Your Most Important Ally Overseas
Your most important ally when buying, selling, or renting real estate in any developing market is your attorney. First thing, before you do anything else, you need to find a local one you can trust who speaks real English, who has experience working with foreigners…
And, who, critically, works for you…not for the seller, not for the property developer, but for you. Sharing doesn’t count. If you’re sharing an attorney with the developer, whose interests come first in his mind when an issue arises?
“Do you mean I need an attorney even to review a rental contract?” asked an attendee at our conference earlier this month.
Yes, I mean you should engage an attorney even to review a rental contract.
In any emerging, unregulated market (like Panama, Nicaragua, Belize, Ecuador, Colombia, etc.), you can’t take anything for granted. You must assume that nothing will be as you expect or as you’re accustomed to back home. Not even a simple rental contract. For, in unregulated markets like these, nothing is standard.
Furthermore, in some countries, any legal document, to be legal, must be in the local language (Spanish, for example), meaning that, unless you read Spanish at a high level, you aren’t going to be able to identify the surprises on your own.
Don’t take for granted that the guy offering to sell you the piece of real estate actually owns that piece of real estate…
Nor that the guy offering to rent you “his” apartment has the right to do so…
Nor that the access to a piece of property across a neighbor’s field in fact conveys with the sale…
Nor that the boundaries stand where the seller or even the real estate agent indicates…
In any unregulated, emerging market, don’t allow yourself to believe that the real estate agent you’re working with actually works for you. He doesn’t. Not really. And he doesn’t really work for the seller either. He works for the commission, which he wants to be as big as possible.
Remember, too, that there’s no Multiple Listing Service in much of the world. This is one of the biggest surprises for North Americans, who are accustomed to walking into a real estate agent’s office, detailing the specs for what they seek (two bedrooms, 2 ½ baths, US$200,000, in a nice school district, for example), then sitting back to watch as the agent types those details into his system to generate a series of listing sheets for every property currently available to suit.
How do you navigate a non-MLS market? To get any real idea what’s available for sale in any particular city or area, you must meet with as many real estate agents operating in that area as possible. Not only do agents in these markets not share listings, neither do they share commissions. Property listings are proprietary.
That is not to say, however, that a particular piece of real estate might not be listed with more than one agent. But this is not because the agents are sharing listings. It’s because the seller has listed the property separately, agent to agent, sometimes at differing prices.
How’s the poor, unsuspecting buyer to prevail?
I say again, engage your own independent legal counsel.
And don’t leave your common sense at the border. Do more due diligence before making a real estate purchase in a foreign country than you would back home…not less.
P.S. What do I mean by an attorney who speaks “real” English? I mean an attorney who understands what you say not only literally but figuratively, as well.
Think of the differences between U.S. English, British English, and Aussie English…and the misunderstandings that can occur as a result.
Now imagine you’re speaking to someone who learned his English with the help of a tutor later in life or someone who learned to speak English by watching MTV as a kid (I’ve known people for whom this is the case). They may understand the words you’re speaking, but that doesn’t mean they get your underlying meanings. When your money is on the table, you want someone who processes the nuances of your instructions as well as the literal details.