April 5, 2011
Odinet on International Real Estate Transactions
Christopher Odinet (Phelps Dunbar) has posed Towards a Convention for the International Sale of Real Property: Challenges, Commonalities, and Possibilities (Quinnipiac Law Review) on SSRN. Here's the abstract:
In a world that is increasingly global in scope, society has come to view the ever-growing body of international commercial laws as being exceptionally important. This is evidenced through the adoption of several high profile pieces of legislation over the past several decades: International Interest in Mobile Equipment - Study LXXI, the EU’s Draft Common Frame of Reference, the EU Directives on Consumer Protection, and, most noteworthy of all, the Convention for the International Sale of Goods (CISG).
As raised by Professors Sprankling, Coletta, and Mirow, what has been conspicuously absent from this growing body of laws is an international framework for the sale of real property across national borders. This absence is not surprising, considering the way society has historically conceptualized property law. Real property is local and individualistic in nature. The laws governing real property vary from country to country and even region to region. Property law is both rigid and inflexible, thus there is very little opportunity for the parties to a real estate transaction to materially modify or shape the contract. However, times have changed and so has the way people think about real property transactions. The sale of real property increasingly reaches across these national borders. The purchasing of vacation homes in other countries, the acquisition of real property for those who live near border areas, and the acquiring of real property by multi-national and international companies is an undeniable part of the global economy. Society has come to realize the integral part that real estate transactions play in a robust global economy.
The time has come for a rethinking of the way society views real property. This involves a questioning of the current legal patchwork governing real estate transactions that an international buyer must navigate in order to consummate the sale. In so doing, jurisdictions should take the next step on the road toward an ever-more vibrant global economy: the creation and global adoption of a framework for the international sale of real property.
This article begins a discussion of whether a convention for the international sale of real property, akin to the highly successful and somewhat similar CISG, could realistically be developed and, in doing so, hopes that future scholars and policy-makers will continue to explore the possibility of such a system. This is accomplished by reviewing three common features of all real property contracts - contract formalities, warranties of title, and security financing - and discusses their importance to an international investor. It further examines how three different countries currently which are highly engaged in international business and investment - the U.S., China, and France - view contract formation requirements, warranties, and security financing, and determines, based on general comparisons, whether a convention for the international sale of real property could be developed for each basic real property contract provision. Finally, this Article concludes by arguing the many existing shared contract principles in each of the subject countries makes an international framework, at least with regards to these particular provisions, very promising.
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international sale of real property has always been a tricky one..
Posted by: First Boston Real Estate Blog | Apr 6, 2011 7:43:15 AM