Previously, we mentioned that a recent National Association of Realtors survey found Texas to be one of the most active markets in the United States in terms of foreign investment in commercial real estate. As we noted last time, there are often special considerations in commercial real estate transactions involving foreign buyers, and addressing these considerations is important to ensuring a successful transaction.
In addition to differences in negotiation style and handling nonstandard purchase agreements, buyer identity and credit verification can be more complicated with foreign buyers, and loan requirements can vary depending on the residency status of the buyer. For instance, lenders may require larger down payments or guaranteed deposits in a U.S. bank before approving loans.
An important task for sellers is to carefully address risks unique to real estate transactions with foreign buyers, such as ensuring effective remedies in the event of default. This can involve carefully spelling out the terms of compensation so that sellers are able to hold foreign buyers accountable. In many cases, though, it is even better to simply ask for a significant deposit or down payment from the start.
Documentation requirements in any commercial real estate sale can be burdensome and confusing, especially since the rules governing the process change from time to time, and keeping current is crucial for pursuing a successful transaction. In any commercial real estate transaction, whether involving foreign or domestic buyers, working with an experienced attorney helps ensure a seller’s interests are well-represented in the process and that all applicable laws and regulations are carefully followed.