of the Internal Armed Conflict on Land
The internal armed conflict has had a devastating impact on Colombia’s rural communities, displacing over 8 million people from their homes and land.11 Forced displacement has left millions of hectares of land vacant, creating a power vacuum that criminal organizations and illegal actors have sought to fill.12 These illicit groups seized control of abandoned land, often selling it to unsuspecting buyers or using it for illegal mining, drug cultivation, and other unlawful activities.13
The numbers reflect the gravity of the issue. Some 3 to 7 million hectares of land have been illegally appropriated due to forced displacement,14 and around 655,000 hectares have been restituted to victims from an estimated 6.5 million hectares.15 This has created a significant hurdle for businesses and individuals seeking to invest in the agricultural and natural resources sectors, as many areas are either occupied by illegal actors or tied up in lengthy legal disputes.
Illegal Land Sales and Ownership Disputes
One of the most pressing challenges related to land in Colombia is the widespread issue of illegal land sales. As a direct result of the displacement crisis, criminal organizations have taken advantage of the lack of oversight to sell land that does not legally belong to them. These groups have falsified ownership documents and engaged in fraudulent transactions, creating a tangled web of ownership disputes that is difficult to untangle.16
For companies seeking to invest in Colombia’s rich agricultural resources, these illegal land sales pose significant risks. Buyers often find themselves embroiled in legal battles, unable to develop the land due to contested ownership claims.17 This not only leads to financial losses but also damages the reputations of companies that inadvertently become entangled in these disputes.
Legal and Bureaucratic Challenges to Land Ownership
Colombia’s land ownership system is burdened by a complex and inefficient bureaucracy, which has exacerbated the problem of land disputes. The country’s land registry is fragmented and incomplete, with many rural areas lacking clear title records.18 This makes it difficult for businesses to verify the legal status of land before making an investment.
The Colombian government has made some efforts to address these issues through the Victims and Land Restitution Law, which aims to restore land to those displaced by the conflict.19 However, the process has been slow, with only 10% of the displaced population having successfully reclaimed their land by 2023.20 Complicating matters further, about 28% of Colombia’s land remains improperly titled or subject to ownership disputes; around among 187 of the municipalities historically affected by high levels of armed conflict, 79% do not have basic cadastral information.21 This makes land due diligence a critical component for any business looking to operate in the country.
Cases of Major Companies Facing Land Issues
Several large companies have faced significant challenges due to inadequate land due diligence in Colombia, where the country’s history of land dispossession and internal conflict has left many properties with unclear or disputed titles. In some cases, companies have unknowingly acquired land involved in forced displacement or illegal seizures, leading to legal disputes with displaced communities, operational delays, and reputational damage.
Additionally, overlapping land claims and conflicts with indigenous or Afro-Colombian communities have caused further complications. Companies operating without a thorough understanding of these land rights have faced protests, lawsuits, and governmental sanctions. The presence of illegal armed groups in rural areas also adds to the complexity, often leading to security concerns and allegations of collusion, underscoring the critical need for rigorous land due diligence.
FTI Consulting : The Role of Due Diligence in Navigating Land Risks
Land due diligence in Colombia is essential to navigate the complex issues stemming from decades of internal conflict, forced displacement, and illicit activity. Given the complexities of land ownership in Colombia, land due diligence is not just a precaution but a necessity for companies looking to invest in the country. Businesses must conduct thorough investigations into the history of land ownership, working with experts to assess potential risks and ensure that the land is free of disputes.
What We Offer
FTI Consulting offers a comprehensive due diligence process designed to help clients navigate the complexities of land ownership in Colombia. Our services include thorough reviews of public records, such as the certificado de tradición y libertad (property certificate), which provides detailed information on historical ownership and potential red flags, such as connections to criminal organizations or involvement in human rights violations. We also conduct in-depth checks on past and current landowners to uncover any negative public profiles, criminal ties, or legal disputes that could affect your investments.
Additionally, we provide discreet source inquiries to obtain critical, non-public information related to the properties. This includes identifying risks such as forced displacement, human rights violations, dispossession, ownership by front men (testaferros) or drug traffickers, and involvement in asset recovery (extinción de dominio) or restitution measures by Colombian authorities. We also assess the reputation and integrity of current shareholders, as well as any concerning transactions related to the properties.
To carry out these inquiries, FTI Consulting identifies and engages with suitable individuals, including local experts, community members, and investigative journalists. Our discreet interviews are conducted in full compliance with local and international laws.
FTI Consulting also helps clients navigate Colombia's legal and bureaucratic landscape, working closely with government agencies and staying abreast of the latest developments in land restitution. With FTI Consulting’s comprehensive and discreet approach, you can mitigate the challenges of Colombia's land ownership environment, ensuring ethical and lawful transactions in this resource-rich but complex market.
