Planet-Love.com Searchable Archives

Does anyone in the group have the foggiest idea how you buy real estate in cash orientated Russia. I have heard that people use cash and yet surely buyers don't show up with a fist full of bills! And by the way if you are thinking a check will work, from what I have heard banks only disburse what they can manage and certainly not anything in the order of $10,000. Anyone been there done that?
Thanks

... in response to Buying real estate in Russia with $$$$'s, posted by Peter Ryan on Mar 25, 2002

Now  that  everyone  has  made  their  guess  about  purchasing  real  estate  in  the  FSU.  I  will  tell  you  how  it  works  at  least  in  Ukraine  anyway.  In  front  of  me  I  have  Baker  &  McKenzie's  review  of  the  New  Land  Code (late  2001)  in  both  English  &  Russian.  It  states  that  all  legal  entities  are  treated  equally  as  property  owners  whether  foreigners or  Ukrainians  with  the exception  of  agricultural  land which  foreigners  are  not   permitted  to  own.

In  reference  to  cash  that  should  not  be  a  major  problem  as  a  man  &  wife  could  both  carry  $9999  and  purchase  a  flat  or  dacha.  An  amount  in  excess  of  $20,000  would  likely  be  directed to  an  offshore  account  as  the  seller  would  not  want  that  kind  of  money  in  a  local  bank  anyhow.  Certainly  in  a  city  as  huge as  Moscow  you  could  get  almost  any  amount  on  your credit  card,  that  is   complete  bull  that  the  money  would  not  be  on  hand  as  the  economy  is  like  completely  dollarised  and  cash  based  to  boot.

The  best  vehicle  for  foreign  ownership  is  an  offshore  company  which  almost  all  well -  heeled  Russians  already  have  and  most  experienced ex-pats..  There are  several  benefits  to  this  type  of  ownership  one  being  privacy  as  you  can  remain  anonymous  and  best  is  that  when  you  sell  you  sell  a  company  rather  than  real  property  avoiding  capital  gains  tax  (one  of  the  few  they  collect).

A  certain  amount  of trust  is  necessary  and  each  investment  is  fraught  with  risk  as there  is  no  title  insurance  and  a  sketchy  title  registration  process.  There  are  certain  tricks  though  to  back  up  purchases   such  as  also  leasing  the  same  property  for  99  years  for  $1  a  month  as  a  backup  and  the  old  saying  possesion  is  9/10  the  law  is  doubly  true  here.    

There  are  many  other  factors  but it  is  most  important  to  have  an  honest  seller  more  than  a  great  deal  and also  a  good  advokat  who  does  just  real  estate.

... in response to how  it  works, posted by odeccaman1 on Mar 26, 2002

According to my wife, each party brings a witness (usually a lawyer) to a notary public, and the lease is transferred and notarized at the same time.  Both witness sign something to that effect.  At the same time, the money is given to the seller.  This appears to be the most trouble free way to make a property transfer.

I hadn't heard of the offshore company before, but it seems to make a lot of sense.  I wonder how one sets one up?

... in response to some additional notes, posted by John K on Mar 27, 2002

100's of firms set them up many British ones for Channel Islands, Isle of Mann, Jersey.... Russians domicile of choice is Cyprus though Bahamas & Caymans are popular.

The contract is little more than toaletni bumaga but the supporting documents must be good and most importantly the seller's character references.

... in response to how  it  works, posted by odeccaman1 on Mar 26, 2002

Thanks for the information.

... in response to Buying real estate in Russia with $$$$'s, posted by Peter Ryan on Mar 25, 2002

Peter, you best get ourself a fist full of dollars, most things are bought with cash!  

Cars, flats, land, bought with cash.

Good news is $20,000 fur coats, jewelry, $2500 suits, can be bought with credit cards.

... in response to Re: Buying real estate in Russia with $$..., posted by Jack on Mar 25, 2002

I agree with you about the cash, Jack, but can you or Dan or someone who is there all the time enlighten us about the ability of foreigners or wives with green cards to purchase property in Ukraine and/or Russia.  Beachfront property at Yalta looks really good now.

... in response to Re: Re: Buying real estate in Russia wit..., posted by Charles on Mar 25, 2002

First off - the situation there is changing SOOOO quickly that it is difficult to keep up with changing legislation.

Right now - it is my understanding that foreign ownership of real property is legal. It follows that - if a foreign citizen can own property, then a permanent citizen residing abroad (green card holder) is also legally capable of owning (or keeping title to) property.

The transaction itself is more than a little dicey.

First is the cash issue. $10,000 is the legal limit that can be taken out of the US unless you specifically declare it. Interestingly, I also understand that the new US currency is equipped with an embedded strip that allows officials to detect the amount of currency (new currency only) you are carrying. I am not sure what the provisions are for carrying more than $10,000 - but it is, at minimum, a bureaucratic step that most of us would probably rather avoid.

Similarly, you are legally allowed to carry no more than $10,000 into Ukraine - if it is in cash currency. You can, however, legally carry as much as $50,000 in US-issued traveler's cheques.

