Skipping risks when buying abroad
14 July 2010
Two common pieces of advice given to UK investors wishing to buy a home overseas are to engage the services of a local English-speaking lawyer and to ensure one does not sign anything without first taking legal guidance. This is sound advice and should never be ignored, but to what extent can a UK investor rely on the professional standards exercised by a 'local' lawyer undertaking the property title investigations?
There are a number of potential pitfalls to be aware of when buying a home abroad and the First Title Euro Home Owners' Protection Policy (HOPP) seeks to address many of these by offering cover for the most common title risks.
Protection against fraud
A lawyer is only as good as the information they have available and even where a thorough investigation has been carried out it may not be apparent from the title deeds that, for instance, a previous owner had acquired the property or obtained a mortgage on it fraudulently. The consequences of this sort of fraud could be severe and result in the current owner of the property losing their title to the land.
A First Title Euro HOPP will provide cover to the value of the property if a new owner is forced to return it to a rightful title-holder.
Ownership claims
In the event of a third party acquiring rights over the insured's property through continued long use without objection, such as walking across the insured property in order to reach the public highway, First Title would try to persuade him or her to take an alternative route or, failing that, pay the insured for the reduction in value.
Limitations to the use of the land
Neighbouring property owners may sometimes have rights over the insured property that restrict any future development that the insured might wish to carry out, such as building a swimming pool.
First Title would try to reach an agreement with the person who has the benefit of the restriction to allow the insured property to remain or, failing that, pay for alterations to be made and pay the insured for any reduction in value.
No legal right of access
When carrying out their title investigations, lawyers rely on the information in the title deeds to establish whether a property has all necessary legal rights of access. It is not uncommon for title deeds to contain incorrect or misleading information about the access arrangements to a property.
Indeed, a private road serving a property may have been incorrectly plotted on the developer's layout plan and as a result rights of access do not extend to the publicly adopted highway.
In this situation, a First Title Euro HOPP would cover all the insured's legal fees and costs of extending the right of way to the road.
Boundary disputes
A First Title Euro HOPP will also offer protection in the event of a neighbour extending their property onto land belonging to the insured.
First Title would negotiate with the neighbour, establish the correct boundary and if appropriate get the extension moved or an appropriate payment to the insured.
The unlimited legal expenses cover provided will fund the proceedings and will also ensure that any loss in the value of the insured land is guarded against. The First Title Euro HOPP does not replace the role of a lawyer but it does provide additional reassurance, meaning should the title of the property be affected by one of the insured events, the value of the investment is protected.
Kevin Mills, Senior Underwriter at First Title Insurance plc