Saturday, November 6, 2010

Purchasing Property in a Foreign Country - Know the Regulations

Investing in a second home or investment property in a foreign country for the first time can be a thrilling and exciting time.  Just imagine, sitting on that first flight, excited about the prospect of finding that perfect bungalow in Belize or villa in Italy, with all of the standard questions going through your head: How much house can we afford? Is that gem still out there in the locale we want? It is completely normal to be excited and a little apprehensive at the same time.  However, before you take that first flight, there are a few additional questions you should ask and answer for yourself.  What country’s real estate laws are friendly to foreign buyers?  Will the local rules and regulations make it easy to purchase?  How long will the process take?

I am hoping that this article may give you a glimpse of a few country requirements and help guide you through the investigation process.  At the end of the day, preparation, perseverance, patience and knowledge will make your process so much smoother.

There are some countries that make it easy for foreigners to own property and others that are not quite as flexible.  That being said, I suggest that once you have found your paradise, stick with it and see it through.  Do the research and know the local processes and procedures.  A little extra preparation is definitely worth it if ultimately, you find that perfect second home in paradise.

I have done a little research on some desirable areas to give a first blush regarding the relative ease or difficulty of purchasing a property.  Here is what I found:

  • The initial sales contract is called the contrato de promessa de compra e venda (CPCV).
  • Deposits are required on property; typically 10 – 12%
  • If a seller is to walk away from a “CPCV” they are obligated to pay twice the amount of the deposit. This is unheard of in most countries and offers an extra layer of protection for you as a buyer.
  • Foreign nationals wishing to buy real estate in Portugal are required to obtain a “Fiscal Number” from the local tax office. It is very simple and quick, but required.
  • The signing of a final contract and deed take approximately 3 to 4 weeks. Once this is complete, the transfer of real estate takes place.
  • The last two steps are to make a payment of the Imposto Municipal Sobre, a tax on real estate. And, the buyer will need to register the deed with the Land Registry Office.
  • Morocco has been working very hard to attract more foreign investment.
  • The first step is to make a verbal offer by the potential buyer to the seller; typically through an agent.
  • Lawyer’s draw up initial preliminary agreements/contracts once verbal offer and negotiations are finalized.
  • Deposits are required once the initial contract is executed, typically 30%.
  • There are some mortgage lenders doing business in Morocco. If you find one, it is recommended to utilize their services.
  • A foreign national must open a bank account in the Kingdom to consummate the sale.
  • Final conveyance of property can happen very quickly (a matter of days), however sometimes the beginning process when the seller is ensuring no encroachments exist and property is legal to transfer, can take several weeks.
  • It is still somewhat restrictive to own here, but not completely impossible.
  • In the 1990’s Croatia begin to relax the laws of real estate ownership for foreign nationals, making it easier for foreigners to purchase. They developed a statue of reciprocity for foreign ownership of real estate. The provisions state that if the country of origin of which the foreigner lives allows a Croatian the ability to own real estate, Croatia will allow that foreigner to own real estate in Croatia.
  • To begin the process you must obtain permission from the Croatian Ministry of Foreign Affairs. They will verify ultimate ownership interests.
  • Sometimes this process of review by the Ministry can be rather lengthy.
  • The sales contract and petition to own property must be submitted to the Ministry simultaneously.
  • A deed cannot be filed in the Land Books of Croatia by a foreign national without all of the paperwork approved and issued by the Ministry of Foreign Affairs.
  • Commonly, 10% is the required deposit for purchases and there are no mortgage lenders (at this time) for foreign nationals in Croatia. Funds will need to be secured elsewhere.
In all matters of purchasing real estate in a foreign county, it is recommended that you reach out to a realtor and a lawyer for a more thorough understanding of the local laws and regulations. This investment will be well worth your time.
After it’s all said and done, enjoy your new slice of heaven. For years and years to come, your family and friends will enjoy the investment and inevitably it will become a large piece of your personal memoir in the storybook of your life.

No comments:

Post a Comment