|
|
Print-friendly version
Buying a Property in United States
Buying a property in any country is a complicated process. Buying a property in a country where you do not speak the language, you do not understand the culture and you do not understand the legal system is even more complicated than normal!
Buying a property in your own country tends to appear more straightforward because you are familiar with the process and the way in which things work. When you read a guide about how to buy a property in another country you may think that it seems far more complicated than buying one at home.
Generally speaking, this isn't so. A foreigner buying a property in the UK would find the process just as complicated and confusing as you find the process of buying a property in, say, Bulgaria or Dubai.
Our Guide to Buying a Property in the United States is designed to explain the process as simply as possible, to point out some of the key issues and problems involved and to answer some of the questions most frequently asked by our Clients.
IMPORTANT NOTE: Remember that this can only be a GENERAL guide. It is no substitute for proper independent legal advice. We will be happy to provide that advice upon request.
Is buying a property overseas a good idea?
For many of our clients this has been one of the best decisions of their life. The person buying a holiday home sees a huge lifestyle benefit and they often become so comfortable in the area that they later decide to retire there. They usually also see it increase enormously in value over the years. The person retiring finds a better climate, a lower cost of living and, often, a far more active social life than they enjoyed at home. The investor who buys well and takes good advice sees an asset that often performs far better than the stock exchange – and often with less risk.
Buying a property overseas is not for everyone, but it suits a very large number of people. There are now over 800,000 British households that own a property overseas (Source: MINTEL).
Will USA do well for you?
Well, we don't have a crystal ball, but we do have over 20 years experience and regularly advise clients who want to put together a portfolio (large or small) of overseas property investments around the world and who are confused by the huge amount of choice now available to them. Contact us or download our 'Buying Property as an Investment" booklet for more details.
Is the way you buy a house in USA the same as at home?
No. The systems abroad are very, very different from the English, Irish or US way of doing things.
Generally speaking, however, provided that the appropriate checks are carried out, in most countries there is hardly any more need to worry than there is when buying at home.
Unfortunately, very often people buying property overseas take little or no legal advice and are far too "casual" about the purchase and about the signing of legal documents. If they go about things in this way it can turn out badly. They may find there is no title to the property, that it was built without planning permission. . . or that it does not even exist! DO NOT DO THIS. For your own safety, insist on taking proper, independent, legal advice.
Can you make all the same checks that you would make in Britain?
No. As we have already said, the systems are very different. We can only do what is normal in the country where you are buying the property. We cannot turn this into an 'English' transaction.
Sometimes the local procedure is not as safe as our system. Sometimes it is better. It is always different!
Remember, though, that every year thousands of local people successfully and safely buy houses and apartments.
That is what we set out to do for you.
The role of the estate agent (US: realtor)
Most UK, Irish and US buyers use the services of an estate agent to help them find a property.
Most (but not all) estate agents are, of course, honest, but however honest and helpful they may be you must remember that they are only paid if the property is sold and that they are not able to give you independent legal advice.
Once you have found a property that you would like to buy you will almost certainly be asked to sign some form of reservation or preliminary/promissory purchase contract. It is far better to sign NOTHING until it has been checked by your lawyer. This can, usually, be done quickly – see below.
Be very careful before using the services of the estate agent's "own" lawyers. Are they looking after your interests or the interests of the agent who is providing all their work?
Sales direct from a seller or developer
Increasingly, our clients are buying directly from a seller or developer, without the intervention of an estate agent.
You still need to take all the same precautions.
EVEN SOME MAJOR DEVELOPERS SELL PROPERTY THAT IS ILLEGALLY CONSTRUCTED OR NOT SAFE TO BUY.
The Role of the Notary
In most countries in the world the Notary () plays a major part in the process of buying and selling real estate.
The Notary is an official who is there to put on the public record the fact that certain formal documents have been signed in his or her presence and understood by the parties concerned.
The Notary has little part to play in a purchase of property in USA unless we need to prepare a Power of Attorney authorising somebody else to sign the documentation in USA. In this case the Power is often signed in front of a Notary near to where you live.
Loans & mortgages
Financing the purchase of the property may take several forms. For example:
• a first (or second) mortgage from a UK/Irish/US lender, secured on your existing UK/Irish/US property
• a mortgage on your new US property from a lender in USA (or, occasionally, elsewhere)
US mortgages are different from UK/Irish/US mortgages.
