When you buy a property in the UK you will probably know which lawyer you are going to use to help you buy. They could be somebody that you have used before. They could be your nearest local solicitor. They could be somebody that is recommended to you by a friend or a firm of solicitors that you have seen advertised somewhere.
When you are buying a property overseas however things are a bit different. You are unlikely to have ever required the services of an overseas lawyer before and in most scenarios would not know where to even start looking for a solicitor.
So where do you start?We think that whoever you use there are some fundamental requirements that you need to look for when choosing a lawyer to help you buy property abroad;
- Do they understand the law of that country?
This may seem obvious but you need somebody who understands the law of that country. If you are buying a property in Spain you need a lawyer who understands Spanish law. If you are buying in Portugal you need a solicitor who understands Portuguese law and so on..
- Do they understand UK Law?
This is less obvious, but equally important. Doing something in one country invariably has an effect on another country. Let us take the example of a British person who lives in the UK but owns a property in Spain, Cyprus, Portugal, Italy etc.. If they rent out the overseas property they will have to pay income tax in the country where the property is based, but also declare that on their UK tax returns. If they die, the overseas property will be dealt with in the country where it is situated, but will also form part of your overall estate and will therefore need to be taken into consideration in the UK inheritance. Should they sell the overseas property there will be Capital Gains tax in that country and potentially in the UK as well. There is an interaction between the two laws and you need somebody who understands both, and without specialist knowledge you can end up making decisions which may be perfect for a national of that country but may have a knock on negative consequence back in your home country.
- Are they independent?
This is absolutely vital. You would never use the same lawyer as the seller when buying a property in the UK so why should it be any different when buying a property abroad? You need to have an independent lawyer – somebody who is going to look after your interest and your interests alone, not also be looking out for the interests of the seller, agent or developer.
In the UK it is prohibited for the same lawyer to be acting for the buyer and seller at the same time as there is a conflict of interest. In many other foreign jurisdictions this also applies and it is prohibited for a lawyer to act for both parties. However, some foreign lawyers ignore these requirements and persuade themselves that it is OK even though it isn’t.
In many cases the lawyer isn’t “technically” acting for the seller or agent but is recommended by them to all buyers. This is, in many respects still a conflict of interest. Is that lawyer going to risk not being recommended by that agent (and therefore lose a source of introductions) by telling you that there is a problem with the property or are they going to play down things for the benefit of the agent’s commission and introductions to them?
- Can they speak your language?
Many foreign lawyers of course can speak English and will possess a good understanding of the language, but is their English good enough to explain often complex legal issues to you? It is surprising how often somebody will instruct a foreign lawyer and then half way through a transaction make contact with us to act as a conduit with them and their foreign lawyer as they can’t quite fully understand what the lawyer is trying to say even though they are using English words. Similarly some words which can appear on the face of it very similar in one language can mean something very different in another. Unless you fully understand the exact meaning of a word and any nuances of the language then it is quite easy to say something which can be misunderstood as something quite different. When talking about legal issues you cannot afford to have a misunderstanding.
- Are they regulated?
This again may seem fairly obvious. By instructing a regulated firm of Solicitors in the UK you are assured that you are significantly covered should that lawyer make a mistake which leads to a problem for you in the foreign transaction – Why Use Judicare.
- Are they insured and if so by how much?
In the UK solicitors have to have Professional Indemnity Insurance to cover the unlikely event that they make a negligent mistake in the advice that they give you. In some countries there is no requirement for compulsory Professional Indemnity Insurance and in other countries the level of cover that is covered as a minimum is very low and wouldn’t even cover a typical purchase of property. As UK solicitors our minimum level of cover is far in excess of the minimum required in many countries. UK Solicitors have to have a minimum insurance of at least £3million per claim. Each Professional Indemnity Insurance policy is obtained individually by the firm of solicitors with their insurers and they cannot practice without it. In Spain, for example, the situation is very different. You simply pay your annual fees to the Colegio de Abogados (Law Society) and as part of that you get the minimum Indemnity Insurance cover. That amount can be as low as €18,000, which wouldn’t even cover the deposit on most purchases of property let along a whole property. There is no requirement to top up this insurance to cover a higher amount.
How much experience does the lawyer have not only in the field of law but also experience in dealing with British clients? Many foreign lawyers are sole practices, and this at times leads to trying to cover everything. British clients are used to expecting a certain level of service from Solicitors and this can often result in communication issues in particular in the buying process of a property or a litigation case which may be in court in a foreign jurisdiction for many years.
- Practical – solves problems
Many lawyers can be very academic and technical in their approach to legal issues. This is clearly needed but you also need a lawyer who will find those important practical solutions to legal problems as a result of experience over a long period of time dealing with foreign matters.
- Are they members of any Association?
Do they go over and above their minimal legal requirements by being members of a relevant association. For example, we are members of the Association of International Property Professionals (www.aipp.org.uk). In fact our own Peter Esders is the Vice Chairman of the AIPP.
If you would like to know more about how we can potentially help with your purchase of a property abroad from a legal point of view then you can contact our international legal team
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.