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Buying a Property

Does a foreigner need permission to buy a property in the country in question?

In some countries, foreign buyers are prohibitted from buying property ot are subjectv to various restrictions, such as only being able to buy certain types of property or property in certain designated area. In other countries they need a speacial licence to buy property. It is, obviously, vital that you are clear about this - preferably before you part with any money!

Is buying a property the same as buying at home?

No! The whole system is very different. You can be in real danger if you do not understand those differences.

The role of the estate agent (Realtor)

In many countries, estate agents must be licensed. Some (but by no means all) will have an additional licence permitting them to receive money from you. Im many countries these rules are widely ignored. Generally, you expose yourself to greater risk if you buy via an agent who does not have the necessary licence.

However honest and helpful they may be you must remember that they are only paid if the property is sold.

They are not able to give you independent legal advice.

Sales direct from a seller or developer

Increasingly, our clients are buying directly from a seller or developer, without the intervention of an estate agent. You still need to take all the same precautions.

Using a Property Finder (Buyers' Agent)

An increasing number of our clients are using Property Finders. They are retained by you to find property that meets your specification. The best ones have detailed local knowledge and justify their fee (up to 5% of the price) by their access to all of the property on the market – including property not sold through estate agents – and by being able to source 'bargains'.

See our leaflet "Property Finding" or ask us for advice.

Mortgages

Loans & mortgages

You can finance the purchase in three main ways:

  • cash
  • a mortgage from a UK/Irish/US lender, secured on your existing UK/Irish/US property
  • a mortgage on the property you are buying from a lender in that country (or, occasionally, elsewhere) and secured against that property.
Local mortgages are very different from UK/Irish/US mortgages.

Choosing the wrong mortgage is an expensive mistake!

Ask us for advice

Local Mortgages

See our country specific supplements to our 'Buying a Property' guide for information as to the usual terms u[pon which mortgages are offered.

The process of buying a property

Of course, this varies substantially from country to country. Please see our 'Buying a Property' Guide and its country specific supplements for the detailed arrangements in the country of your choice.

Here we set out some basic points, applicable in all countries

1.   Preparation

You SHOULD start with thorough preparation. This will save to a lot of wasted time AND money – not to mention aggravation and frustration!.

We STRONGLY recommend that you make contact with us BEFORE you go to look at any property.

That way we can deal with all of the key issues, such as those listed below, calmly and clearly, before you get involved in the rush and pressure always associated with buying a property – anywhere in the world.

Preparation - The Main Message

Going to look at properties should be the LAST stage in the process, not the first!!

Essential Preparation – All Buyers

1.   Who should be the legal owner of the property?

This is not obvious. Just because a couple is buying a property does not mean that it is best put into their names. Ask us for advice.

Getting this right can save you a fortune in tax. Do not underestimate the amounts involved. On a £100,000 house you can often save £40,000 or more in taxes, during your lifetime and on your death. It can also save lots of later inheritance problems. Ask us for advice.

2.   How should I finance the purchase?

Once again, getting this right will save you a lot of money. Ask us for advice.

3.   How am I going to manage the property?

Ask us for advice.

Extra Preparation for INVESTORS

See out guide "A Guide for Property Investors" for more details.

2.   The Role of the Notary

In amy countries, all contracts transferring the ownership of land must be prepared by and signed in front of the Notary He is, in most countries but not all, a specialist lawyer who performs a role that is partly that of a lawyer and partly that of a public official. In most countries (but not all) the Notary has the legal duty to carry out certain (limited) checks on the land you are buying. He will also deal with the collection and payment of the price and the taxes and arrange for the registration of the change of ownership at the Land Registry.

In other countries the Notary is not involved at all.

You need to undertand the system in the coiuntry where you want to buy - and the extent of the Notary's duties, if any.

Even in countrties where a Notary is involved and where his duties are extensive - and this is a very small number of countries - you must understand the limits of what the Notary can or will do for you. The Notary will know little or nothing about the law & taxes in your own country and will seldom speak fluent English.

He is no substitute for specialist advice about the international and broader commercial aspects of your purchase. That is what we provide.

3.   The 'Reservation Contract' or 'Offer to Buy'

A Reservation Contract is a contract under which you pay a small amount of money to take the property off the market for a short time. This is common in many countries but unheard of in others. An Offer to Buy is a formal written offer to buy a property. If the offer is accepted you can become legally bound to buy the property.

4.   Initial Checks Before you Sign

Whether you are signing an 'Offer to Buy' or a 'Reservation Contract' it is a good idea to get your lawyer to have a look at it before you do so. They are not always what they seem. Speak to us.