Mortgages are freely available in USA. You will, of course, have to meet the bank's eligibility criteria.
At the time of writing typical interest rates are about 6.75% and a normal Loan to Value ration is about 80%. Most mortgages do not exceed a term of 30 years. Interest only mortgages are generally available.
Choosing the wrong mortgage is an expensive mistake.
Many of our clients discuss their position with us so that they can decide whether a local or an overseas mortgage will suit them best. We can then, if they wish, introduce them to specialist mortgage brokers in their own country or in USA so that they can arrange the best mortgage for their individual needs.
Structural surveys
As is the case with the purchase of a property anywhere, it is often prudent to have the property you intend to buy surveyed (US: inspected). We strongly recommend a survey, especially in the case of older or unusual properties or in the case of properties that have been extended or modified. Structural surveys typically take 7 - 10 days. The time and cost varies from place to place.
We can, if you wish, make arrangements for such a survey and will be pleased to advise about the merits of doing so.
What is the process of buying a property in USA?
Preparation
The process of buying a property – whether for your personal use or as an investment – SHOULD start with thorough preparation.
This will save to a lot of wasted time AND money.
We STRONGLY recommend that you make contact with us BEFORE you go to look at any property.
That way we can deal with all of the key issues (such as those listed below) calmly and clearly, before you get involved in the rush and pressure always associated with buying a specific property anywhere in the world.
Who should own the property?
Getting this question of ownership wrong is probably both the most common and the most expensive mistake people make when buying property overseas. There are many people who could be made the legal owner of the property or, as the case may be, the shareholders in the company that owns the property. The best choice is, often, not obvious.
Getting this wrong can cost you tens of thousands of pounds/euro/dollars of totally unnecessary taxes, during your lifetime and on your death.
Most local lawyers will be unable to help you make this decision as it involves an understanding of both the local AND your own legal, tax and inheritance systems.
We will be happy to assist you in making this vital decision.
What are the options?
There are many ways to purchase the property. These include:
- in your own name alone
- in your name and in the name of your co-purchaser(s)
- wholly or partly in your children's names or in the name of somebody whom you would like (eventually!) to inherit the property from you
- in the name of a limited company, whether English, US or "off-shore"
- via your SIPP/SSAS pension fund
- via an investment fund (REIT, PUT etc)
- via an investment club
- via a trust
Each method has its own advantages and disadvantages. The one that will be best for you will depend entirely upon your own personal circumstances.
We shall be pleased to advise as to the most advantageous method for you.
The 'Reservation Contract', 'Offer to Buy' or 'Preliminary/Promissory Purchase Contract'
A Reservation Contract (Reservation Contract) is a contract, usually short, under which you pay a small amount of money (typically £2000, $3,000 or €3,000) to take the property off the market for a short time (typically 2 to 4 weeks). During this period your lawyers can check things out. If everything is in order you then sign a preliminary/promissory purchase contract and pay over a full deposit. If there are any problems, you pull out. Usually, if you pull out because of legal problems you will be contractually entitled to your money back. If you simply change your mind you will often lose the deposit.
An Offer to Buy is a formal written offer to buy a property. It should, ideally, be drafted by your lawyers or a qualified estate agent to make sure that it contains any clauses needed to protect your position. Once you have made the offer, if it is accepted by the seller this can create a legally binding commitment. An Offer to Buy is not a document to be signed lightly.
A Preliminary/Promissory Purchase Contract (Preliminary Agreement) is a legally binding contract to buy the property. It is followed up by a formal contract of sale, so to that extent it is a preliminary contract, but it is legally binding. If you do not go ahead with the purchase you will almost certainly lose your deposit and may face further action from the seller.
In fact, whichever type of document you are signing it is a good idea to get your lawyer to have a quick look at it before you do so. They are not always what they seem. See our 'Checking your Contract' service, below.
We much prefer it if clients start the purchase by way of a Reservation Contract or Offer to Buy. It is the safest.
Often, however, they come under pressure to sign a fully binding contract ('Preliminary/Promissory Purchase Contract' or 'Private Contract') at this very early stage – before anything has been checked out. Try to resist this. If there is no alternative ALWAYS get it checked by your lawyer before you sign it. Ideally, it should be subject to conditions (US: contingencies) stating that if various things do not happen (e.g. if you don't get a mortgage or permission to build a swimming pool) the contract will be cancelled and you will be entitled to your money back.
