In a presentation to solicitors at the Law Society today (20^th February 2007) well known overseas property lawyer, Tom McGrath of Tom McGrath & Associates, said that the amount of times that people come into his office in tears having either lost their properties or vast sums of money in dealing with unscrupulous estate agents and developers, is countless.

Mr. McGrath informed the conference that they had come across a number of unfavourable practices used by estate agents when selling property abroad, for example:

(1) In Bulgaria, it is common practice to under-declare the purchase price of the property so as to avoid paying VAT, currently levied at 20%. Of course, this practice raises a number of serious issues for the purchaser such as committing a Bulgarian tax offence, higher perceived capital gain when the client goes to sell the property and generally receipts can not be obtained for monies paid over. We have heard that a number of agents apparently advise purchasers to go down this route and under declare the purchase price of the property.

(2) The black money payments in Spain. Again, we have come across instances where estate agents have advised purchasers to pay a portion of the purchase price in cash to avoid paying property taxes and also to reduce the sellers' capital gains. Even worse than this, we have had cases where the estate agents have chosen not to inform purchasers that the vendor wants a cash/black money payment. The arguments against making such payments are the same as for point (1) above.

(3) We have come across a situation where an estate agent physically showed an apartment to a purchaser which had beautiful views of the sea and the mountains, under the guise that this was the apartment the client was buying. However, when the purchase came to complete, the purchaser discovered that the apartment which had been reserved was a completely different one. In this instance the estate agent knowingly misrepresented the apartment for sale with the intention of "duping" the purchaser into parting with her money.

Mr. McGrath said that the industry urgently needed regulation and said it was high time that something was done about this totally unacceptable state of affairs. He went on to say that he noted this year there was a surge in the level of people investing and buying holiday homes abroad and now, with the enormous variety of countries involved, it was even more important that something should be done about regulation.

Notwithstanding the above, Mr. McGrath is sure that there are many reputable estate agents and developers who would warmly welcome regulation.

To Contact Tom McGrath & Associates:  info@tmsolicitors.ie