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If you're considering US property, then you need to be aware of these differences. I have been asked on many occasions to assist Australians in respect reading through and understanding a contract of sale for property. In general they are very similar, although there are some striking differences in the US compared to Australia.
Blogger: Mark Rooney, Investinus Group
For instance in the US contract of sale there is a rather large amount of concern around the real estate agent and disclosing who and what is he/she doing for his commissions. I can only assume that this is because in the past just as there have been issues with transparency with real estate transactions in Australia, there have also been issues in the past so in one sense it is a good move on behalf of their industry to be even more transparent. Therefore, a lot of the questions I get asked when assisting people to review the US contract is based around the real estate agent and disclosure.
Moving forward in a contract you will find an important part of the contract which is somewhat misunderstood by many Australians is the ‘Lead Based Paint” clause. What this is about is any home that is built before 1978 in the US will contain Lead Based paint; therefore there is no way of removing it totally. In respect to this it is a requirement that the house be correctly sealed with non-lead based paint to protect from peeling, chipping and Lead Based dust.
Obviously from a moral point of view as a landlord you must ensure that the property that you have purchased has removed the Lead Based paint problems such as chipped or peeled paint and or unsealed areas. Use people that are reputable and where possible get photos of work done if you are unable to be in the US to review it yourself. Many States have occupancy codes and local governments will complete their own safety checks prior to allowing the property to be tenanted. This is fantastic and very beneficial to a foreign investor as you can rely on a government body to complete a thorough check for you, then offering a ‘Certificate of Occupancy’ which greatly assists you as an investor.
I also often get asked do I need to get the property inspected by an independent person. This is also a question, which at times I find difficult to answer for many foreign investors as I rarely do obtain these myself due to the fact that I work with developers and local government organizations that have removed much of the concern I may have. I would say if you are working at building a portfolio over there than try and work with teams that have your best interests at heart. You will find that these contacts will be invaluable for you in the future and will greatly assist you to get things done when required.
About Mark Rooney
Mark first found out about the advantages in the U.S real estate market in February 2002, whilst on a business trip to Canada and the U.S.A. The initial contacts made were able to assist with learning and studying the market place and how an Australian can invest into the U.S market safely and also have assurance that a team there can protect the asset.
For the next 4 years Mark researched the U.S real estate market and looked for opportunities to build further relationships with people. Over the next few years Mark gained an understanding of the various cities and what investment outcomes they provided a foreign investor.
In 2009 Mark was asked to assist others with purchasing property in the U.S.A. This was the initial beginnings of Investinus Group, whose focus is ensuring that their clients have a safe and secure investment in U.S. real estate.
The group aims to build strong relationships with their clients and the people who work with them, suppliers, property managers, attorneys, accountants and developers.
A contract is a legal document that binds two or more parties, stating their rights and obligations to the agreement.