RE/MAX has "Real Estate "in more than 91 countries around the world and has worked with thousands of foreign buyers & foreign investors. This experience enables us to offer first class service that ensures your entire transaction is handled with accuracy, honesty and efficiency.
Did you know that RE/MAX sells more International Real Estate in 2 1/2 weeks than it's nearest competitor does in an entire year? Whether you are buying or selling as a foreigner, we are here to help. (480) 570-5500
If you are a foreign buyer, there is no charge for our home buyer service. If you are a foreign seller, please contact our office to schedule an appointment to discuss your options. We have created a PDF version of our "Foreigners Buyer's Guide to Purchasing Arizona Real Estate" that we are happy to email at your request.
We understand the process!
RE/MAX has "Real Estate "in more than 91 countries around the world and has worked with thousands of foreign buyers & foreign investors. This experience enables us to offer first class service that ensures your entire transaction is handled with accuracy, honesty and efficiency
Financing Options
One of the most common misconceptions regarding the purchase of property in the United States by a foreigner is that you can only purchase real estate with cash. Although purchasing with cash will often give you an advantage when making an offer on a property, other options are available.
The following are Foreign National mortgage options including Canadian US Property Mortgages available to Canadians and other foreign citizens to finance property in the United States.
1.Use Equity in your Home
2.Unsecured Loan or Personal Line of Credit
3.Traditional Mortgage through a US Lender
We work directly with many lenders whose sole focus is financing international buyers. Please refer to any of the following lenders for more information. Or contact us and we can direct you to someone who fits your specific needs.
Please remember, no website, not even ours can replace the advice and guidance from an experienced Realtor®. We are here to help so please feel free to call us or email us anytime. (480) 570-5500
Ways to Hold Title in Arizona as a Foreigner
Arizona is a community property state that has a statutory presumption that all property acquired by husband and wife is community property. Holding title as community property is an estate of ownership available only to married persons. Neither spouse, acting individually, may transfer or encumber (get a loan against) real estate that is vested as community property. Upon death of one of the spouses, the deceased spouse’s interest will pass by a will (if one exists) or intestate succession (if no will exists).
Community Property with Rights of Survivorship:
A community property estate between married persons that vests the title to real property in the surviving spouse provided it is expressly declared in the deed. This vesting has the tax benefits of holding title as “community property’ and the ability to avoid probate through “survivorship rights”.
Joint Tenancy with Rights of Survivorship:
Joint tenancy with right of survivorship is a method of co-ownership that gives title to the real property to the surviving tenant(s) upon death of a joint tenant owner. Title to real property can be held in joint tenancy by two or more individuals either married or unmarried. If a married couple acquires title as joint tenants with the right of survivorship, they must specifically accept the joint tenancy to avoid the presumption of community property.
Tenancy in Common:
Tenancy in common is co-ownership where parties do not have survivorship rights and each owns a specific undivided interest in the entire estate.
Sole and Separate:
Sole and separate property is real property owned by a spouse before marriage or any acquired after marriage by gift, descent or specific intent to hold the title separate from the estate of the marital community. If a married person acquires title as sole and separate property, his or her spouse must execute a disclaimer deed.
The ownership options listed above apply to individuals only. Title to real estate can also be vested in corporations, general partnerships, limited partnerships, limited liability companies, or in individuals or corporations acting as trustees pursuant to written trust agreements. If you wish to vest title in one of these entities, Grand Canyon Title Agency, Inc. recommends that you obtain assistance from a qualified real estate agent or attorney.
Funds Availability Guide
Drafts:
No disbursements can be made against a draft until it has been submitted for collection to our depository bank and we have confirmation that final payment has been received and credited to our account.
Third Party Checks:
Most Title Companies will NOT to accept third party checks. These checks are classified as: any check drawn on a non-financial Institution account, payable to a payee other than the title company being used and subsequently endorsed over to the title company handling the transaction. There is one exception: United States Treasury checks payable to Farmers Home Administrations borrower, endorsed over to the title company may be accepted.
Foreign Checks:
Most title agencies will NOT accept foreign checks into escrow.
Business Day:
A business day is defined as a calendar day other than Saturday or Sunday, and also excluding most major holidays. If January 1, July 4, November 11 or December 25 fall on a Sunday, the next Monday is also excluded from the definition of a business day.
**Local Checks:
A check is considered “LOCAL” when it is drawn against a bank located in the same processing region as our depository bank. The check processing region for the State of Arizona is: Los Angeles Region: ABA Numbers 1221 and 3221
Title Commitment
Schedule A:
This is the information submitted to our Title Department by the escrow officer. It contains the basic information given to us by the Buyer or Realtor®, such as the legal description of the property, sale price, loan amount, lender, name, type of entity and/or marital status of Buyer and Seller Title Policies to be issued and so on.
Schedule B:
The Schedule B “exceptions” are items, which are tied to the subject property. These include Covenants, Conditions and Restrictions (CC&Rs), easements, homeowners association by-laws, leases and other items that will remain of record and transfer with the property. They are referred to as “exceptions” because the Buyer will receive a clear title “except” the Buyer’s rights will be subject to conditions in the CC&Rs, recorded easements, etc. The Buyer is asked to acknowledge receipt of the Schedule B documents, provided by GCTA.
Foreigners Buyer's Guide to Purchasing Arizona Real Estate - Requirements:
These are items that the Title Agency needs to delete and/or record in order to provide a clear title to the property. Items that need to be addressed include:
- Current property-tax status,
- Any assessments that are owed such as those for a homeowners association,
- Any encumbrances (or liens) on the property.