In fact, in USA it is most likely that the agents will ask you a sign a full Preliminary Purchase Contract (Preliminary Agreement) right at the outset of the purchase process. This is a contract for the purchase but it is subject to conditions (US: contingencies) that must be satisfied before the contract becomes unconditional. It is vitally important to include all of the conditions needed to protect your position. There are limitless possible contingencies. A condition making the purchase conditional upon your obtaining mortgage finance. A contingency requiring a satisfactory survey (US: inspection) of the property. A contingency making the sale conditional on you selling another property. A contingency that the property is certified free of pests (termites, etc). A contingency that the property passes the EPA lead paint test or radon gas test. Etc. These need to be drafted carefully.
It is also important to be clear about which expenses (utility bills, condo fees, closing/settlement costs etc) you will have to pay and which will be paid by the sellers. This can be freely negotiated, so you don't NEED to pay everything!
You should also agree who shall hold the escrow money – your deposit – and upon what conditions. In the best of cases this should be your own attorney.
Whichever type of contract you are asked to sign, we suggest that you get it checked by your lawyer before you sign it to make sure that it protects your interests. See above.
If you decide to go ahead, you then sign the Purchase Contract and pay over a deposit, typically in the case of a resale property 10% of the price. For property bought off plan the deposit (often 30% of the price) is usually followed by a series of stage payments as the building work progresses.
After you have signed a contract subject to contingencies
We carry out, or arrange for, a variety of checks to make sure that the property is what it seems. These will vary from state to state and from one type of property to another but would usually include:
• a check to make sure that the person selling the property is its registered legal owner and that the property is free from debts or other onerous burdens
• a planning enquiry to establish the current planning status for the property. Ideally, this would show that there is (in the case of a new property) a construction licence for the building of the property or (in the case of a resale property) a habitation certificate authorising the occupation of the property as a dwelling.
• checks on the proposed contract of sale to make sure its terms are fair and cover all of the necessary points
• checking that, where these are required, the proper guarantees securing the completion of construction of the property will be made available
If you want a survey (which we recommend – see above), now is the time to do it, providing you have placed a condition to this effect in the contract. The same applies to obtaining an approval, in principle, of any mortgage. If you wish to make alterations to the property, for example to put in a pool, this is the time to check that the authorities will, in principle, approve the project – though you will not usually be able at this stage to get a binding commitment to do so.
If you have not already done so, now is the time to decide who will become the legal owner of the property (see above). There will usually also be some issues specific to your property that will need to be checked at this stage.
We will, in many cases, prepare a Power of Attorney authorising someone in USA to sign the Final Agreement on your behalf (see below).
We may need to deal with the opening of a bank account or to obtain other official documentation needed to complete the purchase.
If you are taking out a mortgage in USA we will need to liaise with your lender. In any case, we will have to liaise with your Seller and, when everyone (and the house) is ready, we prepare for the signing of the Final Agreement.
The 'Cooling Off Period'
There is no cooling off period when you buy a property in USA. Once you have signed the Purchase Contract (Preliminary Agreement) you are committed and you can only 'escape' from the contract for good legal reasons – those stated in the contract or laid down by the general law. It is, therefore, VITAL that you are entirely happy with the terms of the purchase before you sign any contract.
Do I need official permission to buy a property in USA
Not for EU citizens.
Are there any restrictions on a foreigner owning property in USA
The United States ordinarily places no restrictions on foreigners concerning the ownership of real estate, except where national security is at stake. A foreigner's right to own may be limited, however, by various federal and state statutes that restrict the ability of a foreigner to acquire or dispose of certain real estate or to make testamentary dispositions to foreigners from countries that prohibit similar dispositions to U.S. citizens. Also, there are numerous reporting requirements for foreign investors and for the sellers of real estate to foreigners. Failure to report may be punished severely, with penalties ranging from up to 25% of the fair market value of the real estate to imprisonment.
Mortgages
As we have already stated, there a huge variety of mortgage products on sale in the US. Many will be unfamiliar to you. Many terms will also be unfamiliar. It is especially worthwhile getting advice about which mortgage is best for you when you are buying property in the US.
