How, one wonders, can one go ahead and purchase property over the Internet without having viewed it, let alone having waited for surveys to be conducted or employing independent legal advice. Yet this happens on a daily basis! It seems as though Brits are swept along by the national obsession with buying property, house prices, mortgage rates, investments and property hot-spots, all of which leave people with the feeling that they must act now to snap-up a bargain. But, to act without first taking pause to consider one's options could result in your property dreams becoming your property nightmares.

GETTING THE RIGHT HELP
The most important thing you can do to ensure your property purchase runs smoothly is to employ the right professionals to help you through every stage of the process. It is all-but vital to engage the services of an independent lawyer who is both fluent in English and the language of your intended country and well versed in the property laws of each. Note 'independent'. It's rarely a good idea to use a lawyer recommended by the estate agent or property developer you are using. If you do, they could be acting as much in the other party's interests as your own (after all, the property dealer probably sends substantial business their way and they may have a conflict of interest). One often reliable way to find a good property lawyer is to ask the advice of your Embassy in that country. Otherwise, try to use a lawyer who has been recommended to you by Brits who have had similar dealings. "I strongly advise you to hire a local lawyer that you trust", says Peter Gage Morris, Managing Director of Ober-Haus Real Estate. "Hire someone who speaks English fluently to avoid any misunderstanding. The small amount that you spend on a lawyer will be your best investment."

OWNERSHIP ISSUES
Your lawyer should conduct a search on the property. This will first confirm that the property has a title deed attached to it and that the vendor is legally allowed to sell the property. There have been a number of widely publicised examples of a shady dealer selling a property that they have no rights over, sometimes to more than one person. This is a particular risk in countries with an unstable recent past or a history of population displacement. "In the past few years there has been considerable standardisation of the title registries in central and eastern Europe. But be careful", Gage Morris warns, "in the past there have been incidents of the same property being sold ten times in one day. I have heard of this situation recently in Montenegro, where nothing is yet computerised." The systems of land registry in former Eastern bloc countries are often struggling to modernise after years of neglect. Out-of-date land records, missing title deeds and a system that is not yet computerised can create a confusing picture.
 
Issues of property ownership are complicated still further in countries with a degree of political instability, such as Northern Cyprus. There, a proportion of private property was owned by Greek Cypriots who were displaced by the Turkish military occupation, meaning that the waters are considerably muddied when it comes to the question of 'legitimate ownership'. The British Commonwealth website  notes that "the non-recognition of the Turkish Republic of Northern Cyprus [by the EU] and the possibility of a future political settlement in Northern Cyprus could have significant practical or financial implications for those considering buying a property in the north."  Internationally recognised title deeds are those which were owned by either foreigners or Turkish Cypriots prior to 1974. If the land was owned by a Greek Cypriot before the occupation, or if the title is defined as 'case pending' (land which was not registered in the chaos of the 1974 occupation) then it is best to steer clear. There are some great properties to be found in Northern Cyprus, but you do need to get legal advice that confirms the vendor's right to sell. The search will also check that the property does not have any debts attached to it and compare the registered plan with the estate agent's description to confirm exactly what you are buying.
 
In countries such as Belize this is especially important as neither the vendor nor the agent is obliged to disclose this information – it could be that the vendor can only sell part of the property or that you are being offered it as a short-term lease without realising it! The search will check any planning issues that might limit what work you can do in the future and make sure that work already undertaken doesn't violate any regulations. A proper search will confirm that there are no local authority plans for the area – so that you don't end up with a motorway running through your living-room – and that there are no pre-emptive rights over the land. For example, if buying in certain rural areas a farmer might have first refusal on the land you want to buy.

Your lawyer will also be able to advise you about any restrictions governing foreign ownership of property in your intended country. In Spain, according to Mark Stucklin of Spanish Property Insight, "purchasing property is really straight forward. Any problems that arise are because of how people have gone about buying." For example, one thing to be aware of are the Spanish Coastal Laws: if your property is within 500 metres of the sea, your purchase might be affected. Also, in Valencia and Andalusia legislation that restricts foreign ownership has been introduced to protect rural and agricultural land from development. In Poland, there are restrictions in place on foreigners owning farmland for the next 12 years. In Bulgaria, under the act on Foreign Ownership, foreigners are allowed to own buildings but not land. In Turkey, as a foreign national you can own land in a town or a city, but not in villages or rural areas. A good lawyer will help you avoid these pitfalls.

AVOIDANCE ADVICE
With these restrictions,it can seem tempting to bend the rules. It is fair to say that sometimes restrictive regulations can be circumvented. If you want to own land in Bulgaria then perhaps it is worth considering setting up a Bulgarian company which you can own land through. However, it is not always wise to bend the rules. For example, in Spain it is quite usual for a buyer to agree to a reduced price and pay cash to make up the difference, as this allows the vendor to minimise his capital gains tax liability. As an incentive often some money will be knocked off the total purchase price and to refuse to do so may cause the vendor to back out of the sale. Tax avoidance is, of course, highly illegal. Add to this the fact that, should you want to sell, you will have increased your own capital gains liability and suddenly it's not such a smart move. Your lawyer should also provide advice about how to minimise you tax liability. According to Roy Welch of Currencies Direct, "another aspect that is often overlooked is who should legally own the property, as depending on the country and the name you choose to put it in you could end up paying more tax than is necessary, both during your lifetime and after your death." In many countries it is also wise to either re-write your will or make a new will that is recognised by the country that you are buying in. "There are often strict limitations on who you can leave your property to, especially in France" says Welch, "therefore, others may have claim to your property rather than your chosen beneficiary".

DODGY DEALERS
When buying property abroad, it is worth bearing in mind that in many counties estate agents don't require a licence to practice. In Belize, the entire property market is unregulated and estate agents don't need any certification, prior training or experience. And it's not just the 'off the beaten track' destinations that have this problem. The Spanish property market is rife with uncertified agents. This means that there is the potential for unscrupulous agents to exploit clients who are unfamiliar with the workings of the property process. How can this be avoided? The integrity and professionalism of your property developer is vital to the success of your purchase. Do as many checks as possible, try to speak with former clients, search the Internet for references to the company and pick someone with a good reputation that they'll want to protect.

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For further information:
Spanish Property Insight 
Currencies Direct  
Ober-Haus Real Estate Company

Image courtesy of Visit Florida

Article first published in March 2006