How To Own Property Overseas

Your Felony Conviction Won’t Get In The Way Of Foreign Property Ownership, But Other Restrictions May Apply

A reader wrote in this week to ask if he would be restricted from buying property in another country because of his criminal record.

In fact, no. I don’t know any country that restricts your ability to buy or own real estate based on being convicted of a crime…in another country or in that same country, for that matter.

A criminal record can get in the way of establishing legal residency many places. When applying for a residency permit most anywhere, you’re typically asked to produce a “clean” criminal background check from the jurisdiction where you currently live. For an American, this can be a police report from the city where you’ve been residing (indicating that you have no police record).

While past criminal activity won’t get in the way of your investing in a piece of real estate in a foreign country, other restrictions can apply.

In parts of Asia, the restrictions are absolute. Foreigners can’t own land…period. Indonesia, Thailand, and several other countries simply don’t allow it. You can lease land (or hold some rights of use) in most of these countries, and you can own the construction (the house, the condo, etc.) sitting on the leased land.

In Thailand and the Philippines (as examples), foreigners can own condo units, but even that can come with restrictions. Thailand allows for only up to 49% of any condo building to be owned by foreigners. The thinking being that, if they controlled more than 50% of the building, then, technically, the foreigners could be considered to own the land it sits on, too.

Many of these kinds of restrictions on foreign property ownership are being reviewed as a result of pressure from international agencies (real estate groups mostly) pushing to open up real estate investment to foreigners in countries like Indonesia.

Of course, in any country where restrictions exist, foreign investors create and carry out workarounds. In some jurisdictions, the answer is to set up what is effectively a shell corporation to hold the property. These kinds of workarounds can be risky, as they put legal control of the property into someone else’s hands. You’d better be able to trust the local you get in bed with on this kind of thing.

In Latin America, restrictions on foreign property owners generally have to do with border areas. Most countries don’t like the idea of foreigners owning land near their borders. The idea, in the extreme, seems to be that if Chileans, for example, bought up a bunch of land on the Argentine side of the Chile-Argentina border, then Chile could try to annex that land.

Foreign ownership of ocean borders is almost always restricted. This is why, for example, foreigners can’t own land in their own name within 50 kilometers of the high tide mark in Mexico. However, foreigners can own coastal land within a Mexican fideicomiso (a trust). A bank administers the trust, but you control it and are the beneficiary. Frankly, the only reason this rule remains in place, it seems to me, is so the banks can continue to collect annual trust fees.

These border restrictions are under review in some countries. For example, a few years ago, a foreigner couldn’t own an island in Panama. Today, you can. Panama, though, still imposes a 10-kilometer restriction on foreign ownership of any land border. This isn’t really an issue at the border with Colombia, but can get in the way on the Costa Rican border.

In Argentina, the restriction is simply that you, as a would-be foreign buyer, get approval to own within a border region. There are no hard-line distances, although it’s generally stated that a foreigner needs approval to own within 50 kilometers of any border. The reality is that they don’t want foreigners owning large tracts of undeveloped land, meaning you can easily buy within cities and towns within 50 kilometers of a border.

Lief Simon

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