5.   Further Checks and Enquiries

Does the property belong to the Seller? Does it have planning permission? Are there any debts or other burdens registered against it? Is the contract safe and fair? Do you have any specific requirements – and does the property satisfy them?

This is also the time to have the property surveyed (inspected) or valued (appraised).

We prepare a written report setting out the results of the enquiries made.

6.   The 'Preliminary Purchase Contract'

A Preliminary Purchase Contract is a legally binding contract to buy the property. In most countries, it is signed very early in the transaction – often before you have a mortgage offer or the results of any survey. As a result it contains 'get out clauses' to allow you to cancel the contract in certain circumstances. These must be drafted with care.

7.   The 'Power of Attorney'

In most cases you will need a Power of Attorney authorising a local person to carry out various administrative tasks for you and to sign the final documents of title on your behalf.

This will have to be in a format acceptable in the countery in question and the Power may need to be specially 'legalised' for use there.

8.   Dealing with the Money

The funds needed to buy the property must be sent to the country in a way that complies with all of the necessary formalities in that country and in yours.

The choice of how to transfer the funds can save you a lot of money.

We recommend using a specialist currency dealer, rather than your bank, as you will usually get a much better exchange rate.

Better still, we recommend that we t7 ransfer the money for you. Because of the volume of business that we do with the currency dealers we will usually get an even better rate than you would.

Our preferred currency dealer is MoneyCorp – www.moneycorp.com – with whom we have negotiated special terms of business and rates but you are free to use any dealer of your choice.

Please see our pages about Currency & FX fore more information on this subject

9.   Before you take Delivery

Final checks will be made to make sure that the property is still safe to buy.

10.   Signing the Deed of Sale

This is the document transferring ownership to you. It must, in many countries, by law be signed in front of a Notary or in some other prescribed way.

How long does all this take?

The whole process up to the signing of the title will (in the case of a resale property with no mortgage) typically take about 12 – 16 weeks.

If you are taking a mortgage on the property you are buying it will usually take longer.

Do I have to be in the country to complete the transaction?

This is usually the best solution but, if this is inconvenient, we can arrange for a Power of Attorney to be granted, enabling another person to attend on your behalf.

What about paying the taxes due?

The Notary or the lawyer dealing with your purchase will arrange for the payment of any property transfer taxes due in relation to the transaction.

Is there a Land Registry system?

Yes. After the Deed of Sale has been signed, in most countries arrangements will be made for it to be registered at the appropriate Land Registry.

What does all this cost?

In most countries, the total of the taxes, fees and other expenses (including our own) is likely to amount to about 8 - 10% of the price of the property. In some places it is much less. In others a lot more. Please see out country specific supplements for more information

If you take out a local mortgage over the property you are buying there will be an extra cost - typicaly of about 1%-2% of the value of the loan.

What do I need to do AFTER I buy the property?

This will vary from case to case.

You will certainly need to arrange insurance and for payment of your ongoing tax liabilities.

You may need to transfer the water and electricity accounts into your name and to make contact with the 'community' within which your property is located.

It is usually a good idea of make a Will relating to your property and to amend your English/US/Irish Will accordingly.

Our members can deal with this for you.

What about the taxes?

See our guide to taxes

How can the International Law Partnership Ltd help me buy a house overseas?

We offer a range of legal services for clients buying a property. See our 'Buying a Property' guide and any country specific supplement for details.

Are your fees higher than I would pay a lawyer in, say, Turkey?

A local lawyer may cost you less than we do but, most importantly, they usually cover only a small part of what our members cover when dealing with a property transaction. But please note that some local lawyers charge fees higher than ours – whilst still doing a lot less!

Ask us for a detailed estimate and compare our service with our competitors.

How does using the International Law Partnership differ from using a local lawyer?

There are a number of ways:

1.   We and our members are used to the requirements and expectations of the English/Irish/US client. These are often very different from the requirements of a local client.

2.   Because we view transactions through the eyes of a foreigner we will often explain things to you that a purely local lawyers would not explain - because they think they are obvious or not part of their job. They may be obvious to them, but they are often the exact opposite of what you would expect in your own country!

3.   Better still, we will also be able to explain sometimes surprising local concepts in clear English and in a way that you will understand!

4.   We understand the English, Irish or US and international law as well as the local local law. It is the interaction between the two systems that creates most of the problems – and the opportunities. Most local lawyers will (quite understandably) know little or nothing about the law in your country. They are, therefore, quite likely to suggest a solution that would work well for a local person but which is disastrous (for example, in terms of taxes payable or inheritance law) in your own country. Our members' teams of specialist lawyers from different countries exist to provide that international overview. This can save you a LOT of money.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 4 Feb 2010

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