Dennis Phillips, solicitor and principal of Phillips International Lawyers, provides a helpful guide to the legal smallprint.

Don't pay without signing
Let's begin with a golden rule: Unless you are prepared to lose what you pay, don't pay anything without signing something – and don't sign without the document in question being independently checked.

Follow this rule and you'll minimise the risk of making one of the most common mistakes when buying abroad and avoid any unwelcome surprises further down the line. One of the easiest ways of safeguarding your money is by formally instructing your lawyer before you go on your
property-buying trip. Remember above all, your lawyer is only a phone call away and can give you instant help and advice when you are being asked to sign anything by the developer or agent.

Take professional advice
Always instruct an independent lawyer, too. True, the chances are that a national from the country you're buying in probably wouldn't use a lawyer when buying property, but with so many extra considerations to bear in mind when buying as a foreigner, can you really afford not to? I'm not just saying that to line my own pockets. As most experienced and successful property investors will confirm, taking good legal and professional advice will usually save you much more than their fees.

It's a quirk of our industry that a great property can be sold by a rogue agent or developer and the best agents can have properties with bad title on their books. Moreover, you'll learn a lot about the agent from their approach to recommending legal advice. The worst agents will actively discourage you from taking independent legal advice. They'll tell you that involving lawyers will slow things down and cost you more. They're right if this means you'll be spending more time and money to make sure that things are done properly. But would they be saying this if they were a substantial and reputable agent or developer with nothing to hide? Others will often encourage you to use 'their lawyers', or perhaps their own in-house legal department or the lawyer next door. If these lawyers are directly paid by or getting most of their business from that agent or developer, can you really trust them to point out all of the issues I mention below?

In fact, the best agents will carry out some of their own title checks before putting properties on their books, particularly before selling a substantial development or a handful of unusual properties. Although this can go some way to reducing the risks outlined below, the legal status of the properties they've checked can, and often do, change over time. For all these reasons, the best agents and developers will actively recommend that you take independent legal advice, perhaps from an appointed 'panel' of specialist lawyers.

General legal issues
So, you've teamed up with your lawyer. What are the checks you should be expecting us to make and what sort of problems might we be typically looking out for? As you'd expect, the detailed law and procedure in each of the increasingly wide number of countries on offer to you will, of course, vary. However, there are many common legal threads which run through all of them. We'll turn shortly to a few of the particular legal problems in some key market places. But in those, and many other places you might be considering, your lawyer will, among other important things, be telling you whether:
The sellers have the right to sell you the property
There are any financial or legal burdens registered against the property and whether these will be removed before you become the owner
It's likely that, after completion, you'll be asked to make any future (and otherwise unexpected) payments or, worse still, have your property pulled down if it was built without the appropriate permission)
The contract is sufficiently thorough and whether it protects your interests. Or if it's unfairly biased in the seller's favour and what we can do about it
It's safe to pay your money

In addition, further checks might be needed depending on the particular property you are buying or the area you are buying in. What's more, other issues can often arise, including:
If you're buying new or off-plan property, are your payments protected should the seller become bankrupt or otherwise unable to deliver you the property?

What to do if you're being asked to under declare the price and pay 'black money'. Let me expand on this one. In most of the countries we deal with, it's common for sellers to ask you to 'under declare' the property value in the title deed in a bid to save transfer taxes. This has been a problem long associated with Spain but beginning to become less so. Turkey, on the other hand, is where Spain was 20–25 years ago. The proposed under-declarations are often huge and, if agreed to or not managed properly, may have far-reaching consequences. Take professional advice at the earliest possible stage for guidance on the legal consequences, customs and solutions in your particular country, and on how they fit with your personal circumstances and approach.

Country specific issues
'Land Grab' in Valencia, Spain
This issue has been making headlines for some years now. Following a law passed by the Valencian regional government in 1994, unscrupulous developers were allowed to seize rural land for urbanisation from neighbouring plot owners and pay very low or no compensation. It's becoming less of a problem following a recent European Court decision but it's still a good idea for your lawyer to check the land classification beforehand if you're thinking of buying in this area.