If you take out a mortgage and do not notify the lender about the details of your attorney they will usually appoint their lawyer to act for you – at your cost. It is, therefore, generally better to choose your own lawyer.
Your mortgage lender may require you to do various things to qualify for the loan. The most common would be to take out title insurance, mortgage insurance or flood insurance.
Title insurance is an insurance policy under which the insurance company guarantees that there are no defects in the title of the type covered by the policy. The policy is not, necessarily, all embracing or comprehensive. You need to check what is covered and, even more importantly, what is specifically NOT covered. It is illegal to make a sale conditional upon your taking title insurance from a particular company, so shop around. There are a number of different policies available. The only one that will protect you (rather than just the lender) is the 'owners' policy'. Ask your lawyer for advice about which type of policy will suit you best.
Mortgage insurance only protects the lender, not you. It covers them if you do not pay.
Flood insurance can be hard to obtain in some areas.
Settlement
As soon as everyone is ready to proceed, settlement (closing) takes place.
This is when you pay over the balance of the price of the property and the taxes and other fees and take delivery of the property.
Settlement can take place in various ways, which vary from state to state and city to city. Generally, either the parties meet around a table. All of the money (from you and from the bank) is put onto the table and divided up, some going to the seller, some to the estate agent, some to the title insurance company etc. This is just like we used to do it in the England about 40 years ago. Alternatively, all of the money is paid to one person, who holds it in escrow (trust). They are then responsible for deciding that everything is ready to complete the transaction and for dividing the money between all those entitled. They then transfer legal possession of the property to the buyer.
The whole process up to the signing of the Final Agreement will (in the case of a resale property with no mortgage) typically take about 12 – 16 weeks, though this can vary enormously. In the case of a property under construction, the pace is usually determined by the speed of construction – typically, perhaps, 18 months.
Special points for new properties
Is the property specification agreed in detail? How are you going to deal with the handover and snagging list? Are you clear about what 'common parts' – general facilities to be shared by all the owners in your complex – are included in the price? What are the arrangements for the management and control of those facilities? There will, probably, be other points as well.
It can be a good idea to have a new property surveyed (inspected) before delivery to establish whether there are any defects present.
What are the main dangers when buying property in USA?
The important thing to understand is that there is no simple list of dangers that you need to check.
For different people and different types of property or for people who are buying for different purposes the dangers will be different.
So this is probably a good time to put in the 'Disclaimer clause'!
Having said that, there are some dangers that arise in every country and every transaction. For example:
• Does the seller have good legal title and the right to sell?
• Is the property affected by debts?
• Has the building been constructed legally?
• Does the property suffer from any defects?
• Is what the Seller and the agent have told you about it true?
In addition, in USA there are other issues that often need special attention. These include:
• What is the status of your estate agent? Are they acting for the sellers (and looking after their interests) or acting for you as a buyers' agent (as so looking after your interests)? Even if you appoint a buyers agent, they are usually paid for by the seller, so it costs you nothing to do this. Although, in most states, even the sellers' agent is under a legal responsibility to deal with you fairly, this can be a very valuable safeguard.
• Are you SURE you have chosen the correct form of legal ownership?
• Is the area an area where you are permitted to rent out your property on short term lets? In many parts of Florida zoning laws make it impossible to let for short term lets.
• Are you aware of the rules of any condominium or home owners association of which the property forms a part? These can be very restrictive
• Are you clear about your immigration status, especially if you want to live in the US? The ownership structure of your properties can help or hinder this.
• Are you clear about the tax consequences of owning the property, both in the US and at home? Correct structures can greatly reduce your taxes.
• Is the property built in an area that is specially protected or is it itself specially protected? A lot of old property is protected as the US doesn't have that much of it. If so, it can be very difficult to make changes to it.
There will usually be other issues that arise in the special circumstances of any particular transaction.
Do I have to be in USA to complete the transaction?
The Seller and the people buying the house usually need to attend, in person to sign the Final Purchase Contract/Deed of Sale (Final Agreement). However, if this is inconvenient, arrangements can be made for a Power of Attorney to be granted enabling another person to attend on their behalf. This should be in the US form and, generally, signed in front of a Notary Public, usually near to where you live. We can arrange for this to be prepared. We recommend that you give a Power of attorney even if you intend to be present in person (which we also recommend).
