Spend Money to Save Money - Hire an Attorney
You’ve budgeted, researched, read everything you could find on International real estate and you’re ready to take the plunge and purchase your dream vacation home. And bonus! The developer handles everything from designing your home to financing. Spending that extra money – potentially unbudgeted money – on an attorney may seem like an unnecessary expense when you feel so prepared. Prepared or not, things can quickly go downhill if you try to do everything yourself, possibly costing you tens of thousands of dollars.
Although the extra step of hiring a local attorney may seem expensive, it’s an extra step you’ll be happy you made. Purchasing property or a home in a foreign country is much different then buying in North America. A trusted, local attorney is a necessity, and if you calculate their fee into the purchasing process, it won’t steer you off-budget.
Here are some key areas that your attorney will work with you on to ensure everything is on the legal up-and-up:
Property Title – there are a variety of property titles – freehold, concession, lease, rights of possession. Your attorney can tell you which one your property is. We advise you purchase only freehold registered title and always title insurance.
Boundaries – official property size and rights of way are a couple of examples where your attorney will help you. If right of way is in question, confirm that you have access and ensure your attorney records all details in the title deed.
Understanding the Contract – If a seller provides you with an English contract, ask them for the original that will most likely be in Spanish. Provide the original contract to your attorney to read over and either translate it for you or go over all the points to ensure you understand all the terms. The original Spanish contract is legally binding and the one you will be required to sign.
Permits and Approvals – various permits and approvals are necessary in every country. Sometimes you require a water permit and private communities usually need master plan approval. If you’re purchasing an existing property, you will require approval for any modifications or alterations. Ensure your attorney checks that all permits are in place, otherwise you could risk never getting registered title, face substantial fines, or even have to destroy the property.
Who’s the Seller? – If you’re dealing with a real estate agent or a corporation that’s holding the property, your attorney will ensure that you are purchasing from the registered owner and that they do actually wish to sell.
Terms of Payment – inflation adjustment, balloon payments, stage payments; these are all terms that most people aren’t familiar with. In addition, confirming how much you’re paying in total, the currency you’re expected to pay in and deposit details will all be explained to you by your attorney.
Unpaid Taxes, Liens & Mortgages – your attorney may wish to add a clause into the sale contract to ensure that the seller has paid any taxes, liens, mortgages, etc., prior to you purchasing the property. This is incredibly important, as many countries link the mortgage to the actual property as opposed to the owner.
Fixing Building Faults – if you’re purchasing a home, as opposed to property, ensure your attorney has confirmed the contract includes a period for the seller to fix possible faults in the home. For example, if there’s defective wiring or the roof leaks, you want to make sure you know your rights as they apply to the contract.
Penalty Clauses – your attorney will explain to you what will happen in the event of a worst-case scenario. For example, if you miss a payment, fail to sign on time or need to back out of the contract at the last minute, it’s important to know how much money you will be out or if there are extension options. It’s also not a bad idea to have your attorney add in clauses that are in your favor as well, just in case the seller fails to meet their end of the deal.
It’s easy to get caught-up in the excitement of purchasing a vacation or retirement home in the tropics, but don’t forget your common sense. No matter how prepared you think you are; hiring a local attorney will, without a doubt, make the buying process easier and stress-free. Plus, it can possibly save you money in the long term.
Familiarizing yourself with what you’re buying is also essential. We don’t recommend purchasing anything without visiting first. View the property or home in person on one of our Discovery Weekends to get a true feel for where you will be spending your days in paradise.