By Stephanie Sims
How do real estate models and mortgage processes can differ from country to country?
Some brokerages in Canada charge a buyer agreement fee and some do not; according to Ross Kay with RE/MAX Garden City Realty Inc. in Burlington, Ontario, because many consumers are shopping around, it’s not unusual for a broker to charge a buyer an agreement fee and not have that fee reimbursed.
In addition, says Tom Lam with Urban Mortgage in Calgary, Alberta, a change in Canada’s mortgage law was just implemented on July 9 – 30-year government-backed mortgages are no longer available; 25 years is the maximum time to pay off a government-backed loan.
Homebuyers can still put down anywhere from 5 to 20 percent down, but the amortization amendment was made to try to keep a housing bubble (happening right now across the country) from bursting – home values are increasing, but so is inventory right now.
Under Guatemalan law, foreigners can acquire, maintain and dispose of real property with very few restrictions. What foreigners cannot do is own land directly next to rivers, oceans or international borders. Foreign firms developing projects in designated tourism zones are eligible for income tax exemption on revenue from their investment in the country. However, administrative procedures remain a burden to the investor. All firms must register with the Ministry of Economy, formally incorporate there, publish their intent and agree to Guatemalan jurisdiction.
In addition, mortgages from financial institutions are typically impossible to get. If homebuyers are able to get one, the interest rates will be very high, so an alternative may be to try to arrange one through the seller, or just plan on paying for Guatemalan properties in cash.
In Costa Rica, there is little governmental regulation of the real estate industry, and homebuyers looking to buy here – a hot spot for real estate right now – have the same rules that locals do when it comes to homebuying. But that does include a big restriction for locals and foreigners: the Maritime Zone, 200 meters along the shoreline, is government-controlled. The Public Zone, 50 meters from the shore, is protected from any development. Private persons can acquire property in the Restricted Zone, the next 150 meters, by applying to the municipality, but in this zone, leases cannot be granted to foreigners with less than five years of residency.
Here, however, a lawyer may not cover all the issues in land transactions. In most cases, according to the Puerto Viejo Group in Costa Rica, the lawyer never even sees the physical property, and therefore, can’t advise homebuyers on certain issues, including if the survey map coincides with the physical borders with possession property, whether there are boundary disputes or usage agreements with third parties, if there are guaranteed water rights or how to handle existing tenants or crops. The lawyer’s job isn’t finished until the documents are presented at the local municipality, and a good agent will follow up to make sure the transfer is approved.
Jenny Jin, managing broker of Jin Group Corp. in Chicago, moved here from China 20 years ago, but still represents Chinese clients from time to time. She said that buying and selling real estate in China is still in the beginning processes compared to the U.S., mainly because currently, the Chinese government owns all land and housing on that land.
“The government only started to allow the buying/selling of properties about 20 years ago, so the laws regulating the process are very loose, and there are all kinds of loopholes,” Jin said. “For example, the salesperson at the developer’s office doesn’t need a license; it is just another sales position.”
And, since homebuying and selling is a fairly new line of business, the process is much simpler in most of the cases in China. For example, when developers develop a subdivision, Jin said, “people come with earnest money to secure a unit and close when they are ready to move in. There is no professional home inspection, attorney review, and as far as I know, no title company for a title review. It’s actually pretty scary!”
Buying seems to be relatively easy because of how the process is right now – but what’s more difficult is deciphering the rules of who is allowed to purchase property due to government regulation. According to GlobalPropertyGuide.com, ownership rules became the same for foreigners and locals in 2001, but the local governments implemented the lifting of restrictions. The municipal authorities of Shanghai lifted the restriction in July 2001, and Beijing followed in August 2002. In addition, foreigners who have worked or studied in China for at least a year are allowed to buy a home. Foreigners go through supervision procedures for about a week before they are allowed to buy properties in designated areas.
In Beijing, when a property has been chosen, a down payment of CNY5,000 (US $784.50 at press time)-CNY30,000 (US $4,707.00 at press time) has to be made together with the signing of the Beijing Commodity Housing Purchase Offer. The initial payment is usually 30 percent of the purchase price, paid with the signing of the Beijing Commodity Housing Pre-Sale Contract. After the registration of the contract, the outstanding balance must be paid off. Property acceptance, title transfer and obtaining the title certificate follow.
In France, homebuying can be an expensive process for the buyer, who pays more fees than homebuyers in the US – according to GlobalPropertyGuide.com, besides the agent’s fee, which the buyer and seller pay (and in France, is typically 7 to 8 percent), the buyer also pays registration fees (around 5 percent), notary’s fees (1 percent) and land registrar’s salary (0.10 percent). The buyer pays 8.67 to 13.37 percent in fees, while the seller will pay much less: 2.39 to 5.98 percent!
If a mortgage is needed, it must be confirmed in the compromise de vente that financing is being sought. This way, if the mortgage is declined, the purchaser will not lose his/her deposit. According to French-Property.com, should the buyer break the contract, the deposit is paid to the seller, and should the seller break the contract, the deposit is returned to the buyer.
Once preliminary contracts have been exchanged, there are pre-completion searches: land registry searches, local authority searches, planning permission searches, etc. If the dwelling has been sold by a “property professional” or is less than 10 years old, the seller has a statutory liability to all future owners within the 10-year period for defects.