Take 5
Common Mistakes Global Buyers Make — and How You Can Fix Them
with Marc Weintraub
TRT 3:57
Transcribed

Marc Weintraub directly addresses camera:  Many global buyers come to the United States to buy property without any idea how to structure the purchase. It's up to you as their Realtor to guide them. 

I'm Marc Weintraub, senior business attorney and Florida managing partner of Bailey & Glasser LLP, a firm that specializes in representing international clients making real estate and other investments in the U.S. Let's take five minutes to explore common mistakes global buyers make when taking title, and how to build relationships with outside specialists who can guide your buyers to a successful purchase.

A global buyer must ask themselves some questions before determining how to hold title on a property. There are several options, including holding title in an individual name, in a partnership-type company or in a corporation. How title is held is determined on a case-by-case basis. 

Let's talk about holding title in an individual's name. Do they have a spouse or somebody else buying the property with them? Should they put that person's name on the title too? And, if they do put that person's name on the title, what happens if one of them passes away? Does the property go to the surviving owner or would the property be passed down to the buyer's children? Would the property be subject to an estate outside of  the U.S.?

Another option is to hold title in a partnership where taxation can pass through. It's fairly simple. They own a company and that company is going to manage and direct what happens with the property. 

Finally, they can use a corporation that is taxed on its own and would require annual tax filings and annual payments of income tax in the U.S.

There are pros and cons to any of these options. For example, if you hold title as an individual, it’' in your personal name.  If something bad happens there, it will impact you as an individual rather than your company. 

A significant number of global purchasers of Florida real estate do so for a mixture of investment, income and pleasure. When doing that, it's really important for the owner to understand that, at some point, their property is going to be managed by somebody else. And potentially, somebody else is going to need to sign for them on things.

Getting a power of attorney can be simple if the buyer is in the United States. But if the buyer is overseas, getting a power of attorney can be very difficult. If the property is held by a company, it's very easy for the buyer to sign a simple form that appoints an agent to take care of managing the property, and they can do it in the name of the buyer's company. It can make the paperwork much easier, and that is why I typically have my global owners form some sort of a company to hold their real estate in the United States. Using a company can avoid complicated and expensive estate issues if an owner passes away.

Global buyers also, at times, misunderstand the expenses associated with holding their property in the United States, and that these expenses go beyond merely paying utilities and taxes. Sometimes there are expenses associated with having a company, or paying management fees to somebody, or expenses for dealing with accountants and/or lawyers, when having to file tax returns and tax reports in the U.S.

I always recommend that real estate professionals build a team of professionals who have experience working with global real estate owners. Ask these professionals to provide you with a letter or form that you can hand out to prospective buyers that outlines their options for taking title, along with the pros and cons. 

Also, agents should understand at the beginning of the relationship what the client's goals are for the property. Do they want an investment property? Are they looking for a second home where they can spend winters? What are their goals? Clarify that early on, get them with an attorney or CPA and you'll save yourself headaches now and down the road.