Irish Property Buyer 03.08

Look Before you Leap (Irish Property Buyer)
(March 2008)

Buying an overseas property can be an exciting prospect, but do all of your homework in advance handing over your cash, warns overseas property solicitors Tom McGrath and David O'Donnell.

When buying property overseas, people must seek professional assistance.

If you have ever been to an overseas property exhibition, you will be familiar with the scene: colourful stands with friendly staff advertising exotic, sunny places; designed to get you to invest your money in a dream holiday home abroad.

At these property exhibitions, you may have felt a predatory sense at your shoulder waiting to pounce. This predator is all too often an estate agent keen to sell you a new home and a new life.

While many people leave these exhibitions more confused than ever, others aren't so lucky: having committed themselves to a purchase way beyond their means or that they had no intention of buying in the first place.

Let us be clear: there are many, many good and reputable agents out there, particularly the large, long established firms. The difficulty is that we are dealing with an unregulated industry where anyone can take it upon themselves to sell foreign property to an innocent and unsuspecting purchaser. In our experience, we have even come across a case where Bulgarian J apartments were being sold, liter- I ally from the back of a fruit-van, ' without any right of ownership. Unscrupulous agents will hound a potential customer with promises of this, that and the other, guaranteed rent, or that the property is the most wonderful opportunity that they will ever come across. But remember all they are interested in is getting you to sign on the dotted line so that they can then get their commission. These commissions can be anything up to 15 per cent of the purchase price, which is already built-in.

Once you are committed, the unscrupulous agent often becomes non-contactable. They will only resurface when the next instalment is due. We have had a case where a gentleman wanted to invest his small savings in one apartment. Having placed the deposit, he was then convinced by the agent that instead of paying the second installment due on the first apartment, he should use that money as a deposit on a second investment. Believe it or not, this unfortunate gentleman has now ended up having signed a contract for ten units in a number of different developments. He is totally out of his depth, unable to pay what is due, but he is legally bound to complete the purchases. On the other hand, the agent has already obtained commissions for all of the ten units!

It is vitally important that when people are buying properties overseas, they should take the time and seek professional assistance. Beware agent or development company says you z require legal assistance or they will provide it for you!

Lawyers are perceived by agents as obstacle their commission. Any lawyer that they provide will be acting for both sides with a clear conflict of interests and one who certainly will no: your interests at heart. Clients of ours were told by a developer that unless they dispensed with no services and employ the developer's lawyers, : could not purchase the property. Needless this started alarm bells ringing and they will away from that particular investment.

Another couple were shown their apart: with sea views by a silver tongued agent who convinced them to part with their money. When they went to move in they discovered their new apartment was actually occupied by a family. Their true purchase was in a back alley at the end of the town with no views whatsoever.

We have been made aware some agents who are promoting properties where, irrespective what you sign in the contract, you will be asked for a greater sum to pay on closing. Their attitude is that it is not their problem, talk to the developer.

When buying property overseas, you should conducts yourself as though you were buying property in Ireland. You would not dream of closing a house purchase in Ireland without using a solicitor, so why would you do it in a foreign country where the legal system is different, the tax system is different and above all, the culture is differ.

Other facts to keep in mind are, you she _ never pay over any money or sign any documents without first having obtained professional le. advice. Do not be afraid to ask the agent questions and any commitments, get them in writer buying overseas should be fun. However. : not lose sight of the fact that you are parting v a substantial sum of your hard earned money. Y:-investment deserves that all reasonable steps _ taken to ensure that it is safe and trustworthy whether for an investment or a holiday home can be a terrific adventure through an exotic jungle. Only be careful of what is lurking in the long grass!