How do I get the money to USA?
There are important decisions to make as far as obtaining the currency to buy your property is concerned. Should you buy it now or later? Should you take an option contract to guarantee your right to buy at a certain rate in the future or should you "forward buy" (committing yourself to the purchase at a set rate but paid for largely on delivery)? Who should you use to transfer the funds?
Getting this right can save you a lot of money! On a €300,000/£200,000/$350,000 purchase it can easily amount to a saving of €3,000/£2,000/$3,500.
We can discuss these issues and, where appropriate, refer you to currency brokers. We are not currency brokers and do not attempt to research all of the options available. Instead we refer you to people who have given our clients good service in the past.
Many of our clients ask us to transfer their funds for them. Why? Well, our bank and currency brokers are doing this all the time and so make fewer mistakes. We will also often (but not always) be able to eliminate bank charges in relation to the transfer. These can amount to hundreds of pounds/euro/dollars, even for a small transfer. But, most importantly, because of the very large volumes of currency we transfer, our currency brokers guarantee that we will receive a better exchange rate than our clients would if they dealt with them direct. We also have a special arrangement under which we do not send the brokers we deal with a single penny of your money until after they have proved that their bank has sent the money abroad. This gives you complete protection against the risk of the broker going bust whilst in possession of your money – something that happened to a major broker 2 or 3 years ago. All this makes our sending the money on your behalf a really good idea.
What about paying the taxes due?
We will arrange for the payment of any property transfer taxes due in relation to the transaction.
Is there a Land Registry system in USA?
Yes. After the Final Purchase Contract/Deed of Sale (Final Agreement) has been signed we will arrange for it to be registered at the appropriate Land Registry and for the payment of any Land Registry fees.
What taxes will I have to pay as the owner of a property in USA?
As a non resident of USA you will have to pay certain taxes in USA and you will also have to declare any income and gains in the country where you are tax resident.
Please download our 'Guide to Taxes in USA' booklet for more information.
What other ongoing obligations will I have in USA?
These will vary depending upon who becomes the legal owner of the property. We will be happy to advise on this point.
Should I make a local Will?
This is, generally, a good idea. You will also need to amend your English/Irish/US Will. We will happily assist you with both of these tasks.
What happens to my property when I die?
This is a complex subject. Please download our 'Dealing with an Inheritance in USA booklet.
Why do I need The International Law Partnership?
You will need advice on a range of issues that will be very different from the advice needed by a person from USA buying a house in USA.
You will need to have the US system – and its implications – explained to you. You will need to plan your affairs taking into account the combined effect of the legal and tax systems in your own country and those in USA. The local system may produce the most unexpected and undesirable results if left on its own.
As we mentioned in the section on preparation, it is vitally important to choose the best form of legal ownership for the property. This can save you thousands of pounds. The interaction of your own law and US law, particularly with regard to taxation and inheritance rights, calls for careful consideration. This is especially so as the cost of rectifying a wrong initial decision is often as much as, if not more than, the whole expense of the purchase in the first place!
Giving all this advice calls for specialised knowledge of both legal systems and, increasingly, also of European Union legislation on property, tax and inheritance. Of course, it also requires language skills.
A local lawyer cannot be expected to be conversant with foreign legal & tax systems and will almost certainly not be in a position to advise non-US clients appropriately and fully. He or she will, often, not think about the problems that their 'normal' procedure may create for foreigner buyers.
It is, therefore, potentially very expensive not to seek the assistance of a specialist lawyer able to advise on US legal matters within the context of your own law and your own legal and tax system.
The International Law Partnership is the ONLY firm of solicitors that deals ONLY with international transactions and that can offer you, under one roof, the services of a team of lawyers from many jurisdictions.
How can The International Law Partnership help me buy a home in USA – and what will it cost?
The work we can do for you
We offer you the choice of four services. You may want to use just one of these services, or several.
Preliminary Meeting
We strongly suggest that you arrange a meeting with us before you go to look for property. This way we can discuss all of the key issues – including which areas might best suit your needs, the types of property available, who would be the best owner for tax purposes, how the property should be paid for, mortgages, inheritance issues and how to minimise your tax liabilities – calmly before you get into the rush and pressure involved in buying.
