26 | LEGAL PITFALLS WORDS | Candice Ritchie
The top 5 legal pitfalls O
PPLive brought us all kinds of seminars; from tips on how to sell successfully in various countries, to the workings of Fractional ownerships, and the methods of fi nancing available for developers. It even looked at the use of
technology in property sales and how to get the best out of marketing. But perhaps the most signifi cant – and often forgotten – topics discussed at the show were related to the legal side of property sales. The consequences that can arise if an agent or developer fails to adhere to the written regulations of the sale are far from worth the risk. Around the world, more and more rules are being introduced to regulate the sale of property. For property professionals operating on an international basis, this becomes even more complicated – an agent may have to be aware of the laws in two or even three separate countries. That’s why a panel of the industry’s leading experts clarifi ed such matters in a seminar. While our panel is extremely knowledgeable, we obviously couldn’t cover even a fraction of the legal issues a professional in our sector
needs to be aware of – so, as always, we’d recommend seeking your own legal advice before venturing into any pastures new! Additionally, this article covers only a few countries due to time and space constraints – if you’d like to know more specifi c information about the market or markets you deal in, please contact OPP, who can put you in touch with the right people.
“Some of the most important – and often forgotten – topics discussed were legal issues”
Here is, in no particular order, what our OPPLive panel deemed the top 5 legal regulations that you should make sure you’ve got right!
1) Who does the agent have a duty to – the buyer or the seller? The agent’s duty is dependent upon the country in which they reside. In the
majority of countries, either the buyer or the seller can retain an agent. In a select few nations (China, for example, will allow it as long as both parties are fully aware of the situation) the agent can hold a duty to both parties – acting at the same time for the buyer and the seller. However, this is rare and in most places acting for both is prohibited. Getting this wrong can land you in a world of legal mess.
In Florida, the rules changed considerably within the space of 12 years – while in 1992 a transactional broker had no duty to either the buyer or the seller, in 2004 it was required to be written in notice. Kevin Burke told us that the buyer’s agent in Florida is also free – and they’ll provide the same confi dentiality and adopt the same duties as a paid agent – so it is worth using one before buying anywhere! In Turkey, however, the market is only just emerging and is not fully developed yet, so there are no rules regarding such duty. For English agents, the liability is towards the buyer, said Stefano Lucatello. However, the panel pointed out that in many cases, the agent will be acting for, and their primary responsibilities will be towards the seller – after all, the highest price will give them the highest commission!
Alex Radford told us that when it comes to the case of commission, it also alternates per country – while in Turkey the buyer pays the commission, in Spain it is the seller.
2) What is the agent/developer’s duty to the buyer? The panel agreed that the most important factor when looking at the duty to the buyer is the contract. Often, clients will come looking to see the contract and fi nd that it is silent, in foreign translation or, at times, doesn’t exist. The contract is vital and should be carefully drafted, since a good contract adds value. Many companies offer free advice about the content of contracts, so it might be worth investing time in such matters to ensure your contract is as good as it can be!
Partners? | Should the agent’s legal duty be to the buyer or to the seller?
The brochure should also form part of the contract, and avoid containing any false information about the property. Basak Yildiz gave the example
FEATURE
www.opp-connect.com | FEBRUARY 2013
Ah, legalities. The bane of many a property professional, laws relating to the industry can be complicated and hugely varied from country to country. While it’s impossible to cover every aspect of property law in one seminar, our OPPLive panel identifi ed what they thought were the fi ve most important legal issues
The Panel
Basak Yildiz – Avukat
www.orkunorkun.com basak.yildz@orkunorkun.com Kevin Burke – American Attorney
www.americanattorneyservices.co.uk kevin.burke@americanattorney.
co.uk Stefano Lucatello – Kobalt Law
www.kobaltlaw.co.uk stefanol@kobaltlaw.co.uk Alex Radford – Irwin Mitchell
www.irwinmitchell.com Alex.radford@irwinmitchell.es Peter Esders - Solicitor
pesders@hotmail.com
of a brochure that was created in the UK, and advertising false information about Turkish developments. It is also worth checking the brochure since a vast number of agents sell on the basis of word of mouth, and therefore have nothing to back it up! Time and again, what the developer said they would sell is different to the actual outcome. For this reason, it is worth investing in professional indemnity insurance to cover anything unexpected. For example, there may be the case of amended planning permission, which could result in your property not being built! What would you do if you didn’t have the insurance to cover it?
While indemnity insurance isn’t a legal requirement in every country (although it is in many), it is always recommended. You can’t afford to assume everything will go swimmingly. The buyer should also be kept updated of any changes, delays or completions, by both the agent and developer – honesty is the key.
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