I have a dream of someday paying off all of my debt and buying a home overseas. To keep that dream alive I do a lot of reading up on how you do that and what surprises to expect and so on. I have learned some interesting stuff, so when I am able to take that plunge I should be ready!
If you are interested in buying yourself a home overseas you should know that things are likely to be done in a bit of a different manner than what you are used to in your home country. As a result, you could purchase property overseas and find your self inheriting a mountain of debt since some countries tie debt to properties instead of individuals. That is just one of the things that could happen if you purchase property abroad without being well informed of what problems might arise.
Whether you are purchasing a second home, a retirement home or a new residence for an exciting relocation abroad you should know that you can encounter problems when purchasing a home abroad. There are many foreign property owners in most countries, many of which never encountered a single problem. However, there are also those that have horror stories about property that they have purchased. While you should not be discouraged from buying property overseas, you should simply go into the process well informed.
One of the best things that you can do to avoid problems when buying property in a foreign country is to locate a reputable local lawyer that has experience not only in local property laws but in helping other foreigners purchase property. Many of the people that experience problems when buying a home in a foreign country do so because they did not seek legal advice beforehand. It is important that you find a lawyer before you pay a deposit or sign a contract. When you are doing your search for a lawyer you should look for the association that regulates law professionals in that country, such as the ABA in the United States, to make sure that the lawyer you are interested in is a credentialed professional.
Some of the problems that you may experience when buying property in a foreign country include properties purchased that do not have a legal title, properties that have been built or enlarged without proper planning permission, properties that have missing infrastructure, builders that go bankrupt before completing your home but after you have given them your money, unpaid mortgages from the previous owner, outstanding utility bills from the previous owner, intermediaries that disappear with your money, being overcharged because you are a foreigner and properties that have been sold to more than one buyer.
A common problem is to find properties that were built with no planning permission or that were not built according to approved plans. In some cases you may discover a home that was built on land that was not zoned for building. This is what you need a lawyer for as they can research all of these items for you.
Oftentimes foreigners buy up inexpensive older properties with the intentions of renovating it to grandness. The problem with this is that renovation costs often get underestimated because the buyer did not have a surveyor come out and look at the property before buying it. For this reason, it is essential to have a surveyor do a complete survey of the property before you purchase.
A law that is in both Ireland and Portugal, and possibly some other countries, that foreigners may be unfamiliar with is the law of subrogation. This means that any property debt, which can be mortgages, taxes, and utility bills, remain with the property as opposed to the property owner. This means that you could unknowingly take out a mortgage to buy a home only to discover that is has an unpaid mortgage tied to it. And if you did not have a lawyer that would have looked into this before you purchased you would be stuck with a house with two mortgages.
Another common problem is for sellers to tell you they want a lower price on the sales contract and will take an under the table cash payment for the remainder so that you will save on fees. This is great for them as it means they have less capital gains taxes to pay and bad for you when you get ready to sell as you will have higher capital gains taxes to pay. And if you are selling you should never do this under the table method as many buyers will verbally agree to the under the table payment but never actually pay it and you have no legal recourse since it is not in the contract.
Buying off-plan is when you purchase an un-built property off of the builder’s plans for what the home will look like. In theory this is a good idea as you get a lower price, however the risk is that the builder can go bankrupt and never finish and then you are out your money with no home. If you want to buy off-plan you should look for a builder that provides a banker’s termination guarantee or insurance policy that protects your money in the event that the builder goes broke.
And those are some of the things that I have learned about buying property abroad. Let’s just hope that I can remember it all by the time I am ready to take this step!