The property boom that peaked across Europe somewhere around 2007 apparently resulted in many investors achieving significant gains, and many who dreamed of owning a second home or a retirement property abroad achieving their ambitions.
However, as the boom surged towards its unsustainable peak, greed was found to be undermining the entire real estate industry; and when economies began to falter across much of the EU, we were left looking at a devastated property landscape.
Since then stories of mis-selling, lies, corruption and broken promises and dreams have become so commonplace that perhaps we no longer pay sufficient heed to the tales of woe from those who came unstuck as a result of property transactions undertaken in parts of Europe. However, these tales of real estate dreams gone wrong have been heeded by some in positions of significant power fortunately, and they are working towards making the purchase of property in Europe a safer and more transparent process, with cross border legal guarantees.
Elements of the EU’s interference will always be criticised – after all the EU Savings Tax Directive has been universally unfavourable. However, there are certain aspects of the Union that benefit and advantage us all. Having passport-less access to all European countries on the continent is just one great advantage…and a scheme currently being piloted between Holland and Spain could just prove to be the best thing to come out of the Union so far.
The pilot scheme in question goes by the acronym CROBECO, which stands for Cross Border Electronic Conveyancing. It has been set up by the European Land Registry Association and is being funded by the European Union during its test phase.
Theoretically the scheme means that Dutch buyers of a Spanish home can apply Dutch real estate law to the transaction. However it is our understanding that both parties to the transaction – i.e., the buyer and vendor – have to be Dutch. This is according to a review of a paper given by Bram Akkerman representing Maastricht European Private Law.
On the surface the concept of protecting a buyer of property abroad by ensuring the transaction is undertaken according to their own home nation’s real estate laws and guidelines on transparency etc., is excellent news…music to the ears of potential purchasers everywhere.
However, the practice is not that straightforward. A deed of transfer has to be created that is valid according to both Dutch and Spanish law, (based on the two nations leading the pilot scheme), and the registration of the transaction has to be valid in both nations. What’s more, cross border conveyancing can only be effective when there is transparency and accuracy in the creation and maintenance of property registration processes in all nations within the EU.
A strong voice in favour of the development and extension of this scheme is British MEP Diana Wallis. She is quoted in the Telegraph as stating: “The EU has a role to play in helping to facilitate property deals across borders and at the very least provide a framework of legal certainty.
“In practice, this means we must ensure that there is full access to information on the state of a property, the conditions attached to it and any other legal obligations or obstacles.
“This must go hand in hand with a transparent administration of the property deal and a quick and clear judicial process in case something goes wrong.”
It will take a long time and a lot of legal framework building to reach this point; but the fact that a pilot scheme exists, has EU backing and funding and appears to work means that buying property in Europe could become safer and more transparent sooner rather than later.
If property economies in the likes of Portugal and Ireland want to recover from their current recessionary position, they will be very well advised to sign up to this scheme as Spain has voluntarily done in order to bring confidence back to their markets.
We welcome these developments and will keep you closely updated.