Acquiring real estate in the USA is extremely attractive for many European investors and private individuals. Clients from Germany and Great Britain in particular are increasingly interested in residential and investment properties in economically strong regions of North America. At the same time, it is often underestimated how significantly the American real estate market differs from European standards, both legally and practically.

Urban Thier & Federer Attorneys at Law advises clients on the purchase and sale of real estate throughout the United States. A particular focus of our practice is on assisting international buyers from Europe through our offices in London, Manchester, Munich, and Orlando.
Foreign buyers often assume that the process of purchasing real estate in the US is essentially comparable to procedures in Germany or Great Britain. This assumption regularly leads to problems in practice. American real estate law is heavily influenced by individual states, contract design and liability allocation differ significantly from continental European transactions, and the interests of the parties involved are often misunderstood.

First, it's important to know that there are generally no restrictions in the U.S. for foreign buyers of real estate. German or British citizens can therefore easily purchase residential or commercial properties.
The actual challenges lie not in the acquisition itself, but in the legal and economic structuring of the transaction. Contrary to what many buyers expect, the US system offers significantly less automatic protection. Careful preparation is therefore all the more important.

A well-negotiated purchase agreement plays a central role in this. Unlike in many European countries, the rights of real estate buyers in the USA depend primarily on the specific contractual provisions. It is particularly crucial that the buyer has sufficient Right of withdrawal to be secured and that advance payments already made („deposits“) are protected in the event of justified withdrawals.

International buyers often underestimate how extensively standard contracts can be drafted in favor of sellers. The statement that it is merely a „standard contract“ should therefore never be accepted without scrutiny.

escrow Due Diligence. In this phase, the property is legally, technically, and economically reviewed. This is where the importance of early involvement of experienced lawyers and professionals becomes apparent. Several points are examined during the due diligence phase:

• Ownership and possible encumbrances („Title Search“)
• existing Easements or Usage Restrictions
• structural defects or construction defect risks
• Environmental pollution, e.g. groundwater contamination
• Obligations towards Homeowners associations Homeowners Association
• public law Usage guidelines Zoning

Just the so-called Zoning is sometimes underestimated by European buyers. In the USA, land use and building regulations can be very detailed and significantly restrict the use of a property. The same applies to the rules of Home Owners Associations, which can restrict things like rentals, structural changes, or even certain types of use.

Many buyers naturally assume that a real estate agent who shows them properties and guides them through the buying process automatically represents their interests. In the US system, this is not necessarily the case.

In practice, a classic real estate agent often works economically in the seller's interest. Their compensation is regularly paid via a commission, which is only paid when the purchase is actually completed („closing“). The agent's economic interest primarily lies in the successful completion of the transaction.

This does not necessarily mean that a broker is acting unprofessionally. However, it does explain the conflict of interest. Questions that could jeopardize the transaction, such as extensive defect inspections or renegotiations of the purchase price, are naturally not central to their economic interests.

Another situation only exists if there is an express so-called „Buyer's Broker‘ is commissioned. This party exclusively represents the buyer and is typically compensated directly by them.

Precisely because the interests in the American real estate market are complex, a foreign buyer should engage an experienced attorney early on. Unlike a pure real estate agent, an attorney acts exclusively in the interest of their client. From our experience, many later disputes arise precisely because buyers have relied solely on real estate agents or standardized contract documents.

For international buyers, an additional question arises: in what structure should the property be held? Direct acquisition into personal assets is not always the most sensible solution. Depending on the objectives, corporate structures can offer advantages, for example, with regard to:

• Limitation of Liability
• Estate planning
• tax structuring
• Asset protection
• Administration of multiple properties

In particular, this question should be examined in advance for larger investments.