As specialists in the various problems which can arise with an overseas property investment, we are frequently approached by investors who are concerned about or are experiencing problems with their foreign property purchase or their foreign developer. And as a result, over time, we have seen the same pattern repeated many times;
- An investor will have initially agreed to buy an off-plan property from a foreign developer and for whatever reason the developer is claiming there is now a huge delay in the construction of that property.
- The original sales contract is usually badly drafted with no specific date for completion or, the date for completion of the property is not made clear in the contract.
- The investor has become frustrated at waiting for their property to be finished and is pressuring the overseas developer for a fixed completion date or even demanding the termination of the contract and a refund of all deposit monies paid to the developer.
- The developer often knows that there is no chance of the development being completed on time or at all and therefore suggests to the buyer that they “transfer” their purchase over to another one of their developments which they ( the developer) claims is much closer to completion.
Of course when a buyer is faced with the prospect of having a contract to buy a property on one development which doesn’t look like it will be completed any time soon and the option of being transferred to another project that looks like it will be finished sooner, it’s an appealing proposition. In fact some people may be asked to change developments several times under such circumstances.
If you are faced with this prospect, and this type of offer is placed before you, it is vital that you take stock of the situation and seek specialist legal advice before transferring as this can have serious knock on consequences;
- Often the substitute development won’t be as good as the one that you were considering in the first place or there were good reasons why you did not choose that particular project when you first went to have a look at properties. It is likely that those same reasons which swayed your original decision to purchase will still apply.
- Invariably there will be an extra payment that needs to be paid immediately by you in order to “transfer” you or the new property is slightly more expensive. We encounter many people who after being unhappy about their original purchase are then persuaded to spend more money on another property with the same developer.
- You will be expected to sign a new contract to reflect the fact that you are now buying a different property at a different complex.
This is the stage when legal advice must be sought to ensure;
- You don’t accidentally end up committing to two properties and,
- The developer is not simply taking the opportunity of fixing any deficiencies in the contract that work against him. Often we see the “second” contracts as being much more biased towards the developer than the original contract. In particular we tend to find that the clauses for completion dates are now almost “open ended” and give developers much more wiggle room on the second contract
Often the reality is if a developer faces problems with his first development then it is likely that there will also be problems with the second development.
If you are buying a property overseas which is off-plan there are ways to protect yourself from the beginning, these can be explained by an experienced and independent solicitor. By taking structured legal advice prior to any contracts being signed, many of the problems that can occur can be mitigated and clauses which provide you with legal recourse if things do go wrong can be added.
If you have already committed to buying an off-plan property abroad and are experiencing problems then it is vital that you speak to your lawyer at the earliest opportunity about your options; before agreeing to transfer from one unit to another.
For specialist international legal advice in relation to any aspect of overseas property transactions including off-plan purchases please contact one of our team
for a free no obligation consultation.
Disclaimer – International legal issues are a complex area of law and this information is no substitute for independent legal advice on an individual basis taking into consideration your personal circumstances and legal requirements. This information is provided to provide general information only and was correct at the time of publishing. The legal position in relation to international transactions can change frequently and this page may not have been updated following any changes in the law. You should therefore not rely on this information and should seek legal advice in relation to your personal circumstances.
Back To All News