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European property purchase to be made easier and safer for buyers?

Many aspire to buy property abroad, but the complications of foreign land law can cause pitfalls for those of us aiming to realise those dreams. There are many tales of woe from people who have paid large sums of money for a house only to find out afterwards that they don’t own it. Potential buyers should therefore be interested in proposals for a Europe-wide system of cross-border property title transfer, which is designed to give greater protection to buyers by applying the law of their own country to purchase contracts.

Land law in many European countries is quite different from the English system, and the way in which land transfers are carried out differs considerably. Foreign countries also have different planning and zoning legislation, and this has led to difficulties for many buyers of houses abroad.

One of the challenges buyers face is finding a lawyer both qualified in the relevant country and able to explain everything clearly in English. In English property transfers, each party has their own Solicitor; the buyer’s Solicitor will check the seller’s title, and will deal with the registration of the transfer at the Land Registry. However, in other European countries, lawyers may not act for parties in the same way; for instance a French notaire (or notary) does not perform the same role as an English Conveyancing Solicitor.

Furthermore, any contract for the purchase of a house is traditionally governed by the law of the country where the property is situated, so if anything goes wrong buyers have to deal with a foreign legal system.

In an attempt to make cross-border transactions easier within Europe, the European Land Registry Association (ELRA) has recently inaugurated a new process, called Cross Border Electronic Conveyancing, (CROBECO) which aims to provide a system for buying foreign ‘immovable’ property, i.e. houses and land. An integral part of the proposed system is that there will be a bilingual contract for the purchase, in both the mother-tongue of the buyer and that of the country where the plot is located. The law of the country where the contract is concluded will made applicable to the contract. This will help to protect the buyer against the unknown consequences of a foreign legal system that is not familiar to the buyer. It is expected that this new procedure will boost confidence and encourage purchases of foreign property.

At present, a pilot scheme is underway for Dutch buyers in countries such as Portugal and Spain. Several Dutch lawyers are participating, as well as property brokers based in Holland who deal with foreign properties. Bilingual contract documents have been prepared, and an essential part of the scheme is that Dutch buyers will enter into a contract in Holland for the purchase of a house in say Spain, and the contract will be governed by Dutch law. The actual property transfer will of course have to comply with the law of the country where the property is located, but it does mean that if anything goes wrong with the transfer, the buyer would be able to sue the seller in his own country. It is likely to be some time before this system will be available for buyers in England, but the English Land Registry is a member of the European Land Registry Association, and is actively looking to extend electronic Conveyancing. Part of this process will be making property information available online, and the Land Registry’s system already makes title information quickly available to property buyers in this country.

For more information see the ELRA website (where you can see the text of the Dutch/Spanish contract) and the Land Registry website.

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