Attention Property Buyers: Here is What Nobody is Telling You 

As a foreign buyer, adjusting to unaccustomed methods of property acquisition in a new market can be one of those things that turn you grey (if you’re not already there!). There are always role players, be it a seller, agent, or even a competing buyer, who will have access to additional information or who will have their own motives, backed by various negotiation tactics up their sleeve. So, it’s only fair that you equip yourself with some protective tactics of your own. Here are a handful of tips to keep in mind that will safeguard your interests as a buyer entering the property market in Mauritius.

Be Wary of Non-refundable Deposits It is more common than you’d think to hear the request for a 10% non-refundable deposit when formally selecting the property you’re after. While this has become something of a norm on the Island, it is not impossible to negotiate a way around this onerous condition, particularly on property resales. Furthermore, if any non-refundable deposit is required, we ensure our clients are protected by various risk mitigation clauses in the Promise of Sale (PoS), some of which are: 1. A Contingency Clause: this provides you with a clean way out of the purchase if certain conditions are not met. Essentially, your deposit becomes refundable in the circumstances explicitly stated. For example, the deposit becomes refundable should loan approval not be attained for any reason. 2. A Seller Default Clause: the seller will have certain obligations in terms of the PoS which are fully binding from the date of signature. A clause like this protects your right to cancel the sale and request a refund of your deposit if the seller breaches any terms of the agreement.  3. Escrow Agreement: Insist on using an escrow service to hold the deposit until the sale is finalised. This will provide you with an essential layer of protection and will ensure that the deposit is returned if the sale falls through for any reason not due to you fault. NB: Make sure the above is referenced in the same clause that highlights the “non-refundable” characteristic of the deposit. This avoids a situation where the contract is in contradiction with itself. Heed Caution When Sharing Your Sensitive Information Know-Your-Client (KYC) information is often requested early in the sale process by the seller or their agent. Remember that these documents contain sensitive information, such as identification and salary details, which must be kept under strict confidentiality and security guidelines. It is advisable to provide this information directly to a reputable notary and bank to kick-start the sale and/or pre-approval/loan approval processes, rather than doing so via the seller or agent. While a registered agent will request KYC information from you for their records, which they are legally required to keep, it is wise to share this at the end of the sale process once the transfer is complete. You are within your rights to do the following before sharing this information: 1. Ask for what purpose the information is being collected. 2. Verify the legitimacy of the agency by requesting their formal registration and/or license details.  3. Ask for details on how the documents will be stored and the security measures in place to protect your information. 4. Redact any unnecessary information on the documents you are sharing.

Don’t Skimp on Snagging Now, this one may not be new to you, but we can’t stress its importance enough. Snagging is a crucial aspect of buying property that is often overlooked. It involves thoroughly inspecting the property for any defects or incomplete work before finalizing the purchase. This is especially important for new builds or recently renovated properties where the sale price will often reflect that of a high-standard property. While it may be tempting to skip this step to save time or money, doing so can end up being costly in the long run. It's important to identify any issues early on and have them addressed by the seller before taking ownership of the property. The sale process can move relatively quickly in Mauritius, depending on your notary, banker and the availability of buyer and seller documentation. To protect yourself from protentional time pressures, it is advisable to complete a snag list and reach an agreement with the seller on the same prior to contacting the notary.    Double Check What You Are Signing When purchasing a property, it's important to carefully review and understand all documents before signing. This includes the PoS, the title deed, and any other contracts or agreements involved in the transaction. It is critical to ensure that all details, such as the property description, purchase price, and payment terms, are accurate and aligned with your understanding and expectations. Additionally, make sure to verify that any extras or exclusive use areas are listed on the title deed to avoid any confusion or disputes later on. For example, if you are purchasing a property with a designated parking bay, ensure that the parking bay is listed on the title deed. This will protect you from any future disputes or issues with parking rights by providing legal proof of your ownership of the parking bay. We also encourage buyers to include their snag list as an addendum to the PoS, especially if the snags are still yet to be attended to by the seller.

Don’t Be Pressured Into Paying Deposits Before Finalising a Promise of Sale It’s not uncommon for sellers or agents to try to pressure buyers into paying a deposit before a PoS is finalised. This can be especially true if there are other interested parties or if the seller wants to close the deal quickly. However, it is essential to remember that paying a deposit before the PoS is finalised is risky. Without a signed PoS, there is no legally binding agreement in place, leaving you vulnerable if the sale falls through or if the seller decides to back out. Make sure you have a signed PoS in place before paying any deposits or handing over any funds to the notary’s escrow account. This will ensure that both parties are aware of their responsibilities and obligations, and it will provide you with a sound level of legal protection should the transaction go awry.    

By following these tips, you can safeguard your interests as a property buyer in Mauritius and ensure a smooth and successful purchase process. Remember to do your research, ask questions, and work with a reputable Real Estate Advisor to help you navigate the complexities of the market. Blue Diamond Capital is ready to assist you with your next property transaction. Our clients benefit from an array of due diligence and futureproofing strategies which are carried out by our qualified team of professionals. If you would like our assistance, contact us here for a no-obligation consultation.  Published by: Levana Naidoo, Property Investment Director March 08, 2023