Guest blog by Peter Esders, solicitor at Judicare Law International.
When people look to buy a property abroad, particularly if they are going to use it as a holiday home or for rental, they will often look at properties on a community. The attraction of having communal amenities such as swimming pools, gardens, golf courses and maybe even shops is very attractive for such a purchase. In fact some people may actually be swayed to purchase a property because of the amenities that are associated with the community.
When buying a new property off-plan you will probably be shown the amenities that will come with the property. You will probably be shown some plans, maybe a model or some artist’s impressions and maybe even some sort of video showing you what will be built. You may even be told about the local amenities that are going to be built. Generally, people buy a property as a combination of the property itself and the amenities that are available. Sometimes those amenities are on-site and sometimes off-site.
Off-site amenities are probably the easiest to deal with from a legal point of view. If these things are not under the control of the developer and haven’t been built yet then the only safe thing to assume is that they won’t get built. It is highly unlikely that a developer will tie in your purchase with something that is outside his control and therefore you are unlikely to be able to negotiate a clause which states that you can get your money back if that new airport or theme park doesn’t get built. We have seen too many people who have bought on a particular development because there is going to be a new airport built nearby or a new theme park (normally Disney) and have then found that that did not happen and this was just a rumour. Do not base your decision to buy property based on such speculation unless your ownership adds up on its own without this.
As far as on-site amenities are concerned this is a bit easier to control as the developer is in charge of those. However, we often see situations where the developer will build the properties and not finish off the communal areas or infrastructure. They will then close down, go bust or disappear, leaving a half finished development but with the contracts with the individual buyers technically fulfilled. The problem is that many developers concentrate on the actual properties first and then leave the communal parts (i.e. the parts that they don’t make as much money from) towards the end.
So what can be done to make sure that the communal areas and the infrastructure are finalised? We have spoken to somebody recently, for example, who had to complete on their property because it was finished, but the roads around the development had not been. The developer then closed the business and left the roads unfinished.
Similarly, we are aware of developments where the properties and the roads have been finished but the shops, restaurants and the like are not. Equally, we have seen that some people have agreed to buy properties due to the fact that the development was going to be developed with further phases and then have found that the subsequent phases have not been built.
In terms of things like membership of golf or health clubs that come with a purchase, it is easy to make sure that this is provided when it should be – you can write this into the contract and make sure that completion only happens when those rights can be conveyed to you. Your lawyer can do that for you.
So how can you put pressure on the developer to complete the communal areas, infrastructure and amenities once you have completed? The simple answer is that once you have paid the full price for the property, there is very little pressure that you can bring as they have had all the money due to you. The only thing that you can do is to have a clause in the contract whereby you don’t complete prior to certain aspects of the communal areas or infrastructure being completed, or where you complete but have a retention to cover some sort of compensation if they do not complete these areas.
The best way of proceeding with such matters is not to try and put pressure on the developer after the event, but to try and avoid the situation in the first place. Using an independent lawyer, for example, will mean that they will look after your interests and not the interests of the developer. Therefore, if something is particularly important to you, you should discuss this with your lawyer to make sure that as far as possible the requirement to finalise that thing is written into the contract, or a provision is made for it.
Equally, you can check the track record of the developer to see whether they have completed developments in the past. If they have finalised previous developments then it is likely that this will also happen in the future (although it is not necessarily a guarantee).
Peter can be contacted on:
Tel: 01438 840258