Take Extra Care When Buying Abroad

It is estimated that more than 800,000 Britons now own property abroad. What used to be highly exceptional may now seem rather commonplace, but that is no reason why buyers should relax their vigilance over the process. In particular, it is absolutely vital to employ solicitors who are of good repute and entirely independent of the vendors.

One case that resoundingly proves the point concerned a development of luxury homes in Italy that was alleged to have been a money-laundering front for the IRA and the Mafia.

Almost 200 UK and Irish purchasers had paid deposits of up to £105,000 for seaside homes that had been marketed 'off plan' in glossy brochures but had yet to be built. After allegations that the project was connected to organised crime emerged, the development was investigated by the Italian police. Only a small number of units were ever completed and the purchasers lost their deposits.

In order to recover their money, the purchasers launched proceedings against a firm of Italian solicitors that had offices in England. The firm, which had purported to give the purchasers comprehensive legal advice in respect of their investments, had become involved at the behest of agents who were engaged in selling the properties, one of whom was said to be a convicted IRA terrorist.

A judge found that the firm had breached the duties it owed the purchasers in numerous respects. Amongst other things, it had failed to ensure that the proper guarantees and planning permissions were in place before parting with its clients' money. It had failed to reveal to the purchasers the substantial commissions that were being paid to the selling agents or to alert them to the risks of organised criminal activity in the region of Italy concerned.

Having acted in breach of trust, the firm was ordered to compensate most of the purchasers to the full amount of their deposits. The compensation paid to some was limited to the part of their deposits that had been paid to the agents. In dismissing the firm's challenge to the judge's ruling, the Court of Appeal could detect no error of law in his conclusions.