We were recently contacted by a British reader who had bought a property in Turkey on a development that has since become the focus of much controversy. Despite ‘evidence’ to suggest that everything about the development in question was legitimate, the developers have subsequently declared themselves bankrupt and the ‘owners’ of the properties in question have apparently discovered that they don’t in fact own the land on which they are built.
Unfortunately this is not an uncommon tale – which is why we have decided to produce this report all about buying a property abroad safely. We will use the example cited above for reference to highlight how and why property deals go wrong, and hopefully give you all the advice you need to steer you clear of making the same mistakes and falling victim to the many con artists out there.
Whilst the global recession has certainly pushed a few of the rogue traders, developers and builders out of the construction industry, buyers venturing abroad are still vulnerable to potential issues especially when the buying process is unregulated, and when contracts are written in a foreign language for example. But we don’t want Shelter Offshore readers to be affected by these issues, and whenever we’re contact by those who have suffered misfortune when buying abroad it upsets us. So, read on for a comprehensive guide to buying property abroad safely.
What Happens When it All Goes Wrong
Tracy Brolly, a Shelter Offshore reader who purchased an apartment from Didim Design Group in Didim/Altinkum in Turkey, is the latest reader to contact us about property scandals abroad. This is her story:
“This has been a particularly frustrating and stressful time for me. I purchased my apartment in 2007 from a company called Didim Design Group in Didim/Altinkum in Turkey. I paid the full amount for the property in stage payments, (a total of 83,000 euros), but I quickly discovered that the lawyer acting on my behalf had told lies, suggesting that the developers where of good character and stating that they owned the land that the property was being built on for example.
“However, what transpired to be the truth was like something out of a horror movie. I, together with the other buyers on the development, quickly learned that we had no chance of ever getting the title deeds to our properties, (the ‘tapu’), because the developers had not actually paid the landowner for the land the complex was being built on. What’s more, the builder subsequently went bankrupt.
“Although we were seemingly ‘lucky’ in that we eventually received the keys to our properties, we have since discovered that the builders have been back on site and drilled out the locks to our apartments. Why? So that they can rent them out to Turkish citizens a) without our permission and b) for their own direct profit.
“When the developers have been challenged on site they have threatened the apartment owners with extreme violence.
“I have tried, with others, to raise the profile of our cause - but we have found it extremely difficult to be heard. The Turkish government is unwilling to tackle this problem and put laws in place to protect purchasers, as a result we feel isolated.”
Unfortunately for Tracy, almost every single thing that could go wrong with her purchase has indeed gone wrong…but she is absolutely not to blame. We wish her and those affected every success – you can read more about their situation in Turkey and discover how you can help on the website ‘Altinkum Ripped Off’.
What You Need to Know When Buying Property Abroad
In developing nations such as Turkey, Egypt, Morocco and Northern Cyprus - to name but a random selection - there are massive internal and external political and economic issues that the countries’ respective governments are actively trying to tackle. As a result, property rights for foreign citizens are unfortunately so far down the political agenda that they may never be heard or considered, let alone resolved.
This fact means that anyone buying abroad in countries where ownership rights and buying processes are unregulated, or less well regulated, have to tread exceptionally carefully and be very wary. At this point I am aware that I am treading a fine line between being brutally honest and potentially prejudice and that some people will accuse me of being the latter. However, my only concern is that buyers are protected – and where protection is not available to them in law, people need to be acutely aware of what they are up against.
Estate Agents Abroad – the Truth
Estate agents receive a commission when they sell a property – it is not at all uncommon for developers to make their development ‘stand out’ for an estate agent by offering them bonuses, incentives and extra commissions if their push their development over and above others.
As a result you cannot ever expect an estate agent to be impartial. An estate agent provides a service – and that service extends only so far as chauffeuring you around various building sites and properties. You should not believe, without question and complete investigation, anything an agent tells you about the land, the property, the builder, the developer, the title deeds, the other owners or even the final price you will pay.
There is no legal statute in place in the majority of nations worldwide that governs what an estate agent says – therefore if you take it from the point of view that nothing they say may be wholly accurate, you will be fine.
Please note, my best friend is an estate agent! So I am not universally slating all those in the profession – I am telling you, as a potential buyer, that you should not be hooked in by hype. Buyer beware! – question and research everything you are told.
You will have no come back on the estate agent if you find they have mis-sold, lied, over hyped or manipulated. See them only as a service provider, be polite and honest about what you’re looking for and your budget, but do not believe that the agent is your friend. They are acting in their best interests only.
Solicitors – the Truth
Your estate agent is often the person to recommend a lawyer to you – they will probably receive a commission for so doing. Trouble is, the solicitor may be representing other parties involved with the sale. They might be the estate agent’s solicitor, the vendor’s lawyer, the developer’s cousin, the builder’s advocate…you won’t know!
You will ask perhaps, if you’re wise, but you still won’t necessarily know the truth!
What you need to know is that you are very small fry to the solicitor, your purchase contract probably won’t even be handled by him but by a secretary because conveyancing is really quite easy. What’s more, you won’t be a big customer in terms of money matters – but the developer/estate agent may well be. So, when you have an issue with the contract you signed the solicitor will not necessarily represent your best interests and you may find you are unrepresented at worst, and that you have been blatantly lied to at worst.