The meeting can also cover whatever other issues may be important to you. It can be face to face, over the telephone or by video conference.
To arrange a meeting just telephone us. The meeting will typically take an hour to an hour and a half and we will follow it up with a letter confirming the points discussed.
Our fee is a fixed £500/€750/$950 + UK VAT.
Preliminary check of your Contract or Offer to Buy
If you are asked to sign ANYTHING we strongly suggest that you fax it or email it to us first.
We will then phone you back and:
• Discuss whether it is necessary to sign anything at all at this stage.
• Go through the terms and legal effect of the proposed contract with you.
• Advise you whether the terms are fair and reasonable.
• Suggest any changes we think are necessary.
• Try to negotiate those changes, there and then, with the agent or developer concerned.
You will then be clear about what you are signing and the consequences of signing it. This is not as good as giving us time to carry out a full investigation but it is a great deal better than nothing at all.
We can normally provide this service, Monday to Saturday, 'while you wait'.
We will charge for the work we do on a time basis. You will appreciate that some contracts are much longer than others and that some need more modification than others. A typical fee for a short(ish) reservation contract would be £150/€225/$285 – 1 hour's work and the fee for a 5 page preliminary purchase contract might be £300/€450/$500 – 2 hours' work.
Our 'International' Service
This service gives you advice about ONLY the INTERNATIONAL legal and tax issues arising out of your purchase. This leaves you free, if you wish, to use a local US lawyer to deal with the actual purchase of the property.
We will, for example:
• explain the way the local system of property purchase works
• discuss the special issues to look out for when buying a property in USA
• guide you as to some of the things you should make sure your USlawyer looks into
• discuss the tax and inheritance issues and any other relevant problems arising out of the interaction of the English and US legal systems.
Once we have done this we will confirm our advice to you in writing and also brief your US lawyers by writing to them covering the key points we have discussed and explaining your wishes.
You can choose the US lawyer yourself or we can, if you wish, introduce you to one. This will, wherever possible, be a lawyer who has already given good service to our clients and who we know speaks satisfactory English. In making this introduction we would simply be introducing you to the lawyer as a client. You would then deal directly with that lawyer, not via us. We do not accept any responsibility for the advice given by that lawyer, his actions or inactions. We make no extra charge to you for introducing you to the lawyer as he will share a part of his fee with us to reflect the work that we have done.
This service goes into much more detail about your proposed transaction and covers much more 'international' ground than our preliminary meeting.
Our fee for this service is 0.5% of the value of the property, with a minimum of £750/€1,125/$1,425. For properties over £500,000/€750,000/$950,000 there is a scaled reduction in our fees.
Our Property Transfer Service
In short, this service covers everything needed in an ordinary property purchase: establishing your requirements; checking the contract documents; producing a full report concerning your proposed purchase; liaison with you, your Notary, the estate agent (US: realtor) and/or the seller etc.
Our fee for this work is 1% of the price of the property, subject to a minimum. In the case of a resale property the minimum is £1,500/€2,250/$2850. In the case of a property under construction/renovation or being sold for the first time the minimum is £2,000/€3,000/$3,800. New property is more expensive because it involves more work and because we may be dealing with your case for 2 years or more. In each case there is a scaled reduction in our fee for properties over £500,000/€750,000/$950,000.
Which service will be best for you?
For your convenience, at the end of this guide we set out the features of each of these services in tabular form so that you can compare them and decide which is best for you.
Revising our Estimate
We try to stick to the estimated charges set out above but if the transaction becomes unusual or unduly complicated for any reason, we reserve the right to revise our charges. For example, we have had situations where one of the parties has died part way through the transaction, or divorced, or for some reason has refused to cooperate in the sale. Or where the sellers or buyers have fallen out between themselves. Or where the property has become the subject of a court case. Or where there have been defects in the title or planning situation. Or where there has been delay in the construction. Or where the money has been lost or delayed in transit by the bank. Or where you wish to negotiate substantial changes to your contract.
Payments on Account of Fees & Expenses
We require an initial payment on account of our fees and expenses. We ask for further payments on account as the work progresses. If you do not make the payments requested we reserve the right to stop work!
What does the whole purchase cost?
Our own charges are normally only a very small part of the overall cost of buying!
