| 1. Are
there any restrictions on an overseas company or business
buying commercial property? |
Generally, no. (Some
U.S. states limit the ownership of agricultural land
to non-corporate entities). |
| 2. Is
land/property generally ‘registered’ so
that the title/ownership is guaranteed? |
There is no registry
of title. Title and encumbrances (mortgages and liens)
are usually recorded at the local level—typically
a county in a state. Title insurance (for a premium)
protects the interests of owners and encumbrances against
matters not appearing on the record. Most states have
laws permitting liens that need not be recorded immediately—such
as liens in favour of persons (“mechanics”)
providing goods or services that directly benefit the
real property. |
| 3. What
are the basic requirements/procedures? |
A deed/mortgage must
meet certain formal requirements to be recordable. A
title search is necessary to receive title insurance. |
| 4. On
average, how long does the process take? |
This can take 1 week—10
days at a minimum—but usually longer. 30 days
is a working minimum. |
| 5. What
searches are advisable? |
As above, a title search
by a reputable title insurance company. |
| 6. What
are estimated disbursement costs? |
The cost of title insurance
varies by the value of the real property. The cost of
a title search is included in the escrow and other fees
payable at the time of purchase, which can include transfer
taxes. |
| 7. What
are the local and/or national tax considerations in
the country of purchase? |
Under the Foreign Investment
in Real Property Tax Act (FIRPTA), a withholding tax
is payable upon the sale of United States real property
by foreigners, at the rate of 10% of the sale price,
regardless of the amount of profit from the transaction.
California FIRPTA requires 3 1/3% withholding for all
non-residential property sales (with certain exemptions).
There are many exceptions and special circumstances—always
consult counsel. |
| 8. What
other annual local charges are obligatory? |
In California, 1% of
the original purchase price of the property. The tax
may not increase more than 2% per year so long as the
original purchaser owns the property (subject to certain
exceptions). |
| 9. Are
there any other issues to consider? |
There are many restrictions
on the development of commercial real property, including
limitations on the development of property along the
ocean; laws and regulations governing the zoning and
use of commercial property, including, in California,
laws governing the seismic strengthening of properties
deemed susceptible to earthquake damage. |
