THE GENERAL BUYING PROCESS

Eastern Europe is a staggeringly beautiful and diverse region that has a wealth of attractive properties on offer, and it can be easy to let your heart rule your head and succumb to agent pressure or your own feelings without doing the proper research and thorough checks on a property. Never allow yourself to do this. Always ensure you give the property a going-over before parting with any money, and don’t worry if you lose the property as a result of your diligence – there’s sure to be another.

Almost all of the Eastern European countries employ a continental law system, which is completely different from the UK common law system. The standard residential conveyancing transaction generally follows a threefold process: the reservation, the preliminary contract and completion.

The first stage is the reservation of the property. Depending on the price of the building, reservation fees vary, but are usually in the region of €1,000 to €2,000 for properties costing up to €100,000. Once the reservation contract is signed and the reservation deposit is paid, the buyer is provided with the preliminary sale contracts, either by the agent or the seller’s solicitor, management contracts and all the other relevant documents in relation to the purchase, such as title deeds, construction licences and habitation licences.

The second stage of the transaction is the signing of the preliminary sale contract. In cases where you are purchasing an old or resale property this is the stage at which a survey should be arranged. Buyers should be aware that before they sign the preliminary sale contract, they should always seek independent legal advice, as once the contract is signed they will be committed to the purchase, and in the majority of cases, there are heavy penalty clauses in case the buyer pulls out once the contract is signed. Also, buyers should bear in mind that the preliminary sale contract is a private contract and as such, the title of the property does not transfer at this stage. You will generally now be required to pay a deposit of between 10% to 20%, and with an off-plan property, this will make up the first instalment. The preliminary contract should contain details of the payment timeline if you are purchasing a newly-built, off-plan property, and buyers should know that in Eastern Europe, the stage payments in off-plan cases are not protected by bank guarantees, as in Spain or Portugal. Because of this, it is crucial that the content of the contract is specific about the details of payment and in what situation payment should not be offered.

The final stage is the signing of the title deeds, which is executed in the presence of a public notary. A state official, it is his/her role to witness the signatures of the parties on the deeds and also to check that both parties have the legal capacity to enter into the final contract or deed. Buyers should be aware that the notary is independent and does not act for either of the parties. At this stage, if buying a resale or old property, the payment of the remainder of the property price is required, along with the payment of estate agents’ fees in some cases. If you are buying in a country such as the Czech Republic, where it can take a significant amount of time for the land registry to recognise the sale (and thus legally declare you as the owner of the property), the final payment can remain with the notary or in a separate bank account, only being transferred to the seller on receipt of the title deeds.

Restrictions on foreign buyers

As many Eastern European countries are part of the EU, other EU citizens are generally allowed to purchase property with limited restrictions or no restrictions at all. Where there are restrictions, these tend to surround the ownership of land and most can be circumnavigated by setting up a limited company. In some cases, such as Turkey, you will need to check with the government or military that they are happy for you to buy.

Additional costs

Several fees and taxes will be payable on top of the cost of the initial property purchase price. It’s recommended that you budget for an additional 4–5% of the cost of the property – this should cover the additional fees required.

Costs may include:

• Transfer fees: 2–2.5%
• Notary fees: 0.5–1%
• Legal fees: 1–1.5%
• Surveyor’s fee (optional)
• Mortgage fees (if applicable)
• Foreign exchange costs (if applicable)
• Estate agents’ fees (if applicable).

Surveys

It is advisable that you get a survey carried out on your property, especially if it is an older or resale property. Although newly-built properties come with a guarantee for a certain period of time, it’s still recommended that you get it checked out. Your lawyer or agent should also complete a background check on the property, including checking court records and mortgage records to ensure there are no debts transferable with the property. Normally, a visual survey will be arranged and the cost of this is often included in the overall fee paid to your lawyer or estate agent. A structural engineer will also view the property to inspect the construction in detail. The type of report you decide to get will vary from a UK survey and is generally not as thorough. The survey can be carried out by either a surveyor or an architect, but you may have to get it translated. However, there are increasing numbers of local companies, especially in the larger towns and cities, which are offering English-style surveys and are gearing themselves towards the foreign market. A full structural survey can be arranged if the house is particularly old or there is some doubt about the land the building has been built on. This will cost you between £200 and £300.

The following is a list of things to ensure the surveyor looks out for:

• That the title corresponds with the property’s size and number of rooms.
• Whether the plot boundaries are correct.
• Check the walls and roof for obvious signs of disrepair or cracks.
• Check the property for damp or dry rot.
• Check which fittings and furnishings come with the house and garden and which don’t.
• Do the doors and windows fit and lock properly?
• Are you connected to all utilities?
• Where are all the plug sockets and telephone points, and are there enough?
• Do you have fully-functioning heating and air conditioning, or is this something you will have to rectify?
• Is the bathroom in good condition? Are the tiles damaged? Is the bathroom ventilated?
• Does the drainage system function properly?
• Are there any strange smells in the house?
• Are there any signs of insect infestation in the woodwork?

Background checks

With certain types of property there are different considerations to take into account before you purchase. For example, with an apartment always check out the management costs you may be levied with for upkeep of communal areas, security and general caretaking. For a business, make sure the proper background checks are done and you are permitted to trade and use the property or land you have purchased for the intended business venture. If buying a newly-built or off-plan property, dig around and ensure the developer has obtained building permission. In all cases, you should ensure that all the planning permission and permits you require have been granted. Finally, it is worth checking to see whether there are any plans for the development of the land surrounding your property; is a road or airport planned over the next few years? Will your view be blocked by a new development?