by Tim O’Dwyer Solicitor*
We all need and enjoy holidays away from home. Be very careful about buying real estate while relaxing, warns Tim O’Dwyer.
You can’t go too far wrong if you rent your accommodation when you go on holiday. More caution is needed if you are tempted to become a property buyer and then owner in the process.
The first rule is: never buy while on holiday. Still, it is very easy, while relaxed and away from home, to read the local real estate advertisements and to peek, particularly after hours, in agents’ windows.
What if you take a fancy to a piece of property where you have been having a wonderful time, and really want to buy it?
These are the next ten rules about holiday investments:
* Try to be 95 percent pessimistic when listening to any salesperson. Investigate the local area thoroughly and double check for yourself what you have been told.
* Try to hold off making a final decision until you have visited again at a different time of the year.
* Be suspicious of any investment or financial advice offered to you. Find out all about the local property, building and rental laws and regulations – but not from the salesperson.
* Get independent legal, valuation and financial advice before you sign anything.
* Don’t use anyone recommended by the selling agent or salesperson.
* Consult your home-town solicitor and other advisers before making any commitment.
* Walk away if you are not permitted to take the proffered paper-work away.
* Finally, don’t sign anything in a hurry or before you have made all your inquiries and taken independent advices. BUYING LOCALLY
If you want to buy while on holiday in your own State, don’t let yourself be persuaded to use a local lawyer or conveyancer. Whoever you regularly use at home can just as easily advise you on the contract and handle the conveyancing in another part of the State.
You will still need a solicitor but always first ask your home-state lawyer to help or recommend someone he or she may know interstate. Otherwise, if you have family or friends in the state in question, ask if they can refer you to someone to do your conveyancing.
BUYING LOCALLY OR INTERSTATE
What is said above about conveyancing services applies no less to valuation, finance and investment advisors. Phone home first, and speak to your home-town or home-state professionals. Run all the paperwork you might be asked to sign past your own experts for their comments. Be prepared of course to pay for their advices.
Needless to say the tragic experience of the marketeering of negatively-geared and grossly over-priced Queensland investment properties, particularly on the Gold Coast, serves as a loud warning about the risks involved in buying real estate away from where you live. Sadly most of the victims of the marketeers tricks, traps and deceits broke all of the safety rules and, regrettably and scandalously, much of the professional advice these gullible folk paid for was less than independent and provided by accomplices of the crooks.
Finding a legal adviser becomes more complicated in this case. Some Australian law firms have international branches and agencies. Otherwise your solicitor may be able to offer a referral from personal knowledge or from Law Society information. If all else fails, sign nothing until you have asked the Australian consulate in that country to refer you to a suitable local legal adviser.
Take care. There are many pitfalls in buying property overseas. The following is a story reported in The Weekly Telegraph in the United Kingdom.
Some years ago about 100 units at a Canary Islands resort were sold to British citizens who had responded to advertisements by a real estate division of the famous Harrods store of London.
Most units were for investment, many were used for their new owners’ annual holidays and a few were occupied by couples who sold up in England and retired to their retreats.
Some nine years later the Caja Canaries Bank assumed ownership of the units because the developer, who used the title deeds as collateral on a multimillion-dollar bank loan, failed to meet interest payments.
Spanish officials, backed up by 50 riot police, ensured the repossession of the units and the eviction of all occupants.
Many of the former owners blamed Harrods for their misfortune. They said they bought the properties only because of the prestige of the department store’s estate agency.
One retired foundry worker recalled promotional literature which boasted that the developer was “in association with Harrods Estate Offices”.
“We felt secure knowing that a big name like Harrods was involved,” his wife said.
Harrods denied any responsibility and insisted it had acted in good faith.
“If someone buys a property and something goes wrong, one normally pursues a claim against one’s solicitor or the vendor,” Michael Rogers, Harrods’ legal director, said.
“Our only involvement would have been to act as estate agent notifying the vendor of prospective purchasers,” he added.
Harrods in the meantime pulled out of the estate agency business. However, Harrods Estates, a subsidiary still traded, but it did not deal in properties outside the United Kingdom. Arlette Adler of the Federation of Overseas Developers, Property Agents and Consultants, told The Weekly Telegraph: “Estate agents in Spain now have to be licensed, but often they gloss over the finer details.”
* (Tim O’Dwyer is a Queensland solicitor and consumer advocate – firstname.lastname@example.org)