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Getting all of the necessary pieces in place for any real estate deal in today’s risk-averse housing finance environment can be a complicated affair. And when you add an international component to a transaction that requires financing, you increase the odds that something can go wrong.
At a Global Forum held during the California Association of REALTORS® Expo last week in Long Beach, a panel of experts — Steven Hung of CTBC (formerly Chinatrust Bank), John Fernando of Orange Coast Title and Regan Franklin at Inter Valley Escrow — discussed steps you can take to make the road to the closing table smoother. Here is a list of things they said you can do to prevent deal-derailing problems:
1. Get proof of liquid assets: This is important in any transaction, as you’ll need to know what your clients will be able to pay. But it’s especially crucial when the client will be seeking financing and making an escrow offer. And you’ll want to be sure they can demonstrate proof of those assets in any country they’re in, not just the buyer’s home nation.
2. Get those assets into the U.S.: Beyond getting an accurate picture of your clients’ ready money overseas, you need to help them prepare to move those funds into an FDIC-insured U.S. bank to make the purchase. Again, this is especially important when financing is being sought. Also, when wiring money into the U.S., you and your clients should be aware of any restrictions on cash amounts that can be transferred at one time.
3. Have them form a U.S.-based LLC: Oftentimes, establishing a limited liability company offers an easier way for foreign individuals to move money into United States and purchase (and later sell) a property. But you should talk to a financial expert who has experience with that specific situation before advising your clients to move in that direction.
4. Verify marital status: If your clients have a spouse, lenders want to know about it regardless of where they were married or whether their marriage is legally recognized in their home country or the United States. That’s because lenders want to know if anyone besides the title holder will have a claim to the property. If clients are married, they’ll have to get an interspousal deed.
5. Get documents translated correctly: “Se habla espanol” in a Yellow Pages ad does not mean the company in question can reliably translate real estate contracts. For reasons related to accuracy and legal assurance, translations should be done by a U.S. court-appointed translator.
6. Determine who can supply authorized signatures: It’s not uncommon when dealing with foreign purchases of U.S. properties to have multiple-buyer situations. Whether you’re working with a group of family members or an overseas company, make sure the person signing the contracts is empowered to spend the funds.
7. Know when to use original signatures: In some cases, electronic signatures will be fine. But in others, an original signature will be required. If your clients aren’t in the U.S. for long periods of time leading up to closing, make sure to take into account the time it will take to get the documents to them for signing and getting those back to you.