Moving Magazine 07.07
IT IS VITAL FOR ANYONE CONSIDERING THE PURCHASE OF A PROPERTY OVERSEAS TO AVAIL OF PROFESSIONAL LEGAL ADVICE TO ENSURE THAT THE PROCESS RUNS SMOOTHLY.
Phoenix Magizine , July 2007
At a recent conference hosted by the Law Society of Ireland, guest speaker Tom McGrath, Ireland's most prominent overseas property lawyer told delegates that he was constantly receiving calls from overseas property buyers who had lost significant sums of money and even been forced to forfeit their property as a result of dealing with unscrupulous estate agents.
With Irish overseas buyers now investing up to 8 billion annually in overseas property, he is constantly dismayed at the number of people who fail to undertake even the most rudimentary level of research on the market in which they are investing. The same mistakes tend to be repeated time and time again, often with catastrophic consequences. "The common pitfalls and mistakes that people make are paying over money without taking professional advice, rushing into something without realising what they are doing or why they are doing it, signing documents whether its contracts or Powers of Attorney, giving away their rights to other parties without realising what they are doing and basically the underlying problem is not doing their homework, not taking their time and not dealing with professional people," he says. "If someone is buying a property in Ireland they wouldn't dream of doing so without using a lawyer.
Why on earth would they do so in a country where the language is different, the tax system is different, the currency is different, the law is different and above all the culture is different." Prior to setting up his own practice in 2001, Tom was involved primarily in litigation work and spent his life in the Four Courts and in every District, Circuit and High Court house around the country.
His decision to establish his own practice was encouraged by his extensive involvement with the Ireland Spain Economic Association?! a relationship which had resulted in a significant number of business contacts, particularly in Spain. In addition, Tom is fluent in Spanish and his wife is Spanish, so people would frequently ask him to assist them with their purchases of properties in Spain. Ireland's economic recovery was in full swing and with Irish proper! prices soaring considerable numbers of people were utilizing their equity to invest in property overseas.
However, there was still a lack of professional advice and guidance available to these people and Tom was quick to capitalize on the opportunity. Using his extensive contacts he established an association with a Spanish law firm and from there the practice gradually extended to other parts of Spain.
They now have some 25 associate offices throughout the peninsula. After that, they moved to Portugal where they now have 4 associate offices and then onto France, Germany, Poland and the East European countries. More recently, they have formed an association with a number of high powered international law firms and we are now able to provide the legal services worldwide and particularly important, at a consistent level of service.
For anyone considering buying abroad the importance of using a professional legal specialist cannot be overstated. There are numerous potential minefields to be negotiated and unsuspecting buyers who fail to acquire professional help and guidance are taking a considerable risk. Tom's practice offers clients the advantage of dealing with an Irish based solicitor which is obviously more convenient and also ensures that no difficulties arise as a result of the language barrier.
There is also the added benefit of invaluable local knowledge gained from the associations which Tom McGrath & Associates have established with legal firms worldwide. "Basically we give the Irish investor and holiday home maker peace of mind," says Tom. "We ensure that there are no hidden surprises in relation to their purchases, that all licences are in place, that planning permission is complied with and that there are no rights of way affecting the property you want to buy.
We also ensure that there are no mortgages or charges attached to their properties and that a full investigation of title is carried out." Tom McGrath is also a Notary Public which means that Powers of Attorney can be notarised and documents authenticated for use in foreign jurisdictions. The practical benefits of this service include saving the client from having to travel overseas in order to sign documents.
A document you sign in Dublin is accepted as a legal document in the country where you are buying property. While it is undoubtedly beneficial for reasons of convenience for buyers to have an Irish based solicitor, Tom agrees with those who argue that overseas buyers are better advised to secure the services of a local solicitor when buying abroad? "I absolutely agree that a local Tom was quick to capitalize on the opportunity. Using his extensive contacts he established an association with a Spanish law firm and from there the practice gradually extended to other parts of Spain.
They now have some 25 associate offices throughout the peninsula. After that, they moved to Portugal where they now have 4 associate offices and then onto France, Germany, Poland and the East European countries. More recently, they have formed an association with a number of high powered international law firms and we are now able to provide the legal services worldwide and particularly important, at a consistent level of service.
