Which Set of Laws to Use in Real Estate Transactions?


Skärva - The country estate
Some international real estate, yesterday

This morning on social media I added the following to a discussion on the above question. Some others had given similar answers, but there were other divergent answers.

The most important jurisdiction is where the property in question is physically located. This determines whether the mortgages or charges which the lender will wish to place on the property are properly drawn up and registered.

Let’s imagine a scenario where an inhabitant of country A buys a building in country B and receives a loan to do so from country C. If Country B has law that says a resident of country A needs a permit to buy property from country B, and the person from A has bought without the permit, then in that scenario any rights that the buyer has granted the lender will automatically also not be enfoceable on the property.

Which doesn’t mean that I can’t use Country C law for the loan contract – probably you can, but in a way that also takes account of the risks and vagaries of the law in country B and also maybe even Country A.

For these things you need firms of real estate lawyers and tax accountants that are international. Not just networks, but firms where the people putting the deal together include experts from the different countries involved working in each other’s offices or working together so closely and regularly, that they may as well be in each others’ offices. Good professional international communication is the key to success in these cases, and not every firm seems able to deliver it.

Tax is also a consideration, but most of all you have to make sure that you are compliant with the laws of the place the property is. The worst things that can go wrong will go wrong if that isn’t sorted out first and foremost.

Your thoughts welcome, go ahead:

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