Buying Properties Abroad can be a tortuous affair; learn how to avoid some of the pitfalls of buying Overseas Properties.

Brian and Jenny had been led to buy a Spanish property on Costa Blanca in Southern Spain from the corrupt agent, Madam Elisha who had sold it to them and had taken a 20K deposit in cash. They had also signed a document in Spanish which had not been translated and purported to be an instruction to a Spanish lawyer, she had recommended, to act on their behalf to secure the Spanish Property.

They had now returned to the UK in great delight to tell all their friends the great news and even recommend the charming and helpful Agent they had met whilst in Torrevieja. After two weeks they heard from Elisha. Everything was proceeding well and she would get back in contact soon, and could they confirm the balance of the monies, some 202K Euros was available to send? They confirmed.

Poor Brian. If only he had been working with an accredited agent of the mypropertypal Overseas Property Agents Association.

One week later she called again to ask for the balance to be sent to complete the purchase. She also told Brian to transfer an extra 25,000 Euros to cover for Notary fees, taxes and expenses. This seemed reasonable and Brian?s only concern was whether he had to book a flight to attend the completion appointment. Elisha told them that this would not be necessary as Brian had not only signed an instruction to his solicitor to act but the same document allowed for a Power of Attorney! This was a pleasant surprise or so it seemed at the time. How convenient. Brian and Jenny thought this was good news!

Or was it? Buyers of Property Overseas should never sign documents without a proper translation being available and only in exceptional cases give a Power of Attorney. The latter means what it says, a transfer of your power to a third party. In this instance they thought to a reliable and recommended solicitor in Spain.

Clever Alisha

Brian and Jenny transferred the amount from their ISA account to their current account and then asked their High Street Bank to transfer the amount to the bank account they were given by Madam Elisha.

Poor Brian

Buyers of Overseas Property should always seek help to transfer large amounts of money to an overseas account. Moneycorp.com for example can save you large amounts on the rate achievable and the transfer time.

The phone rang again three days later?.it was Elsiha complaining the transfer had not been made and they were in danger of losing the property. They confirmed they had made the transfer and were worried, not just because it had not reached the destination but by the attitude of the Agent.

However it was too late. The Bank had indeed made the transfer after two days of internal process associated with most High Street lenders. Banks purport to process the money having taken it from your account and place it on London?s overnight money tree for 2 days gaining interest for them!

Then off it goes through the international banking system and it invariably gets stuck in Madrid or any Banking Capital for a few days collecting more interest for the receiving Bank before reaching its chosen destination.

In this case the private banking account of Madame Elisha!

She called again a few days later to confirm receipt and that all had gone well at the Notary?s office and the Spanish Property was now theirs! Relief all round for Brian and Jenny. The couple told her of their plans to go out in a few months to take control of their Dream Overseas Home. What they did not realize was that it was all about to go horribly wrong They had completed their purchase in July and waited for cheaper flights and cooler weather before traveling out again in October. When they arrived they went straight to their new home and collected the key from the neighbor as had been arranged. There was no electricity in the house. Worse there was no water. Elisha had promised that services were connected and that she would pay the bills to maintain them from the money left over from expenses. She had not, and they had been cut off!

They phoned her several times her but got no reply.

They went to the office in Torrevieja to find it closed down and empty. Had she moved her office? Alarm bells started ring albeit gently. After all they had the key and only needed to connect the services again. They went to the local Bank where they had been told to transfer the money but received no information about any account set up by Elisha in their name. To be blunt the Bank had never heard of them.

Well, what to think? Had anyone heard of the Agent Elisha and why she had closed down? They had thought that there were several other branches but had no detail of where they might be! There were none.

They went to the Iberdrola office to enquire about an electricity supply. They gave their address and it was confirmed that a 1.5 supply was in place. Brian knew that with microwave ovens and other white goods let alone an air conditioning unit, he would need a much heavier supply. So he asked for the application forms for a 4.5 supply. Iberdrola agreed it was a good idea but said they would have to inspect the premises first before even re-connecting the original supply. At the water office it was an easier story. Re-connection was quite simple and could be achieved later that day. That impressed the sad couple until they were told that first the arrears would need to be paid and the disconnection and re-connection charges of 200 Euros, a total of 395 Euros! The girl spoke reasonable English and explained there were unpaid invoices for several months. Surely they didn?t have to pay for water they had not used?

In Spain services are provided to properties not people. Their solicitor should have checked it was clear or not and made the appropriate alteration with the seller for the cost. It had not been done.

With the water supply restored later that day they felt a little better until a few days later a visit was made by the man from Iberdrola, the local Electricity Company. He informed them in Spanish and in written English on a standard form, that the wiring in the house was illegal, out of date and not up to the required standard, therefore the supply could not be resumed until a substantial amount of internal work had been completed.