For anyone considering buying abroad the importance of using a professional legal specialist cannot be overstated.
There are numerous potential minefields to be negotiated and unsuspecting buyers who fail to acquire professional help and guidance are taking a considerable risk. Tom's practice offers clients the advantage of dealing with an Irish based solicitor which is obviously more convenient and also ensures that no difficulties arise as a result of the language barrier. There is also the added benefit of invaluable local knowledge gained from the associations which Tom McGrath & Associates have established with legal firms worldwide. "Basically we give the Irish investor and holiday home maker peace of mind," says Tom. "We ensure that there are no hidden surprises in relation to their purchases, that all solicitor has to be involved and that is why we have a network of reputable lawyers in the countries where people are buying," he says. "Because we only deal with highly reputable law firms, people that we trust, we rely on our colleagues to be able to provide an efficient and satisfactory service.
Through this process we are able to keep abreast of all changes in the local jurisdiction. Having said that, everything is channelled through our office here in Dublin and the client only deals with an Irish law firm." Regardless of the type of property a buyer is purchasing or the funds they have at their disposal Tom emphasises the importance of only dealing with reputable estate agents and developers. "There are many, many good ones out there, however there are also those who are dodgy and unscrupulous," he says. "In an industry, which is unregulated, people have to be so careful. The industry is crying out for regulation and good estate agents will warmly welcome this when it happens."
Tom also emphasises the importance of getting professional advice in relation to the tax implications of your purchase. Buyers need to check whether there is a double taxation agreement in place between Ireland and the place where they are buying and also need to familiarise themselves with the local tax liabilities. "There are numerous questions to be addressed," says Tom. "Do they need to raise finance and if so are they going to rely on rental income? Is the property easy to rent? They should take care of what they are told by agents. The whole area of buying properties overseas is a minefield. I see people attending these large exhibitions and they pick up the glossy magazines, which I am convinced only confuse them more at the end of the day. Each and every agent with their stand will try and convince a potential purchaser that their product is the best. Some are good, some are better, some are atrocious and it is difficult for the inexperienced to distinguish which is which."
PURCHASING ADVICE: WANT TO BUY ABROAD? WHAT YOU SHOULD DO?
Seek independent legal advice before signing any contract or paying any deposit. Once the contract has been signed or a deposit paid certain commitments have been assumed which may be impossible to avoid or change. It may also be advisable to purchase the property through a foreign company for tax reasons this decision must be made before the signing the title deed. Confirm what the conditions of the contract are, and that all necessary documentation is available if the transaction falls through, to ensure that the deposit is fully refundable should the vendor withdraw or have a change of mind on the sale. Beware of the construction deadlines on new developments. Make sure you get an approximate date for handing over ownership and keys. The issuing of official licenses can sustain delays due to building irregularities. This can cause a delay and you may have to wait an extra few months or even a year to get keys to the property.
Top Spots
We advise clients buying property overseas to make a Will in the country where they have bought. Ensure all advance payments have a bank guarantee or that your money is secured during the course of the purchase transaction.
“When we started the traditional markets were Spain and Portugal. These countries will always be attractive particularly to the lifestyle and holiday home buyer. The investor however has gone elsewhere and we have found in the last few years clients are buying in regions such as Cape Verde Islands, Turkey and Bulgaria, although Turkey has cooled down somewhat in the last year. Recently Montenegro, Morocco and South America have come on the horizon.
For the commercial investor, Poland and Germany are quite popular. Recently Italy and France are quite popular with people wishing to have a holiday home and with France in particular with some investment element. For investment potential with good rental returns I believe that France provides this through the leaseback system.
There are those who argue against this. Be careful with the word ‘guaranteed rental’ as some unscrupulous developers are only paying you back your own money having increased the purchase price. Rental can be good in Germany and to some extent in certain areas of Spain and Portugal. For capital appreciation at the moment I think that Poland is the leader. I know that in certain parts of Poland last year capital appreciation was a staggering 75%, Montenegro and Morocco have also good potential for capital appreciation as indeed will the South American countries when they come on stream, which I believe will be very shortly.