As a general guide, in the case of a RESALE property, the TOTAL costs (our charges for our Property Transfer Service, land registry fees, Notary's fees, taxes, bank charges etc) normally come to about 6% of the price of the property.
In the case of a PROPERTY UNDER CONSTRUCTION, the TOTAL costs, excluding any VAT or equivalent payable on the property, normally come to about 6% of the price of the property. In USA new properties are subject to tax which, just to confuse you, is sometimes (but not always) included in the price of the property as quoted to you. If you are buying a new property it makes sense to ask whether the price includes the tax.
In both cases, if the property is less than about £50,000/€75,000/€95,000 the overall percentage will be higher. If the property is over about £500,000/€750,000/ $950,000, the overall cost will usually be a little lower.
These can, of course, at this stage be only the most general of estimates. We will give you a more detailed estimate of the likely overall cost once we know more about your particular purchase.
If a transaction does not proceed to completion – for whatever reason – we charge at our current hourly charging rate for the work actually undertaken.
Finally, all or part of these charges may attract US or English VAT at the current rate.
Extra work
Other work may be needed. For example, you may want:
• to take out a mortgage to help buy the property.
• to buy through a Limited Company or to set up a Limited Company to buy the property.
• a valuation (appraisal) or survey (inspection).
• us to negotiate the price of the property or other contractual issues.
• us to arrange for a Power of Attorney authorising someone to sign the Final Purchase Contract/Deed of Sale (Final Agreement) on your behalf.
Note: You will then also have to pay the charges of the person who attends to sign and pay the taxes on your behalf. We will give you an estimate of these fees when we know more about your particular needs.
Other examples of extra work are explained in our Buying a Property Questionnaire.
This extra work is charged for over and above our standard charges. If any extra work is needed we will notify you before we undertake it and agree with you either a fixed price for that work or another way of charging for it.
Why are your fees so much higher than for buying a property in the UK?
Because there is a lot more work involved! The average purchase of a new property, for example, involves about 20 hours' work, most of which is invisible to you.
This is partly because the process is often more complicated and partly because our clients, who know little about the country, its legal system or its culture, need a lot more explained to them than they do when buying a property in their own country.
Are your fees higher than I would pay a lawyer in USA?
That depends. Sometimes a local lawyer will charge you less than we do. Sometimes they will charge a lot more – and for doing a lot less.
How does using the International Law Partnership differ from using a local lawyer?
There are a number of ways:
Although we are thoroughly familiar with the local laws and practices (because most of our lawyers are qualified as lawyers in other jurisdictions and our staff work very closely with lawyers from all of the countries we serve) we are also used to the requirements and expectations of the Anglo Saxon client. These are often very different from the requirements of a local US client.
Because we view transactions through the eyes of a foreigner we will often explain things to you that the local lawyers would not explain because they think they are obvious. They may be obvious to them, but they are often the exact opposite of what you would expect in your own country! Better still, we explain in clear English!
Most local lawyers will (quite understandably) know little or nothing about UK, Irish or US law. They are, therefore, quite likely to suggest a solution that would work well for a local person but which is disastrous (for example, in terms of taxes payable or inheritance law) in your own country. Our teams of specialist lawyers from different countries exist to provide that international overview. This can save you a LOT of money.
In most of the countries that we deal with lawyers are much less regulated than they are in the UK. For example, they may not have to have negligence insurance or be required to keep your money in a separate client account. These are significant safeguards for the client.
In many of the countries that we deal with it is difficult or impossible to obtain compensation from your lawyers if they make a negligent mistake. This is something that you take for granted when dealing with an English solicitor.
How do I take things forward?
If you would like us to represent you, please telephone, email or write. Our contact details are on the front cover of this guide.
We can then have a brief discussion over the telephone and, if necessary, make an appointment so that we can meet to look at the matter in more detail.
We are used to acting for Clients from all over the world and, generally, find that it is not necessary to meet in order to deal with the purchase of a property in USA. Of course, we are delighted to meet to discuss matters personally if this is convenient for you.
Revised January 2007
The International Law Partnership LLP
Solicitors & International Lawyers
Holborn Hall
193-197 High Holborn
London
WC1V 7BD
Tel: 020 7420 0400
Fax: 020 7836 3626
Email: info@LawOverseas.com
Internet: www.LawOverseas.com
© The International Law Partnership
|
|