This often happens in Spain and when a bill is left unpaid they disconnect you. In order to ensure houses re-wire to the correct standard they will not reconnect. Often a 1.5 supply is inadequate for northern Europeans and their slightly lavish lifestyle and when an application is made to increase the power it is advisable to have internal work completed up to the required standard before the inspection is made. Otherwise further extensive delays will be inevitable.

They decided that without power it would be better to return to England earlier than planned. On enquiring with the neighbor whether he would be happy to keep the key for the Electrician to gain entry, another shock was in store. It turned out the neighbor?s Brother in law used to own their villa. This man still had the rights to the Olive crop for the next two years! Worse, he then asked what they had paid for the Villa.

Remember the purchase price paid was 222K Euros. The neighbor was a very pleasant Spaniard but became quite agitated at this news. Not that he was concerned about the price his Family had received, 135K Euros was a fair price and his Brother in law was happy to sell! The balance was commissions and it made him very angry to see his new neighbor so badly treated in his country.

There is nothing illegal about charging high commissions. It has been common practice during the boom of the late nineties and early naughties to place commissions of more than 30K on most properties.

They left with him a forwarding address and their UK phone number in case of any problems with the electrician and he promised to look after the place for them in their absence. They returned home feeling cheated, let down and generally despondent, yet even worse news was to come. The electrician had been and upgraded the system and their neighbor Jose had contacted Bedroll for them, in hope that the wheels of the giant electric company might start to go round in their absence. However on a visit to the Post Office Jose collected some post for them. One letter was marked very urgent and was from a local Spanish bank, so he called Brian in England. Brian asked him to open the letter as he had no knowledge of any Bank account in Spain; perhaps this was his money turning up?

The letter was urgent; it was a formal demand from a Spanish Mortgage company referring to a Spanish Mortgage in Brian?s name! According to the Spanish Bank he had not been making payments since accepting the mortgage at the time of his completion. He was now three months in arrears and steps would be taken shortly to re-possess the house! Brian assured Jose that he had no mortgage on the property. Jose assured him that there was no mortgage on the property when his Brother in law had owned it and that the total outstanding now was 186K Euros! Brian flew out to Alicante the next day and drove to meet Jose at the property. He collected the paperwork and made a visit to the Bank in question. Luckily they had an English speaker on hand which is unusual in most inland areas.

They were able to research the situation for him and opened the file. He was able to ascertain that his solicitor with his Power of Attorney had arranged a mortgage for him. There were bogus pay slips on the same file and the Bank had approved the loan quickly as the lawyer in question also acted as an agent for the Bank.

The loan however was not bogus. It existed and was secured on the property deeds by the notary?s office which were lodged at the bank by the lawyer. The only good news was that the Notary fees and legal expenses had been paid even though they were paid from Brian?s additional transfer of 25K!

Brian paid the arrears and extracted copies from his file of the relevant documents. Armed with a copy of the lawyer?s bill, he went to search the town of Torrevieja and later that day he made a surprise visit to a certain lawyer?s office.

The lawyer had a small practice and met Brian in person. He spoke some English and having been reminded of the situation confirmed he had acted for Brian. Obviously embarrassed he was not forthcoming on much more information as he was obviously upset by the disappearance of Madame Elisha. He gave Brian a copy of his Power of Attorney and confirmed Elisha had asked him to arrange a mortgage because funds had not arrived for the intended purchase. She had provided the pay slips and he had no reason to believe that there was anything untoward happening. He was shocked to learn that Brian had indeed made the transfer and did not need a Spanish mortgage. Further there was nothing he could do or would do except to cancel the Power of Attorney! He had no comment on the disappearance of Brian?s 248K except to say there was nothing owing!

Brian went to the local Police and then to the British consulate in Alicante It transpired that Madame Elisha was being sought by many buyers of Spanish property from the UK and that a total of 5 million Euros had not been accounted for.! Poor Brian, if only he had consulted all the information freely available for buyers on the website mypropertypal.com:

Brian and Jenny finally moved out to Spain in the following Spring. Due to the existing mortgage Brian had to take on some part time work to help pay for his lifestyle. Madame Elisha and the lawyer were interviewed by the Police, and Fraud squad detectives are still looking for 5million Euros that are missing from her accounts. She of course has blamed corrupt staff and lawyers and is still free to conduct business having become a large Property Developer on the Costa Almeria. Last heard of she had just bribed a local official to allow her to put an extra floor on a 15 storey apartment block netting her an additional 3 million in sales! I wonder where the development fund came from.

Hugo Raymond is the Founder of mypropertypal.com And the Association of Overseas property Agents

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Posted in: on Tuesday, October 21, 2008 at at 12:37 PM