Agrarian Reform
The agrarian reform under President Gustavo Petro's government plays a crucial role in addressing Colombia's deeply rooted land inequality. As part of Petro’s larger push for social and economic justice, the reform focuses on redistributing land to marginalized rural communities, particularly those displaced by decades of armed conflict. Through agreements like the one signed with FEDEGAN in 2022, the government aims to acquire millions of hectares of land from large landowners to return to peasants and small farmers. This reform is not only a means to correct historical injustices but also a strategy to strengthen rural productivity and support the peace process by curbing the influence of illegal actors in Colombia’s countryside. However, ongoing violence, resistance from landowners, and bureaucratic hurdles continue to present challenges to the reform’s success.
This agrarian reform underscores the importance of comprehensive land due diligence in Colombia. With vast portions of land tied up in ownership disputes and vulnerable to illegal activities, the reform is likely to create additional layers of complexity for businesses and individuals looking to invest in Colombia's land and resources. Proper due diligence remains essential for ensuring lawful transactions and avoiding conflicts with affected communities or criminal actors, as companies navigate this evolving landscape.
Conclusion
Colombia’s land issues, rooted in its history of conflict, displacement, and illicit activity, present significant challenges for businesses and individuals alike. With millions of hectares of land disputed or illegally sold, the risks of land ownership are high. However, companies that recognize the importance of land due diligence and take the necessary precautions can successfully navigate these challenges, tapping into the potential of Colombia’s rich agricultural and natural resources. As the Colombian government continues its efforts to resolve land disputes and restore land to rightful owners, businesses must remain vigilant, ensuring that they operate ethically and sustainably in this complex environment.
This article was researched and written by Sofia Mesa Parra, an FTI Consulting intern.
Footnotes:
1: María Fernanda Lizcano, “Así se disputan la tierra en Colombia”, Mongabay (July, 31, 2018).
2: Amnesty International, “Colombia: Restoring the Land, Securing the Peace”, Amnesty International (November, 2015).
3: Anastasia Moloney, “Colombia’s Push for Land Titles Brings Hope for Farmers Amid Fragile Peace”, LandLinks (June 5, 2019).
4: Carolina Camacho, “Land Formalization: Key to Agricultural Productivity in Colombia”, CAF Development Bank of Latin America and the Caribbean (November 24, 2021).
5: Félix Posada Rojas, “Land Ownerships, Mother of All Conflicts”, CPT Colombia (July 6, 2021).
6: Joan Miguel Tejedor Estupiñan, “The Rural Reform and the Problem of Unequal Distribution of Land in Colombia”, Revista Finanzas y Política Económica (June 28, 2023).
7: Riccardo D’Emidio, “Divide and Purchase: How Land ownership is Being Concentrated in Colombia”, OZFAM International (September 27, 2013).
8: Angelika Rettberg, Angela Rivas, Juliana Arboleda, & Andrés Cajiao, “Private Sector and Forced Internal Displacement (FID) in Colombia”, Fundación Ideas para la Paz (August, 2011).
9: Amnesty International, “Colombia: Restoring the Land, Securing the Peace”, Amnesty International (November, 2015).
10: ABColombia, “Returning Land to Colombia’s Victims”, ABColombia (May, 2011).
11: Unidad para las Víctimas, “Las cifras que presenta el Informe Global sobre Desplazamiento 2024”, Unidad para las Víctima (June 5, 2024).
12: Jenniffer Vargas-Reina, “Alejandro Reyes Posada. Guerreros y campesinos. El despojo de la tierra en Colombia”, Estudios Socio-Jurídicos (December, 2010).
13: USAID, “Property Rights and Resource Governance”, USAID (2017).
14: International Center for Transitional Justice, “An Overview of Conflict in Colombia”, Internacional Center for Transitional Justice (2009).
15: Fundación Forjando Futuros, “La Restitución de Tierras Sigue Estancada”, Fundación Forjando Futuros (April 24, 2024).
16: William Fernando Martinez, “Causes of Dispossession and Forced Abandonment of Lands in Colombia. A Look from Private Law”, Vniversitas Pontificia Universidad Javeriana (October 29, 2021).
17: Enrique Prieto-Rios, Juan Francisco Soto Hoyos, & Juan P. Pontón-Serra, “Foreign Concerns: The Impact of International Investment Law on the Ethnic-Based Land Restitution Programme in Colombia” The International Journal of Human Rights (April 7, 2022).
18: Kevin Barthel, Vanessa Cespedes, Beatriz Salazar, Ricardo Torres, &Margarita Varón, “Land and Rural Development Policy Reforms in Colombia: The Path to Peace”, USAID/Colombia Land and Rural Development Program (March, 2016).
19: Victims and Land Restitution Law (Law 1448 of 2011).
20: Fundación Forjando Futuros, “La Restitución de Tierras Sigue Estancada”, Fundación Forjando Futuros (April 24, 2024).
21: Consejo Nacional de Política Económica y Social, “Política para la Adopción e Implementación de un Catastro Multipropósito Rural-Urbano”, Consejo Nacional de Política Económica y Social (June 13, 2016).
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