When buying property in Morocco it is recommended that you appoint a specialist in Moroccan mortgages, either a lawyer or other expert, regardless of the notary. This specialist will be invaluable in helping you navigate the language, local customs, and the general property purchasing process. Unsurprisingly, buying a property in Morocco follows the French process very closely given that Morocco was formerly a French colony and maintains close relations with France to this day. The initial contract is drawn up after a offer is made and accepted on a home. This contract, known as a “Compromis de Vente, usually carries a 10% deposit to be paid at this time. Provided the Compromis de Vente is protected by the proper clauses at the time of signature by both buyer and seller, the deposit is refundable. It is important to have an “escape” clause in the event that your mortgage cannot be finalized. Make sure that this clause is included in your contract and make it conditional upon arranging for your Moroccan Mortgage.
Negotiating a Moroccan mortgage is tedious and frustrating, and while an agreement might be arrived at, the mortgage may be issued only once the contract is signed. Thus, it is extremely important that your Compromis de Vente includes the so-called escape clause.
In most cases, Mortgages are available with 15-year terms. This can be extended to 25 years, but it will be accompanied by a much higher interest rate. You can not get an interest only mortgage for the entire duration of a mortgage, though an interest only option is offered for the first six months of a loan Since the application process is such a burden in Morocco, and bank staffs are so inexperienced, arranging a mortgage with professional help is strongly advised.
First the Compromis de Vente is signed and then a search will take place. If the search is satisfactory, then the notary will complete the document by signing it. It is recommended that 5% of the overall purchase price be reserved to ensure any incidental costs and additional fees that may be incurred will be covered. For the life span of a mortgage in Morocco, there is also a monthly mortgage tax of 10% included in the contract.
Under Moroccan practice, it is strongly recommended one appoints a lawyer to act as the notary for both the buyer and seller. For this reason, you have to be certain the title’s deed and the mortgage paperwork are appropriately researched for your own good. Make sure the lawyer checks what work is expected to take place because the bank does not. This may make your property hard to sell in the future.
It is also easy to find developers who will handle construction and the transaction of real estate deals, offering total packages for purchasing Moroccan property. Along with considering the convenient opinions of the appointed lawyers and notaries you need to make independent decisions in protecting your interests.
Overseas buyers looking to purchase property in Bulgaria frequently hear that the
regular practice is to put a lower price in the deeds to save money. Agents and even
lawyers often assure the purchaser that most property transactions in Bulgaria are
conducted precisely in this manner. The overseas buyer often poses no more
questions, because they believe this information to be correct.
How wrong they are - there are such enomous risks to the buyer; it’s really
important that people don’t get tricked with this.
Putting a lower price in the deeds during the last stage of the conveyancing process
in Bulgaria is generally done because the vendor wishes to avoid taxes and fees
which are due on final signing and which depend upon the property price which is
declared in the deeds. The higher the value of the property, the higher the taxes
and charges. But by declaring a lower price in the deeds than that which is actually
being paid is an evasion of Bulgarian law and creates an ‘invalid’ or ‘fake’ deal and
can lead to serious consequences.
From a civil law point of view this kind of ‘fake’ deal would be considered null and
void anyway. To add to this, if you were found guilty of having been party to such a
deal you could be charged with a fine of up to 1,000 pounds and even
imprisonment of up to three years.
It is also a common practice at the moment with Bulgarian constructors who are
trying to avoid VAT which has to be paid on new build or off plan sales. They offer
the potential of putting in a low and false price in order that they do not pay all or
any of the VAT due.
For the overseas buyer, one can only imagine what any mortgage company might
have to say about all of this if at a later date they become aware of the property
being under-declared on the deeds! Bulgarian estate agents often say, ‘oh well,
don’t worry, you can do the same; just find someone else to pay you part in cash
later’, but it’s not that simple. With European entry looking increasingly likely in the
immediate term, it won’t be so easy to find a buyer willing to do this and people
trying to operate in this way will find it increasingly difficult to do so. Any buyer
really has to ask himself whether he would do this in Britain with a similar proposal
from an agent, paying in some cases up to 70% of the price in cash and then hoping
to find a future buyer who would do the same.
Even if after all this, anyone still thinks it’s a good idea to put a lower price in the
final deed, then let’s take a look at the financial implications on just a small scale
when it comes to re-sale. :
Firstly, if the full purchase price is declared
Price 40,000
Taxes and Notary Fees about 3.5% 1,400
Re-sale Price 60,000
Profit 20,000
Gains Tax at 15% 3,000
Secondly, if a lower price is declared (the real price remains at 40,000 as in the first
example above)…
Price 20,000
Taxes and Notary Fees about 3.5% 700
Re-sale Price 60,000
Profit 40,000
Gains tax at 15% 6,000
Initially,it looks good - 700 pounds is saved on the initial taxes and fees when
buying. However, when it comes to re-sale there’s an additional tax burden of
3,000 pounds!.
The best advice we can give to anyone is to get your own independent lawyer who
will act in your interests. Buyers should not be tempted by those that say this kind
of practice in Bulgaria is above board, it’s certainly not and purchasers could end up
in real difficulties all round.
Quest Bulgaria is the specialist english language magazine for those interested in
buying property, moving to and investing in Bulgaria. Impartial and in-depth articles
written every month by practicing lawyers, accountants, real estate and other
experts. No-nonsense, factual and impartial.
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Contact :
Jain Goodall, Marketing Director
Quest Bulgaria
Sofia
Bulgaria
Tel : 00 359 2 851 90 65
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http://www.questbulgaria.com