Purchasing Property Abroad? Know What You're Buying!
It should be pretty straightforward, right? Find property… buy property… enjoy property. And although this can be your reality if your buying process is done with a trustworthy source, this isn’t the case for everyone who has or is buying real estate abroad.
Now, before you start thinking, ‘of course I know what I’m buying!’ We’re not talking about a condo or a beautiful ocean-view home. We’re referring to how you actually own the property you’re buying.
There are a few different ways to purchase (or ‘hold’) real estate overseas… and a variety of ways to get in trouble. Knowing the terms and what type of ownership you’re getting into are key to avoid losing a lot of money, your home or both.
And we get it, buying abroad is much different from buying the same thing in your home country. The terms are different and the concepts may seem backwards… it’s not hard to become confused. That being said; we’ve done our best to break it down into three small bites for you…
Most countries will have a maritime zone. This is where the government owns the property along a shoreline. For example, in Costa Rica, the maritime zone is 200 meters. The 50 meters leading up to the ocean is public, meaning that anyone is able to access the shore without worrying about trespassing (as long as it’s accessed publicly, of course!), and no one can own it privately.
After that first 50 meters, the next 150 meters are restricted. The Costa Rican government allows concessions – a form of leasing – in this zone. Foreigners are not allowed to own concession land.
In Latin America, concession land is usually built upon by tourist developments; hotels, resorts, dive shops or restaurants. Sometimes though, developers will ignore these rules and build beachside condos… a risky move for those who buy these condos, since it’s undeterminable whether or not the developer will be able to renew the building’s lease, or at what cost. And if (when) there’s a change in government, previously lax laws can quickly become very strict.
When it comes to buying property in Latin America (or anywhere, for that matter!), freehold is the safest bet. Either you hold the property in your name or in a corporation’s name… that you own.
That being said, it’s still very important to check the title history. If there’s any record of confiscation or communally owned land, have your lawyer dig deeper to ensure all transfers were done cleanly.
Many countries within Latin America don’t allow foreign land ownership within certain limits of a bordering country. Additionally, some countries don’t even allow foreign ownership! Confirming that your dream destination will allow you to even own a piece of land is part of doing your homework and completing your due diligence when buying abroad.
Rights of Possession (ROP)
It’s not much more complicated then the name implies… you get the right to live on the property and use it. That is, until someone with a better claim shows up! And don’t be fooled by countries that have a registration system for ROP properties. In some cases, local officials will register multiple claims on the same property, even though they should only register one.
Sometimes the owner will tell you that he can obtain a freehold title for an ROP property. If that’s the case, get him to do so as a selling condition… don’t try and do it yourself after taking possession.
You already know that having a local attorney is a necessity when purchasing property abroad… confirming the type of property you’re buying is only one aspect of the sale contract, but a very important one!
That being said, when you’re working with one of our developers, these are details you won’t need to pay quite as much attention to. All of the properties within our developer’s projects will be freehold, which is right where you want to be. The only time you really need to pay attention to the small print is when you’re dealing with someone not pre-approved by Where International…
Want to meet our developers and see what they have available for you? Chances are, you won’t even need to look elsewhere after you see what they have! And a Discovery Weekend makes the process super-easy… get yourself to your choice country and the developer will take care of everything else for you. From airport pick-up to meals and personalized tours, it’s exactly the experience you would expect it should be.