Owning real estate is challenging for most people. Few of us have all the financial, legal and handyman training that would make us top-notch property owners. In some jurisdictions, all the usual difficulties are compounded by unusual rules, procedures and customs. Let's take a look at seven of these factors.
TUTORIAL: Exploring Real Estate Investments
1. You Can't Own the Land
In some jurisdictions, it is possible to own property, but not the land on which the property is located. One such location is Vietnam, where all land is considered communal property. Similarly, in China, all land is owned by either the government or by a collective. Thailand prevents foreigners from owning land unless they do so in conjunction with a private limited company that is at least 51% Thai-owned. There are some communities in the United States where it is possible to buy property on leased land, but it is not the dominant U.S. ownership structure. (Learn more in Should You Buy Property On Leased Land?)
2. You Can Only Own One Home
In 2010, Shanghai and Beijing's municipal governments decided that families would only be allowed to own one home in those cities. The stated purpose of the law was to help slow the rapid price increases in the Chinese real estate market. At the time of enactment, no end date for the new rule was established. A seeming consequence of this law has been a decrease in new home sales.
3. You Can Own Corporate Shares, but Not the Actual Property
In cooperative housing arrangements such as New York City's co-ops, residents don't actually own the units they occupy. What they really own is a share in the corporation that owns the entire building or development, plus the right to occupy a given space. The corporation holds the title to the property.
This type of ownership structure is not unique to New York, though it is not as common in other U.S. cities. It also exists abroad. Belize is one country that offers a similar arrangement in some housing developments. (For related reading, see An Introduction To Buying A Condominium.)
4. You Have to Wait for Water Rights
Since 1986, Cambria, Calif., has had a waiting list to acquire water rights. Without these rights, a property cannot have any water or sewer hookups. What's more, the waiting list was closed in 1990. There are three waiting lists: one for single-family properties, one for multi-family properties and one for commercial properties. No new water permits have been issued since November, 2001 because of a lack of water supply, so the waiting lists are currently stagnant. The single-family wait list has 666 listings. Real estate listings for land in Cambria note the property's position on the water rights waiting list.
5. You May Have Difficulty Obtaining a Clear Title
In some countries, getting a free and clear title is not as simple as doing a title search and purchasing title insurance. Many traditional, older homes in Morocco do not have a formal title and have multiple owners. This makes it difficult for a buyer to acquire full and indisputable ownership of the property. Cypress is another country where it can be challenging to acquire a title. (For related reading, see Holding Titles On Real Property.)
6. Your Historic Home Can't Have a Modern Door
Properties located in official historic districts in the United States are often subject to numerous regulations when it comes to modifying the property. In the St. Louis neighborhood of Soulard, which is listed on the National Register of Historic Places, a combination of historic standards and city building codes determine how property owners maintain and modify their buildings. Here are a few of the district's codes governing doors:
- Doors shall be one of the following:
- The original wood door restored
- A new wood door which replicates the original
- A finished metal door of a style which replicates the original
- Based on a Model Example.
- The following types of doors are prohibited:
- Flush, hollow-core doors with or without applied moldings
- Flush doors of any material.
- Doors shall have one of the following finishes:
- When hardwood, a natural finish
7. You Should Sell Your Property at Auction.
In the United States, property auctions are only common among foreclosure and tax lien sales, and bidders are primarily professional real estate investors. In Australia, however, it's not unusual for the average person to buy or sell a property at auction. Sellers establish the minimum price they are willing to accept; if no bidder meets this price, one of the highest bidders may be able to negotiate a deal with the seller. Auction sales represent roughly 33% of sales in Melbourne, Canberra and Sydney. (The traditional real estate market isn't the only place to conduct your home search. For more, see Should You Buy A House At Auction?)
TUTORIAL: Types Of Real Estate
The Bottom Line
If you own property in a jurisdiction that is relatively free of unusual situations, consider yourself fortunate. Having water rights, a clear title and the freedom to own multiple properties aren't a given everywhere in the world.
Home & AutoGoing in with friends to buy a vacation home will save you on the mortgage and expenses. But if there's conflict, it could end up costing your more.
Home & AutoUnderstand what makes London such a desirable place to live and why it is so expensive. Learn about the top five most expensive neighborhoods in London.
Home & AutoFinancial experts will argue that there’s no problem with allocating 50% of your net income to housing, but that barely leaves enough money for living comfortably. Reducing housing expenses to ...
Investing BasicsThe tiny house movement throws all assumptions about household budgeting and mortgage management out the window, and creates new market segments too.
InvestingWhile saving up for a down payment, where should you keep your money. A bank? The stock market? It all depends on your timeline.
Home & AutoUnderstand why Manhattan has some of the priciest residential real estate in the world. Learn about the top four most expensive neighborhoods in Manhattan.
Home & AutoUnderstand the layout of the greater Los Angeles area and what is driving up home values. Learn about the top eight most expensive places to live in LA.
Home & AutoMany remodeling projects sound good in theory, but don’t recoup their costs when it’s time to sell the house.
Home & AutoBoost your new home's value and curb appeal with smart and cost-effective landscaping tips.
Credit & LoansA special type of FHA-insured reverse mortgage called the HECM for Purchase lets seniors use a reverse mortgage to buy a home.
You can borrow from your annuity to put a down payment on a house, but be prepared to pay an assortment of fees and penalties. ... Read Full Answer >>
Once you reach 59.5, you can use the funds in your 401(k) retirement savings account to buy a house or any other expense ... Read Full Answer >>
Under the standard regulations for 401(k) retirement savings plans, you may elect to withdraw funds from your 401(k) for ... Read Full Answer >>
Anyone who has ever tried to purchase or sell a home has probably heard a lot about the property's fair market value, or ... Read Full Answer >>
The American Dream at its core is the belief that every generation should enjoy greater prosperity than the generation before ... Read Full Answer >>
As soon as an agent or broker accepts an earnest money deposit, he becomes an escrow agent. This means that, in most cases, ... Read Full Answer >>