7. Fiduciary

Chapter 7



by josavere


This kind of contract is the best option for open mined financiers. The creative ones. It’s an agreement by which a natural or legal person CONSTITUENT called TRUSTEE delivers one or more real goods to a FIDUCIARY; including the property in some cases, with the intention to accomplish a determined purpose to benefit the constituent or a third person specifically determined by him.  It’s called fiduciary trust when the client keeps the property.

The fiduciary gets committed to accomplish its best effort to obtain a client’s predetermined objective, managing the goods received for such purpose. It’s not a result contract but a means. It constitutes a hybrid between the traditional and investment banking.


A. TRUST: it demands knowledge from both sides because it’s a two-way effect. As much from a client's point of view (constituent) to the fiduciary, as from fiduciary to the client. Because most people don’t have sufficient knowledge and trust in these kinds of financial operations, the government has ruled and supervised these institutions.

B. A PURPOSE TO ACCOMPLISH: it must be established clearly to avoid possible abuses. 

C. A PROFESSIONAL AGENT: specialized organization properly authorized. 

D. ABSOLUTE SEPARATION OF GOODS: the fiduciary patrimony and all clients with individual accounting. 

E. CONSTITUTION OF AN INDEPENDENT PATRIMONY: it can’t be seized and called trust. It’s constituted per client with the goods giving by each client, according to the contract. The goods of the constituent patrimony and it don’t get into the fiduciary’s patrimony, but becomes an independent one. 

F. TEMPORARY: the fiduciary never acquires absolute property over the goods received; when the contract is over, the fiduciary returns the goods to the component; or any other person the constituent appoints. 

G. ELASTICITY: it allows us to accomplish all the lawful purposes that a client’s needs or its imagination determines in order to accomplish an objective. 



a. Individual
b. Collective, called funds:

  • Common ordinary
  • Common special
  • Of foreign capital or (country)
  • Of voluntary pensions
  • Others (of employees, or mutual)

B. REAL ESTATE: an investor hands over real estate to a fiduciary company in order to manage it or develop a construction project; then those real state properties are transferred to the beneficiaries. Generally, a lot is handover through a mercantile fiduciary contract; changing into an individual contract. This contract may be:

a. At face value: the price depends on the project’s final value. The investors assume the project inherent risks.

b. At fixed price: a promoter other than the fiduciary, commits itself to sell the finished units at prices previously established. It’s highly used for low-income people housing.

Example: one client delivers a piece of land and the necessary resources so that the fiduciary develops and manages a real estate project; according to the instructions indicated on the contract. The fiduciary is able to alienate or transfer the built units to the beneficiaries.

The delivery of the land to the fiduciary is carried out by a mercantile fiduciary contract; the goods of a client’s patrimony and becomes an independent one. The project can be executed at face value or at a fixed price. 

C. OF ADMINISTRATION: the investor delivers a property other than cash to a fiduciary with property transference or without it; so it’s managed according to a form previously defined in the contract. This may be:

a. In guarantee: replaces the mortgage more efficiently, because it’s not necessary to promote a judgment to sell the real state (expressed in the contract) when the constituent or third party doesn't honor the contract conditions.

It requires as a previous property valuation and a lower figure, previously agreed upon when signing the contract. In this case a natural or legal person (indebted) gives over a fiduciary company, one or several properties to guarantee the fulfillment of one or several personal obligations or derived from a third party.

Example: one company that requests a loan, gives over a piece of real state to a fiduciary so if the agreement is not honored, it proceeds to sell and cancel the obligation’s surplus.

b. Public: when the constituent is a public organization legally authorized by the law, such as the state Departmental Assembly or the Municipality Council. It is an excellent mechanism for the private sector contracting with the state; this organization can celebrate three kinds of contracts: Fiduciary order, public fiduciary and mercantile fiduciary.

Example: one state entity, delivers to a fiduciary the destined resources for the development of a specific project. The fiduciary receives the money and on behalf of the public organization, celebrates the contracts required for the contract execution; carries out the payments and report books and accounts status.

c. Others: those derived from investor’s business creativity whenever they strictly honor the legal regulations on this matter. It includes among others: managing of companies under liquidation, the enterprise handling of arbitration, managing of inheritances and disabled people goods, handling of shares objectives and commercial papers, administration of life insurances and payments for administration fiduciary, among others. 

D. FIDUCIARY INVESTMENT: when an investor delivers to a fiduciary certain amount of money to invest in titles or other values. These may be:

a. Individuals: these are managed in a separated way from other fiduciary businesses  titles corresponding to the constituent.

b. Collective: when the investor’s titles don’t belong to any individual person. In these cases, it’s also mandatory to account separately for each investor.

Example: when a client delivers resources to a fiduciary; to be invested through the ordinary common fund. In this case, a mercantile fiduciary contract is celebrated, or a fiduciary order.


A. ORDINARY COMMON FUNDS: the constituent resources are invested in fixed rent titles properly guaranteed by the nation and authorized by the banking supervisory entity. Each fiduciary company can have an ordinary common fund. 

B. SPECIAL COMMON FUNDS: the investor’s instructions are followed strictly. The fiduciary can make suggestions including investing funds in foreign currency with a specific regulation. 

C. FOREIGN CAPITAL INVESTMENT FUNDS (Country Fund): when natural people or juridical foreigners contribute with foreign currency resources to invest in Colombian currency (pesos) in the stock exchange. 

D. VOLUNTARY PENSIONS FUNDS: they are ruled by the regime of pensions, Law 100 of 1993; these are compounded with contributions of people interested in pension and disability plans, constituting an additional alternative which doesn't substitute the mandatory system. 

E. OTHERS: these are cases not specifically described in the previous modalities such as employee funds and the mutual investment funds.

Over any fiduciary contract, when the fiduciary organization is established as an investment fiduciary, this company charges a managerial commission without guaranteeing any results.

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