Getting a good lawyer is absolutely wholly key to your ever having your rights in any way protected abroad.
But how do you find a good lawyer?
There is no easy way to answer this question as rules ‘governing’ lawyers differ from nation to nation. You can however find out from the International Bar Association and the International Law Society division if they have any registered members in your chosen nation – and what membership to these organisations means in terms of your rights being protected if you discover your lawyer has misrepresented you.
You can also ask about your lawyer’s qualifications and accreditation – and then don’t just take their word for it, go to the university where they say they trained and the legal association they claim to be a member of, and ensure they haven’t lied to you.
You can also take recommendations from others who have bought abroad in your chosen nation. However, ensure that recommendations are taken only from those who have had a complete resolution of their property purchase, and who are in receipt of their title deeds. Again, your solicitor is not your friend – the fact that they are friendly and polite is just a part of their professionalism…nothing more. They are not going to make your move to your new nation smoother, they will not become your dining partner once you’ve bought a house in their country…they may not even approve of you buying the land or property you’ve got your eye on.
In other words, they are not your friend, do not unequivocally trust them – ensure you do your due diligence on them!
Developers/Builders – The Truth
The construction industry is big business in any emerging/developing nation. Where there is tourism interest there is property interest – and then there are always those willing to cash in on that. A construction industry booms before any regulation can be put in place to control it. What’s more, the greedy see they can get very rich very quickly and they seldom care about quality or their customers.
Of course – there are always exceptions, but they are in the minority and if you want to be assured of a safe purchase abroad you have to assume that everyone is out to fleece you so that you stay one step ahead! So what if everyone you come into contact with thinks you are very business orientated and possibly even unfriendly – wouldn’t you rather be a savvy and successful buyer than a naive and ripped off victim?
One very common ‘trick’ that many developers employ in nations all over the world is that they approach a landowner and ask to develop properties on their plot, advising that when all the properties are sold they will pay them for the land. The landowner readily agrees because he doesn’t have to pay to develop the land himself…but what this all means is that the developer sells properties he does not actually own.
You cannot ‘own’ a property if you do not own the land it sits on technically – and yet this is what the developer does. It could all work out fine if, and it’s a big IF, the developer does indeed pay the landowner at the end of the development process. But as has happened to Tracy in the above cited example, the developer never paid the landowner and went bankrupt to get out of ever having to pay him.
Naturally enough an incensed landowner at this point will attempt to seize all the properties on the land because as far as he is concerned they belong to him. Usually though they have all been sold to foreign buyers who believe that they own them.
They will never receive their title deeds until a resolution is found…and at best this will mean all the buyers clubbing together to pay off the landowner – forking out money over and above that which was budgeted to buy the property abroad in the first place.
Title Deeds & the Buying Process – the Truth
You do not own your property until the title deeds have been officially registered in your name…what’s more, you should not assume that the person selling the property even has the title deeds in their name! Title deeds deserve a lot of your attention. You need to understand the rules relating to who can get them and how in your new nation.
For example, in Tracy’s chosen country of Turkey you cannot get your title deeds if you are buying a home anywhere near a military facility for example. You also may need to pass financial or police or even military checks in certain nations before you’re deemed eligible to buy. You should have those checks done and complete before you even make an offer to purchase…but most people don’t bother unfortunately. They believe their solicitor when they are told it’s only a matter or protocol and process – nothing can go wrong…yeah right!
The buying process differs from nation to nation of course – but a central and integral part of the process is ensuring the vendor has the right to sell and making sure there are no mortgages or liens against the property in question.
Your lawyer should check all this out for you – but you should really do the checks yourself too – which is not easy when legal documents are in a foreign language of course. But it could pay to have documents translated. Another word of warning is that if you buy off plan you will not get your deeds until your home is finished and signed off – meanwhile the developer could re-mortgage the land/property which would make all the checks done before you agreed to buy rubbish.
This can mean that those who want to find the safest way to buy ensure they buy and own the land on which their property will be built – or their buy an already completed and signed off property to which they can get the deeds as soon as they are approved as foreign buyers in the nation in question.
Is It Possible to Buy Property Abroad Safely?
YES! Of course it is, there are foreign owners of property assets all over the world – and those who have been scammed and ripped off are thankfully in the minority. However, it pays to know the scams that the people involved in construction and real estate industry can employ to get the money they want out of buyers, without ever having to deliver on promises made.
It really does pay to approach the process with suspicion – everyone involved is typically exceptionally friendly until something goes wrong. With their platitudes and openness, generosity and seeming friendship, estate agents, developers, builders, vendors and solicitors lull buyers into what is genuinely a very false sense of security.
Foreign buyers think ‘what could possibly go wrong I have been promised everything will be okay.’ Then when the purchase does begin to unravel no one wants to know. Your efforts to have your rights upheld can result in threats of violence as Tracy alludes to, or they will simply fall on deaf ears.
In Conclusion
Please be a savvy and suspicious buyer if that is what it takes to ensure you get the deal you’re expecting to secure. Don’t be rude or obnoxious, openly unfriendly or challenging as this will set you aside and put you on the back foot with those you come in to contact with – but be sensible, approach every element of the process as a business transaction and don’t allow your heart to enter into it! Good luck…