The Irish Independent 02.07

Irish Independent
Jan 2007

Time to crack down on unscrupulous

THIS week overseas property lawyer Tom McGrath told the Law Society that countless overseas property buyers call on him in tears, having either lost their properties or vast sums of money in dealing with unscrupulous estate agents and developers. Speaking at a solicitors' conference, McGrath out­lined several unfavourable practices used by estate agents when selling property abroad. For example, in Bulgaria it is common practice to under-declare the purchase price of a property so as to avoid paying VAT, currently levied at 20%.

Serious issues
This practice raises a number of serious issues for the purchaser such as committing a Bulgarian tax offence, higher perceived capital gain when the client goes to sell the property and gener ally receipts cannot be obtained for monies paid over. We have heard that a number of agents apparently advise purchasers to go down this route and under declare the purchase price of the property.

Black money payments in Spain also came under fire. He outlined instances where estate agents have advised purchasers to pay a portion of the purchase price in cash to avoid pay­ing property taxes and also to reduce the sellers' capital gains. Even worse than this, he had cases where estate agents have chosen not to inform purchasers that the vendor wants a cash/black money payment. The arguments against making such payments are the same outlined in the Bulgaria exam­ple.

Tom McGrath & Associates has also come across a situation where an estate agent physically showed an apartment to a purchaser which had beautiful views of the sea and the mountains, maintaining that this was the apartment the client was buying. However, when the purchase came to complete, the buyer discovered that the apartment which had been reserved was a completely different one.

Duping
In this instance the estate agent knowingly misrepresented the apartment for sale with the intention of "duping" the purchaser into parting with her money.

Vendors
Mr McGrath said that the industry urgently needed regulation, stressing it was high time that something was done about this totally unacceptable state of affairs.

Noting that this year there was a surge in the number of people investing and buying holiday homes abroad and that, with the enormous variety of countries involved, it was even more important that some­thing should be done about regulation.