Overseas property often features in our financial planning, especially when we are wistfully thinking of sunshine in the winter months.
If you are seriously thinking of buying overseas property, there are some common pitfalls you should be aware of, that could save you both a huge amount of heartache and avoidable expense.
1. Contract errors
When buying abroad, you may only receive one contract in the local language. If you do, you must get a professional translation completed. Many buyers baulk at the cost of getting this done professionally, but this will be one of the soundest investments you make.
Property is often the largest purchase we make, and you want to ensure you have a complete understanding of the contract you are signing. If you are provided with a translation, it is still worth getting this verified by a professional to ensure accuracy.
What to check
Accuracy – Ensure that the translation does not contain any errors, omissions or additions. Otherwise, you could be unwittingly agreeing to further conditions or charges not covered under the original contract. If you decide not to invest in professional translation, one simple check is to check that the provided translation has the same number of paragraphs as the original. If not, then there is almost certainly a problem.
Time constraints – In some countries, conditions are set when you sign a sales contract. This means you must either pay certain amounts of money at set times or complete the transaction within a defined period. Time constraints may be set due to national laws, rather than a developer’s or agent’s timeframe.
However, some of the conditions may, however, be unreasonable and do not take into account delays beyond your control. For example, if the property is still being built, there may be construction delays, or if you are applying for a mortgage to purchase the property, you may encounter financial or valuation difficulties. Ensure you are protected, and that specific clauses are included as required.
Finance agreements – Finance may be essential for you to purchase the property. If so, ensure any contract you sign states that all monies/deposit are refundable in full if finance is not forthcoming.
2. Developer Credibility
Always research a developer’s or agent’s previous work to see if they met deadlines. One way to do this is to hire an independent lawyer to obtain financial references for the developer to ascertain whether they have the cash resources needed to complete the development under construction.
The lawyer can also establish any compensation you would be entitled to if the developer does not meet agreed timescales.
It is also worth searching for reviews on the developer to flag any major issues before you proceed. Start with Google, and use the power of social media platforms like Facebook to quickly connect with other overseas property buyers and share experiences.
3. Deposit loss
You don’t want to lose your hard-earned deposit. When signing a sales contract, developers or agents may set dates when a holding deposit or larger stage payment is required. Often there is a lack of a cooling-off period beyond which you are unable to withdraw from the contract without losing your deposit.
Before parting with any cash, ask your independent lawyer to check the contract for clauses that become applicable if you decide to withdraw from the purchase. Also, ask for a cooling-off period of at least 14 days; this gives you plenty of time to return to home and seek other professional advice before proceeding.
Beware if you are paying for any holding deposit by credit card. Check that the developer or agent is not using your rights under the credit card laws regarding refunds, to avoid giving you a cooling-off period.
Many buyers typically worry about Contracts, paperwork and payments. To reduce stress, and ensure you minimise difficulties when purchasing an overseas property, we recommend taking professional, independent advice before proceeding.
Many thanks to Simon Conn for his support in creating this article which was taken from his original publication ‘How to avoid some of the common pitfalls in buying overseas.’
Want to know more about the pitfalls of buying abroad and what to do about them? Download our free guide…
