Hazards in Buying Foreign Real Estate

[haha]

http://www.timesonline.co.uk/article/0,,2-1808644,00.html

Some Brits have big problems in Spain.

Ha

 

[Lancelot]

I would not buy in Thailand either....

Lance

 

[pagar]

Since the US Supreme Court seems to think that public good may be more important than individual rights, I'm not so sure that there aren't some new hazards for people buying in the US. But I feel good about the homeowner's right's in Panama and I think most of us who own here think the same way.

 

[Craig]

I nearly took a position as CFO for a company developing real estate in Mexico ... Rocky Point. They took cash deposits from buyers for development of single family homes. There was no legal requirement in Mexico to put those deposits into escrow accounts, so ... the company used them for operating expenses. I never signed up, the company declared bankruptcy, and the buyers lost their deposits.

Without a great deal of knowledge, and a very trusted local advisor / attorney, I would never buy real estate in another country.

pagar, you're right ... private property rights in the U.S. are under fire as well.

 

[Mr._johngalt]

pagar, you're right ... private property rights in the U.S. are under fire as well.

And as Al Jolsen used to say "You ain't seen nothing yet!"

The Bill of Rights will be gutted eventually, for the public good of course.

JG

 

[Ed_The_Gypsy]

Charles,

It always amazes me why people walk into such deals. There is an astounding shortage of common sense out there. PT Barnum once said [somjething like] No one ever went broke underestimating the intelligence of the public. [Anybody have this quote correct somewhere?]

Ed

 

[astromeria]

"No one ever went broke underestimating the intelligence of the American public."
HL Mencken

I'd love to hear what he'd have to say about today's scene!

 

[Craig]

Regarding PT Barnum's quote:

http://www.historybuff.com/library/refbarnum.html

P. T. Barnum Never Did Say
"There's a Sucker Born Every Minute"
By R. J. Brown
Editor-in-Chief

P. T. Barnum is most often associated with the circus sideshow and the display of freaks. While this is true, he is also the founding force behind one of America's most famous circuses: Barnum & Bailey Circus. Barnum is also affiliated with the famous quote "There's a sucker born every minute." History, unfortunately, has misdirected this quotation. Barnum never did say it. Actually, it was said by his competitor. Here's the incredible story.

From 1866 until 1868 Mr. George Hull, of Binghamton, New York studied archeology and paleontology. Over this period of time Hull contemplated how to pull off a hoax. It seems that many an evangelist at the time had been preaching that there were giants in the earth. In June of 1868 Hull traveled back to Fort Dodge, Iowa where there was a gypsum quarry he had recalled seeing two years earlier. Even then, he had noticed that the dark blue streaks running through the soft lime rock resembled human veins. Realizing this its appearance was tailor-made for his hoax and it was easy to carve, Hull hired a group of quarry workers to cut off a slab measuring twelve feet long, four feet wide and two feet thick.

In November, Hull had his gypsum wrapped in canvas and hoisted onto a wagon. Since the nearest railroad was forty miles away, it proved to be a long, difficult job. He then had the slab of gypsum shipped by rail to Chicago where he had hired a stone cutter named Edward Burghardt to carve a giant. Burghardt and his two assistants, were sworn to secrecy and agreed to work on the piece in a secluded barn during their off hours and Sundays. The instructions were to carve the giant as if it had died in great pain, and the final result was an eerie figure, slightly twisted in apparent agony, with his right hand clutching his stomach. All of the details were there; toenails, fingernails, nostrils, sex organs and so forth. Even a needlepoint mallet was used to add authentic-looking skin pores. When the carving was done, sulfuric acid and ink were used to make the figure look aged.

The giant finished, Hull then had the figure shipped by rail to the farm of William Newell, his cousin, located near the town of Cardiff, New York. In the dead of night, Hull, Newell and his oldest son buried the giant between the barn and house. They were instructed to say nothing about it and that Hull would let them know in about a year of what the next stage was.

Luckily, about six months later, on another farm near the Newell's, some million year-old fossil bones were dug up. Newspapers around the country reported the finding. Hull was filled with glee in reading the accounts.

True to his word, one year after burying the giant, Hull sent word to his cousin on October 15, 1869, to start the next stage of the hoax. Newell hired two laborers to dig a new well near his home. Newell directed them to the exact spot he wanted the well dug and went back into the house to wait -- anxiously. Sure enough, well into the day, the two laborers rushed up to the house to announce their discovery: a giant turned to stone! The laborers and both Newells carefully excavated the area surrounding the giant.

News of this amazing discovery spread throughout the valley and soon wagon loads of neighbors streamed into Newell's farm to see the giant. By mid-afternoon, Newell erected a tent around the "grave" and started charging 25 cent admission. Two days later, the Syracuse Journal (New York) printed an article about the discovery. Being greedy, Newell raised the price to 50 cents, and a stage coach company made four round trips a day from Syracuse to the Newell farm. Thousands came every day. Among the visitors were clergymen, college professors and distinguished scientists. Before long, the expert's opinions split into two theories; one side claimed it was a true fossilized human giant and the other side pronounced it an authentic ancient statue. No one asserted that it was a fake!

About ten days after the discovery, and about the time the Cardiff Giant, as the papers had named it, started receiving national attention, Hull sold two-thirds interest in the giant for $30,000 to a five-man syndicate in Syracuse, the head of which was a banker named David Hannum. The syndicate moved the giant to an exhibition hall in Syracuse and raised the admission price to a dollar a head. Unknown to them, P. T. Barnum sent an agent to see the giant and make an assessment. The particular Sunday the representative saw the giant, the crowds were abnormally large -- about 3,000 people. The agent wired the news back to Barnum and Barnum instructed him to make an offer of $50,000 to buy it. Hannum turned his offer down.

