For those who buy a property to live in, as well as to invest or speculate, some properties can be a real trap. Situations range from pending lawsuits that generate headaches and high costs to investments made without the care and information necessary for the success of the business. See below eight real estate investments that can be traps for the buyer, according to experts:
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Commercial rooms
In the opinion of Professor João da Rocha Lima Jr., from the Real Estate group at Poli-USP, commercial rooms are not recommended for small investors. “The investor needs to be passive, both to rent and to maintain the quality of the property. It is not possible to be proactive in seeking a market, and the quality of the property is driven by a confused condominium assembly”, says the professor.
For small investors who want to invest in commercial real estate, Rocha Lima recommends investments in real estate funds, especially those in shopping centers, as long as the share price is fair and allows for appreciation. “It is an investment with greater liquidity, in which you can enter with 100,000 reais and, after a while, withdraw only 10,000 reais, which is not possible to do with the physical property”, says the professor.
Property on the plant
The property on the floor plan can either be a good deal, due to the possibility of buying it at a cheaper price and customizing it, as it can generate a big headache. Although construction companies are already making an effort to solve the wave of delays in works that hit the Brazilian market in 2011, delays are part of the business risk, and are even provided for in the contract.
When the property is delayed, several factors often weigh against the buyer. First, the forecast of a 180-day delay in the contract is no longer legally supported, as it leaves the buyer at a clear disadvantage. Second, by delaying, the work ends up financially burdening the buyer. The latter is unable to migrate its financing from the construction company to the bank while the property is not ready, and is obliged to pay installments adjusted by the INCC, an inflation index that usually rises above the IPCA.
Once the work is finished, the hiatus between issuing the occupancy permit and registering the property can become another headache. The bureaucracy involved in the process delays the migration of financing to the bank, and as the property is ready, the buyer is obliged to pay interest plus INCC on their installments. In addition, the occupancy permit can be issued before the property is actually habitable, which delays the owner's move to the new home.
Of course, for all these situations, the buyer's rights are safeguarded. But if the construction company does not accept an agreement, the matter will have to be taken to court. “Whoever buys a property in the plant to live in and still lives on rent must be prepared for delays of at least six months and for adjustments by the INCC. And also reserve the 'part of the keys', so as not to be scared”, says economist Luiz Calado, vice-president of the Brazilian Institute of Finance Executives (IBEF) and author of the book “Imóveis – your guide to making purchases and sell a big deal”.
Property still on the plant, originally purchased by someone else
It is relatively common for a person who purchased a property on the plant to resell it while it is still under construction and without having paid off the loan. The problem is that this cannot be done through a purchase and sale contract, as many people do. “It's selling something that isn't yours. This instrument is null. Going forward, the buyer will not be able to do the deed”, explains Alex Strotbek, real estate consultant at Areal Pires Advogados.
He explains that in these cases there is an assignment of rights and obligations, not a sale. Therefore, a specific contract must be drawn up for this purpose, including the consent of the construction company.
Property at auction
Getting a good deal by buying a property at auction is not simple. A series of precautions must be taken not to end up buying a property full of legal disputes that will take years – and a lot of money – to be resolved. The investment can be more expensive than if it were purchased a property with no pending issues and at market price in the same region. Besides that, while the pending issues exist, the property cannot be sold, which can harm the planning of those who speculate with real estate.
Real estate auctions, warns Alex Strotbek, are not for the uninitiated. “The properties were auctioned because they have debt-related problems”, recalls the consultant. The buyer can even bid for a good price, but discover that the property has numerous liens in different courts of law, IPTU debt, condominium and notary and tax costs that will make the property more expensive than the average in the region where it is located. located.
“I had a client who bought a property with seven pledges, in seven different courts, and it took two years to download them all. It was for investment, but during this period he couldn't do anything with the property,” says Strotbek. The problem is that the debts related to the property are linked to the property. Thus, they are passed on at the time of sale, if the buyer does not demand clearance certificates.
Therefore, the buyer needs to take a series of precautions: read all the material provided by the bank, ask for the property to be registered in a real estate registry office, check the property tax register with the city hall, check other liens and their origins, and check with the condominium administration for debts. With the debt volume in hand, you must add it to the notary's office costs and the Real Estate Transfer Tax (ITBI), in addition to calculating the opportunity cost, depending on the time to settle all debts.
From the total cost, the buyer can check whether the initial bid is worth it or not. That's why it's good to be wary of bids that are too low – they often indicate very problematic properties.
Property in inventory
Another shot that could backfire. Property in inventory is often sold at below market prices when heirs are in a hurry to dispose of the property, which can be a good deal. Often the proceeds from the sale are used to pay court fees and attorneys' fees during the process. But the risk is high, so you need to be careful.
The biggest trap that the buyer can enter is to buy a property through a drawer contract, without the property having judicial authorization to be sold. It doesn't matter if all the heirs are in agreement – without a court order, the property will not actually belong to the buyer. A new heir or even an unknown creditor may appear and undo the deal. It is also necessary that all heirs sign the promise of purchase and sale, and that the buyer has in hand all the clearance certificates of the deceased.
Property of couples in separation or divorce
This case is similar to the property in inventory, although it is a little simpler. Again, buying a property that is being shared by a divorced couple can be a great deal, as they may be in a hurry to part with the property to share the money and complete the process. However, it is essential that both owners sign the purchase and sale promise and do not have debts, which is proven by the clearance certificates.
If one of the two does not agree with the sale, the buyer will pay, but he will not, in fact, become the owner of the property. Alex Strotbek tells the case of a client who bought property from a woman who was only separated from her husband, not divorced. The property, therefore, was still his. “A person cannot sell something that is not entirely theirs. The other party also needs to sell. This sort of thing is deterrent,” says Strotbek.
Owner with pending legal issues
As in the three previous cases, there may be other cases of pending legal matters that make the business unfeasible or leave a headache for the buyer. "The seller will be prevented from selling a property in tax foreclosure or any private or commercial title. If it's his only property and he doesn't have equity to cover the debt, this sale is fraud,” says real estate consultant Alex Strotbek.
Therefore, it is essential to ask for the seller's clearance certificates. “If he sells a property in one city, but lives in another, it is necessary to check his name in at least both cities. Find out if he's ever had a company, if he's ever been married, that sort of thing. If there is a debt with the Union, for example, the property can be repossessed even if it is already in your name”, says economist Luiz Calado.
Real estate in regions that can still develop
Another pitfall is to launch into a launch market, based on the hopes that a new microregion will develop. This is a risky path, which, although it can be profitable, also depends on knowledge of the market. “Investors should visit the region and only invest if something is actually happening, if there are projects by renowned construction companies,” says Strotbek.
Source: Tajarat.com.pk
