Wednesday, December 05, 2012
Dreaming of buying a lot overseas and building your own house? Perhaps you’d like to buy a chunk of land where you can grow your own grapes. Or you may want to jump on the current hot play and invest in a big parcel of farmland.
Before you get caught up and carried away, you should read our 10-tip guide on what to do before you sign on the dotted line.
#1. Check that you can own it. It’s not possible for foreigners to own land in many countries. You may face restrictions on the maximum amount of land you can buy or a minimum value. Sometimes you need an official letter from the government authorizing the sale. Most countries won’t allow foreigners to buy any property within a certain distance of national borders.
#2. Check that you can get title on it. By that, I mean freehold title (fee simple). You’ll see other forms of ownership such as rights of possession or concession leases. We only recommend fee simple property – it’s the safest, most secure form of ownership. In many locations, you’ll need the infrastructure (access road, water, electricity) in place before you can get title on the lot. So if you’re buying a lot in a pre-construction project, hold a chunk of the purchase price back until they’re in place.
#3. Check out previous owners. If the land was previously confiscated or held in any type of communal ownership your attorney should go through past title transfers and see if they were done correctly.
#4. Check build requirements. If you’re buying a lot in a private community you may have to build a home within a certain timeframe. If you want to build a home, ask your attorney to check the style of house you’re allowed to build, the height, size and any other rules you’ll have to comply with. In some countries foreigners have to build a house of a certain size and value within a relatively short time of buying a lot.
#5. Check what you can do with it. If you’re buying land for farming, get an expert in to carry out a soil analysis test and give you a full report on land usage. It should cover climate, water access and the quality of the soil. That way you’ll know if the land is suitable for growing wheat or raising cattle. Sometimes there are restrictions on the use of property (if it’s classed as protected, for example); get your attorney to check the deed and with the local municipality.
#6. Check the infrastructure. Check out the standard of the water supply and sewage treatment systems. Ask if they comply with local regulations. If you haven’t got water or sewage, figure out how much it will cost to install them. Make finding water a condition of closing. Find out how reliable the electricity supply is – will you need a back-up generator? If you need to install it, how much will that cost and how long will it take? If you want cable TV or high-speed internet or excellent cell coverage make sure you can get it on your property.
#7. Check access. Always check that the property has good access. If access is via a right-of-way make sure that it’s recorded in the deed. And investigate to see if anyone else has access to your land. If they’ve used it to get from A to B or lived on it for long enough they may have acquired legal rights to carry on doing so.
#8. Check the boundaries. Get a proper survey done to establish your boundaries. The survey will tell you how much land you’re getting. That’s very important if you’re buying a big parcel of land and paying a price per acre. You need to know you’re getting all the acres you’re paying for.
#9. Check for taxes and liens. Your attorney should ensure that you’re getting the land free and clear of any mortgages or debts owed by the seller. And find out how much property tax you’ll pay as the new owner.
#10. Check out the pricing. Are you paying fair market value or a seller’s inflated asking price? Look at local comparables and ask your attorney if he knows the purchase price of recent sales in the area.