The Cardiff Giant was the most talked about exhibit in the nation. Barnum wanted the giant to display himself while the attraction was still a hot topic of the day. Rather than upping his offer, Barnum hired a crew of workers to carve a giant of his own. Within a short time, Barnum unveiled HIS giant and proclaimed that Hannum had sold Barnum the original giant and that Hannum was now displaying a fake! Thousands of people flocked to see Barnum's giant. Many newspapers carried the version that Barnum had given them; that is, Hannum's giant was a fake and Barnum's was authentic. It is at this point that Hannum -- NOT BARNUM -- was quoted as saying "There's a sucker born every minute." Hannum, still under the impression that HIS giant was authentic, was referring to the thousands of "fools" that paid money to see Barnum's fake and not his authentic one.

Hannum brought a lawsuit against Barnum for calling his giant a fake. When it came to trial, Hull stepped forward and confessed that the Cardiff Giant was a hoax and the entire story. The judge ruled that Barnum could not be sued for calling Hannum's giant a fake since it was a fake after all. Thereafter, Hannum's name was lost to history while Barnum was left with the misplaced stigma of being the one to say "There's a sucker born every minute."

Whether Barnum or Hannum ... the quote remains true to this day.  One wag has said the time was closer to 30 seconds ...

 

[Ed_The_Gypsy]

Thanks, astromeria. Quotes are easy to mess up and I do my share.

Ed

 

[ladelfina]

Re: Charles and the unfinished property..

This happened to friends of ours in Italy.. the thing is, they were Italian and should have known better! Not only did the developer go bankrupt, but there was somehow a separate mortgage held by the developer's bank on the plot of land under all the condos, finished and unfinished. What a mess. It takes so long to resolve that a frequent solution is to try and sell the thing off to a bigger chump than you..

Problem is, these schemes are common, and popular, because the majority of times when they work out OK, the buyers do pay a lower property price for the inherent risk. This is popular with young couples starting out and others with a very limited budget; sometimes it's the only way that permits them to enter the market.

Definitely get a local (trusted) connection to help you (i.e., not just a broker) and steer clear of unfinished property. If you really need to buy and know nobody, you might first contact a local lawyer or notary responsible for reviewing real estate sales (who is usually bound by stricter legal ethics codes) to help you navigate the process.

You might also consider renting in the area at first to get the lay of the land. Though the rental market is not as liquid as that in the States, in Europe renters have more iron-clad rights.

This is not only a foreign problem; I remember a nasty case in Charlestown, MA years back. Just use common sense.. the Italians have a phrase: "Fidarsi e' bene; non fidarsi e' meglio..." (Trusting is good; not trusting is better.)

For a funny novel that deals in part with an horrific expatriate property experience, I recommend "After Hannibal" by Barry Unsworth.

 

[peteyperson]

I would not buy in Thailand either....

Lance

Hey Lance,

Why would you not buy in Thailand either?

BTW, you a private message in your box.   

Petey

 

[farmerEd]

I've almost bought property inthe bahamas a few times and the whole issue of dealing with a different legal system (and the fear of getting screwed by locals) has always stopped me; I imagine it would be very frustrating and expensive to fight a bahamian in a bahamian court while living here in the USA

I just heard recently, a house we had liked very much almost 8 years ago and didn't get (we made a lower offer than the asking price reflecting my uncomfortableness with the title/deed etc), developed problems from the sale AFTER having been bought by foreigners and sold multiple times...

Basically, the house was on about 2 acres, had a main house, a guest house and a couple of outbuildings all on the beach...it was always represented by the RE agent that everything was included in the sale...anyway, we didn't buy it, but it sold shortly after we tried to a Eurpoean buyer...they moved in, remodeled both houses etc and then sold it two years later, new american buyer also moves it, continues living in/using/renting out both houses etc and then out of nowhere, 8 years later, the original seller (whom had it for 50+ years, claims the guest house,outbuildings and 1/2 the land were never included in the sale, despite having been bought and sold 3 times, WITH local lawyers etc), so the current owner gets screwed out of about 40% of the value of his investment, not to mentioned all the "free" remodeling he did on the pieces he no longer owns.....I have no idea how this happens, and though it may be the exeception rather than the rule, makes me real nervous about investing overseas in lesser developed countries....

 

[Honkie]

The issue one has to resolve with real estate is establishing the quality of the system as a whole, as distinct from a single property having a title defect or similar problem. A title defect can and does occur in EVERY jurisdiction. Simply down to sloppy/inept or "mischievious" legal work. This is a hazard when buying property anywhere and cannot be totally avoided. The bigger problems occur when the flaws are systemic - e.g. the state has draconian powers to take over private property, foreigners have limited ownership rights, historical title records are incomplete, easily challenged, tenants have ongoing occupation rights even in the event of non-payment or other lease breaches etc etc.

Having bought, sold and been a both a landlord and a tenant in 8 different jurisdictions I can testify that no two are alike, they all have their own peculiarities, but being "different" does not necessarily always mean they are less attractive or fair or transparent.

Cheers

Honkie

For the record, the 8 jurisdictions are the UK, France, Hong Kong, China and Macau, Singapore, Kuwait and Dubai. Will be going for a ninth when we pick up our search for an place in Australia next year!