Sometimes items show up against a property because another person has a name similar to an involved party. This is one reason we ask for an Identify Statement, to determine if items are inaccurate and can be deleted.
All funds deposited for the escrow must be by wire transfer.
Out of US Wire Transfers / Swift Fee: International transfers are executed through SWIFT, Society for Worldwide Interbank Financial Telecommunication, and there is an additional charge for this type of transfer.
The charge is deducted from the wired funds and from bank to bank. The charge is typically a flat rate does not exceed $100.00, so we recommend that our clients wire an additional $100.00 when wiring from outside the U.S.
When a foreign owner gets ready to sell, they could be subject to a 10% (of the Sales Price) withholding unless the transaction is exempt from FIRPTA.
Most common residential exemption: Sales Price is not more than $300K. The buyer or a member of their family must have plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two twelve month periods after sale.
Escrow Timeline
ESCROW OPENS
When the escrow opens, it means that the title company is in receipt of: a completed and signed purchase contract, including all amendments and addendums; and an earnest money deposit, usually in the form of a personal check, made payable to the title company.
RECEIPTS ARE FAXED
The receipt for earnest money is faxed to both agents and the lender within 24 hours along with the escrow number and pertinent contact information known to us at the time.
ESCROW OFFICER WORKS FILE
1. The commitment for title insurance is ordered and received, then faxed to agents and lender 2. Escrow Officer schedules signing appointment with Seller
3. The Owner’s Association is notified and statements are ordered
4. Seller’s written mortgage loan payoffs are ordered
5. Lender’s loan terms and documents are requested (if applicable)
6. Buyer provides Escrow Officer with Insurance information
7. The Pre-Audit HUD1 Settlement is faxed to agents and lender
8. Upon receipt of loan documents, Escrow Officer schedules signing appointment with buyer
ESCROW SIGNING to Convey Title and Give you keys:
Signing takes place with both Sellers and Buyers prior to close of escrow date on contract. Both must bring valid photo identification for Notary Public purposes. Upon completion of signing, Lender’s documentation is returned to Lender for review, approval, and funding. This process can take more than 24 hours at the lenders, so be sure to provide ample “prior to close of escrow” time for these signings. Once funds are received the transaction can record the same day. Congratulations, close of escrow has taken place!
ESCROW CLOSES
Close Of Escrow . . . Deeds Are Recorded!
FUNDS AND COMMISSIONS ARE DISBURSED
Once we have confirmed recording information, the funds are disbursed, including commission checks, and final closing packages are ready for pick up, delivery or mail.
FIRPTA - The Foreign Investment in Property Tax Act
Seller agrees to comply with IRS reporting requirements. If applicable, Seller agrees to complete, sign, and deliver to Escrow Company a certificate indicating whether Seller is a foreign person or a non-resident alien pursuant to the Foreign Investment in Real Property Tax Act (FIRPTA). Buyer acknowledges that if the Seller is a foreign person, the Buyer must withhold a tax equal to 10% of the purchase price, unless an exemption applies.
FIRPTA, the Foreign Investment in Real Property Tax Act, was enacted in 1980 and provides that if the Seller of real property is a foreign person, the Buyer must withhold a tax equal to 10% of the gross purchase price, unless an exemption applies. 26 U.S.C.A. § 1445(a). A foreign person is a nonresident alien individual; a foreign corporation not treated as a domestic corporation; or a foreign partnership, trust or estate. A resident alien is not considered a foreign person under FIRPTA.
There are numerous exemptions to the FIRPTA requirements. The most common exemption is when the seller furnishes a non-foreign affidavit stating under penalty of perjury that the seller is not a foreign person. 26 U.S.C.A. §1445(b)(2). Another exemption is a transaction involving the transfer of a property acquired for use as the buyer’s residence and the amount realized (purchase price) does not exceed $300,000. 26 U.S.C.A. §1445(b)(5). Under certain circumstances, a seller may obtain a “qualifying statement” from the IRS stating that no withholding is required. 26 U.S.C.A.§1445(b)(4).
Although FIRPTA generally provides that 10% of the purchase price must be withheld, the amount withheld should not exceed the seller’s maximum tax liability. 26 U.S.C.A. §1445(c)(1). The seller (or buyer) can request the IRS to determine the seller’s maximum tax liability with respect to the sale.
A real estate broker or salesperson (“broker”) for either party can be held liable for the tax that should have been withheld (up to the amount of compensation received), if the broker has actual knowledge that the non-foreign affidavit is false and fails to notify the buyer and the IRS. 26 U.S.C.A. §1445(d). Under certain circumstances, the broker may also be liable for civil or criminal penalties
Any necessary withholding should be accomplished by requiring the escrow agent to withhold the required funds. The escrow company should be instructed to send the funds to the IRS at close of escrow. Additional information regarding this issue may be obtained in IRS Publication 515.
Department of the Treasury/Internal Revenue Service — Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations
Foreigners Buyer's Guide to Purchasing Arizona Real Estate
PLEASE NOTE: The foregoing is for informational purposes only and is not intended as definitive legal or tax advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. You should not act upon this information without seeking independent legal counsel. If you desire legal advice, tax or other professional advice, please contact your attorney, tax advisor or other professional consultant.
Please note: this article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.
Angie Johnson
Realtor | SFR | Since 1997
ABC15.com Real Estate Columnist Direct: (480) 570-5500
RE/MAX Luxury Real Estate
Angie Johnson Real Estate Group
15435 N Scottsdale, Rd | Scottsdale, AZ 85254
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