Real Estate Q&A: Purchasing Overseas Property & Bank-Owned Property Transfers

Bank-Owned Property Transfers :: Mint.com/blog

Zillow real estate investment writer and long-term investor Leonard Baron, MBA, is answering questions from MintLife readers.

If you have a question about investment properties, cash flows, insurance, mortgage financing, homeowners associations, renting versus owning, foreclosures and more, drop Leonard an email.

Overseas Property Investments for Retirement

Mike of Portland, OR asks:

We see a lot of advertisements for investment properties in South America that can later be used for retirement.

We’re about 10-15 years away from retirement but may consider buying in Belize for an investment and possible retirement home.

What should we consider to make sure we are doing our homework here?

Answer: You asked about buying a retirement home for 10-15 years down the road.

My question to you is whether you are sure you want to retire in Belize?

Many things could change over the next 15 years and if you buy now and change your mind, you’re probably going to lose a lot of money.

You also asked making a real estate investment. There are a couple of issues here.

First, real estate investments should produce income. Do you plan to rent this property out?

And, have you considered the issues and complexity of dealing with a rental property very far from your home?

Everything may go great for a while, but it’s highly unlikely that everything will go well over a 10- year period. You’d be better off buying an investment property in the city where you live.

While some South American countries like Belize are stable now, they may not be stable in 10 years.

Plus if you have problems with the property such as title issues, the legal system is very different there and may not treat a foreigner fairly.

If you still like Belize when it’s time to retire, I’d highly suggest renting a property there for a few years before you decide to buy something.

Bank-Owned Property Transfers

Mario of New York, NY asks:

We purchased a bank-owned property that was almost rectangular shape.

I say almost rectangular because the lot had one small corner that was sliced off to a separate county assessor parcel years before the bank foreclosed on both parcels.

The bank, in our purchase contract, sold us both parcels but only deeded us the main one because there was some problem with their foreclosure action against the small, sliced-off corner parcel.

We didn’t think it was a big deal at the time – because it was a really small corner – so we let the issue pass.

But, now we’re wondering if we should have tried to get the second parcel, which is still titled in the name of the original owner who was foreclosed upon.

Answer: Yes, you need to go back to the bank to get this resolved.

Also, was there a title policy issued at the purchase and, if so, did it cover both parcels or just the main parcel?

This could end up being a big problem in the future as the original owner still owns the corner parcel.

Start by reading your contract to make sure you didn’t sign any addendum that removed the second small parcel from the contract.

Also, pull out your final title insurance policy to see if it covered both parcels.

Hopefully, you didn’t sign away your rights to the smaller parcel. It will be even better if your title policy covers both parcels.

Contact the bank to let them know you need the smaller parcel transferred to you.

They may fight your request, so if you can live without that parcel, I would come up with a dollar amount and settle. Start high because they’ll likely want to negotiate.

Also, have a list of reasons why the small parcel is so important to you.

Finally, contact the title insurance company so they know you expect them to fight on your behalf to get that parcel or be compensated for it, assuming it was included in your title policy.

Try to work with both parties to resolve the issue.

If you can’t get it resolved, you’ll need to contact a local attorney to assess your options and get a monetary settlement or the parcel transferred to you.

Leonard Baron, MBA, CPA, is Zillow’s real estate investment writer, a San Diego University lecturer and real estate due diligence expert. As America’s Real Estate Professor®, his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions.