Your essential legal guide to buying overseas

Part one

Dennis Phillips - Expert solicitor with Legal
Index

Remember - Don't pay without signing

Always seek professional advice

Dennis Phillips, a leading member of the panel of expert solicitors with Legal Index, provides an insight into some of the legalities to consider when buying property overseas, to help ensure your purchase runs as smoothly as possible.

Don’t pay without signing

Let’s begin with a golden rule - unless you are prepared to lose what you pay, don’t pay anything without signing something – and don’t sign without the document in question being independently checked.

Follow this rule and you’ll minimise the risk of making one of the most common mistakes when buying abroad and avoid any unwelcome surprises further down the line.

One of the easiest ways of safeguarding your money is by formally instructing your solicitor before you go on your property buying trip.

Above all, remember that your solicitor is only a phone call away and can give you instant help and advice when you are being asked to sign anything by the developer or agent.

Take professional advice

Always instruct an independent solicitor. Although the chances are that a national from the country you’re buying in probably wouldn’t use a solicitor when buying property, with so many extra considerations to bear in mind when buying as a foreigner, can you really afford not to? As most experienced and successful property investors will confirm, taking good legal and professional advice will usually save you much more than the amount you pay in solicitor fees.

It’s a quirk of our industry that a great property can be sold by a rogue agent or developer and the best agents can have properties with ‘bad title’ (i.e. title to property that does not clearly confer ownership) on their books. Moreover, you’ll learn a lot about the agent from their approach to recommending legal advice.

The worst agents will actively discourage you from taking independent legal advice. They’ll tell you that involving solicitors will slow things down and cost you more. They’re right if this means you’ll be spending more time and money to make sure that things are done properly, but would they be saying this if they were a reputable agent/developer with nothing to hide?

Other agents will often encourage you to use ‘their solicitors’, or perhaps their own in-house legal department or the solicitor next door. If these solicitors are directly paid by or getting most of their business from that agent or developer, are they really independent?

In fact, the best agents will carry out some of their own title checks before putting properties on their books, particularly before selling a substantial development or a handful of unusual properties. Although this can go some way to reducing the risks outlined below, the legal status of the properties they’ve checked can, and often does, change over time.

For all these reasons, the best agents and developers will actively recommend that you take independent legal advice, perhaps from an appointed panel of specialist solicitors.

There are always general legal issues to
consider when buying abroad

Professional advice can help turn your
dream into reality

General legal issues

So, you’ve teamed up with your solicitor. What are the checks you should be expecting them to make and what sort of problems might they be typically looking out for?

As you’d expect, the detailed law and procedure in each of the increasingly wide number of countries on offer to you will of course vary. However, there are many common legal threads which run through all of them. In part two of this article, we look in more detail at a few of the particular legal problems in some key market places. In those countries, and many other locations you might be considering, your solicitor will, among other important things, be telling you whether:

The sellers have the right to sell you the property;
There are any financial or legal burdens registered against the property and whether these will be removed before you become the owner;
It’s likely that, after completion, you’ll be asked to make any future (and otherwise unexpected) payments or, worse still, have your property pulled down if it was built without the appropriate permission;
The contract is sufficiently thorough and whether it protects your interests. Or if it’s unfairly biased in the seller’s favour and what we can do about it;
It’s safe to pay your money.

In addition, further checks might be needed depending on the particular property you are buying or the area you are buying in.

What’s more, other issues can often arise, including:

If you’re buying new or off-plan property, are your payments protected if the seller becomes bankrupt or otherwise unable to deliver the property?
What to do if you’re being asked to under declare the price and pay ‘black money’.

Let me expand on this second point. In most of the countries we deal with, it’s common for sellers to ask you to ‘under declare’ the property value in the title deed in a bid to save transfer taxes.

This has been a problem long associated with Spain but is beginning to become less so. Turkey, on the other hand, is where Spain was 20–25 years ago. The proposed under-declarations are often huge and, if agreed to or not managed properly, may have far-reaching consequences.

The best advice we can offer is that you seek professional guidance (at the earliest possible stage) on the legal consequences, customs and solutions in the particular country you’re buying property in, and on how they fit with your personal circumstances.

Click here to read part two of this article which goes on to explore country-specific legal issues to consider when purchasing property in Spain, Dubai, Croatia or Turkey; draws insightful overall conclusions; and provides a checklist of key things to consider when buying abroad.

Information courtesy of Dennis Phillips - a leading member of the panel of expert solicitors with Legal Index

Legal Index is part of the PropertyIndex.com group of companies, and offers a range of services from established firms of solicitors, mortgage brokers, insurance specialists and HIP providers, to make moving home as easy as possible.

Click here to find out more/ contact Legal Index.