Next is the issue of Ukrainian records. Usually both parties to the transaction have a vested interest in declaring the value of the transaction to be smaller (less money) than is actually negotiated (less taxes/fees to the government). While sensible on the surface, more than a few people have gotten caught up in disagreements and problems that occur *after* the negotiation and after the official papers are filed. Perhaps it is a ploy to get more money from the buyer - or perhaps it is a simple case of "seller's remorse" - or who knows, but it is often a problem.

Then, of course, there is the whole question of political instability. For many of us, the attraction to buy property in Crimea or Odesa is the beautiful location, or the ability to retire there (someday) at a fraction of the cost of doing so here - all with only spending pennies on the dollar for a comparable property here in the US. HOWEVER, it was not that long ago that people feared they would lose their property if they were to be found by the government to no longer permanently reside in Ukraine - and for good reason.

It is a bit of a gamble. You must be prepared to circumnavigate some pretty uncertain waters to make the transaction in the first place - and then to have some confidence in the future of the nation both economically and politically.

Having said all that - I would love to own some property on the Black Sea coast of Crimea - as well as a summer cottage in Karpaty. Just haven't been able to get past some of the obstacles to make that happen.

- Dan

... in response to Several Considerations . . ., posted by Dan on Mar 25, 2002

Dan, thanks for the input.  My feeling is there is risk to anything but based on the data we have we believe we can recoup our investment within the first year or two at the latest.  Hopefully by then there will be no upheaval and, on the other hand, the economic situation in Ukraine can only get better.  I am aware of the $10,000 issue but that is a paperwork problem on both ends as you must provide a written explanation of what the additional money is for.  We're thinking about doing this, and if we do we'll keep you informed as we step into this gauntlet.

... in response to Re: Several Considerations . . ., posted by Charles on Mar 26, 2002

Charles,

I'll be quite interested in how things progress for you. If we continue to exchange information as we learn, maybe we can avoid some of the pitfalls that others have encountered.

Best of luck to you.

- Dan

... in response to Re: Re: Buying real estate in Russia wit..., posted by Charles on Mar 25, 2002

My wife has property in Saratov and she is thinking of selling it and buying another flat in Moscow. She wants me to go and take care of the cash transaction because she's scared to carry that much money. When she purchased her last flat in Moscow she had her cousin go with her ( who is top dog at a police district in Moscow )so she would feel safe with that much cash. I do know that you can take travelers checks with you and cash them at the banks but I can't remember what you would lose on the dollar after paying fees, I'm sure it's cheaper then Western Union, or another idea might be to take your debit card and take out what you can over a needed period of time at an ATM (or let her mom start on this withdraw for you by sending her your card)and the fees may be less then travelers checks. ???
Mike

... in response to Only cash, posted by Mike on Mar 25, 2002

The ATM machine is a good idea but it would take 20 trips to it to get $10,000 and that is too many and too dangerous. Western Union is too expensive at 10% and the cheapest way I have found is through a bank draft deposited into an account over there. They charge about 2% for the sender and about 1% for the reciever. That is OK for small amounts up to $1K. Problem is most banks over there do not give out all the amount because frankly they just don't have that kind of money. I agree with your wife about the safety issue. I am tempted to fly over there and just take the cash but I am not sure if customs will let you take more than 10 grand.
Peter

... in response to Re: Only cash, posted by Peter Ryan on Mar 25, 2002

n/t

... in response to Re: Re: Buying real estate in Russia wit..., posted by Charles on Mar 25, 2002

Charles,

 First you must realize that there are many new laws and what we understand as being law today can be different next month (example: Russia is now offering to sell foreigners certain land). Now with saying that this is what I discovered as we are looking into buying some property in Odessa.

 A foreign man and his Ukraine wife we can buy property in Ukraine.

 The woman will maintain 51% of the property. In case there is a divorce later down the road the Ukraine court will award the man some of the material possessions but the land and flat will ALWAYS go to the woman.

... in response to Buying real estate in Russia with $$$$'s, posted by Jack on Mar 25, 2002

Thanks for the info, Jack.  Do you know whether it makes any difference if she has a U.S. green card?

... in response to Re: Buying real estate in Russia with $$..., posted by Charles on Mar 25, 2002

I don't think it makes any difference in Russia or Ukraine as to if the woman has a green card or not.

Of course we (us guys) care as it allows for free movement between the two countries

... in response to Buying real estate in Russia with $$$$'s, posted by Jack on Mar 25, 2002

Jack my wife and I are thinking now is the time to get in on investing in property over there! I doubt an educated country such as Ukrain and Russia (with all their resources) will stay in an economic crunch as they are in now. We're betting they will eventually catch up with the rest of Europe and the value of property will be a big time good investment!
Mike

... in response to Re: Buying real estate in Russia with $$..., posted by Mike on Mar 25, 2002

My brother from Ukraine told me about this three-bedroom flat being sold for $2000, but it's impossible to rent it out (if you are not planning to live there and just have it as an investment) and many people rent out their flats just for paying utilities bills at no income to the owner at all, because it's impossible to turn the utilities off. I don't think it's a such a good idea, at least for now