No contracts in Dubai?
I started acting for clients buying in Dubai in early 2004. For some time since then it's been a strong sellers' market. The background to this is the Sheikh's Royal Decree some four years ago allowing freehold ownership for foreigners. Following that decree, early investors piled in to make the most of the potential investment opportunities offered by Dubai's ambitious economic growth plans. This sellers' market has, perhaps, been one of the main factors influencing seemingly bizarre practices. I've witnessed on countless occasions situations where many buyers have paid 20, 30 and sometimes even 50 or more per cent of their property price instalments without having signed any form of binding contract. But today, with more property actually approaching completion and still more starting to be built, the market conditions may well become much more competitive. So, before long (if it's not starting to happen already), this may start to favour the buyer rather than the seller. Against that backdrop, buyers currently considering Dubai should insist on being issued with a full purchase contract. That way, you'll be clear on exactly where you stand legally and have a much stronger basis on which to negotiate should any problems, such as building delays or shoddy workmanship, ever arise. Many of the main contract terms issued by the main developers are likely to remain non-negotiable. But if you're not getting a contract when you ask for one then look elsewhere. Once you do get one pass it to your lawyer. We should be able to advise you in full on the terms of that contract and guide you as to which of those terms are and aren't worth negotiating hard on, to ensure you're getting the best deal for your money.

The 'extra bits' illegally added in Croatia
I recently acted for a couple who were buying a very well-appointed resale property on the Croatian coastline. Our legal checks revealed that the seller had obtained permission to build a two-bedroom bungalow back in the 1980s. Good news you might think – until you realise that what our clients are actually buying is a five-bedroom property spread over three levels! 'But everyone does this in Croatia' is the common response. True, but with the clients all but having fallen in love with the property and the Croatian authorities determined to clamp down on planning breaches in a bid to preserve their beautiful coastline, what could we do? In you find yourself in this situation, there are a limited number of 'options': Pull out altogether; Go ahead despite the title defects and get the problem sorted out later at your own cost; Get the seller to sort it out before you hand over any further money to them; or place a goodwill deposit in a third party blocked account to be released to the seller once the problems are sorted.

Title classifications in Turkey
In Turkey there is, currently, a large amount of property with 'bad title'. In particular, if you are buying a property under the course of construction you will need to be sure your developer is building with planning permission in the first place and, if so, what type of permission they have actually been granted. It's been very commonplace for buyers in Turkey to be led to believe they are buying property with the equivalent of 'freehold' title (with full unrestricted ownership rights) when, in fact, they are actually buying property with possible restrictions on their personal enjoyment. For example, they might only be allowed to use the property for a certain number of weeks a year and be legally obliged to take steps to rent their property on a commercial basis for the rest of it. For those who see their property mainly as an investment that may not pose too much of a problem. But for those who've been expecting they'll be able to use it all year round and come and go as they please, it can come as a surprise. And the more money they've paid before they realise this, the more unwelcome the surprise. In both cases, you need to have an eye on the future and how marketable your property will be depending on its legal status. Get this checked by your lawyer at the earliest stage possible and, ideally, before you commit any major deposit to your purchase.

In conclusion
As you'll realise, there's no 'one size fits all' answer. There are usually a number of possible solutions to the many specific problems which might vary from case to case. These will depend on your financial circumstances, the seller's circumstances and his/her keenness to sell, the prevailing market conditions and how attached you've already become to your chosen property. In often dynamic property markets and with a number of options available, this is precisely how we your lawyers and your other professional advisers provide our value and ensure your interests are best protected each step of the way, thereby making your overseas property purchase an enjoyable and ultimately rewarding experience.

This article has been provided for information only and is not a substitute for proper legal advice.  Phillips International Lawyers cover Croatia, Dubai, Spain and Turkey. 

Key considerations
Ten key things to consider when buying abroad:

1. The considerable investment of time and effort required to reap the rewards of a well-selected overseas property.

2. Deciding on your reasons for buying. Which combination of lifestyle, investment or speculation?

3. Thoroughly researching your chosen country and preferred location, and deciding on a property type.

4. Instructing an independent lawyer before you go.

5. Saving tax by taking professional advice about whose name(s) the property will be held in.

6. Arranging your finances before you go.

7. How currency fluctuations might affect your budgeting and what you can do about it.

8. Carefully researching your agent or developer before selecting them.

9. Once you've found your property, agreeing a fair price and arranging a valuation if you're unsure.

10. The management of your property once you own it. Will you do it yourself or appoint a management company?

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Article published on 5 February 2007