Buying a Holiday Home Abroad? You Need Independent Legal Advice
When buying holiday homes abroad, it is absolutely vital to employ solicitors who are entirely independent of the vendors. One case that resoundingly proved the point concerned a development of luxury homes in Italy that was alleged to have been a money laundering front for the IRA and the mafia.
Almost 200 UK and Irish purchasers had paid deposits of up to £105,000 in respect of seaside homes that had been marketed in glossy brochures but had yet to be built. After allegations that the project was connected to organised crime emerged, the development was taken over by the Italian police. Only a small number of units were ever completed and the purchasers lost their deposits.
In order to recover their money, the purchasers launched proceedings against a firm of Italian solicitors that was registered to practise in England. The firm, which had purported to give the purchasers comprehensive legal advice in respect of their investments, had become involved at the behest of agents who were engaged in selling the properties, one of whom was said to be a convicted IRA terrorist.
A judge found that the firm had breached the duties that it owed the purchasers in numerous respects. Amongst other things, it had failed to ensure that the proper guarantees and planning permissions were in place before parting with its clients’ money. It had failed to reveal to the purchasers the substantial commissions that were being paid to the selling agents or to alert them to the risks of organised criminal activity in the region of Italy concerned.
Having acted in breach of trust, the firm was ordered to pay equitable compensation to most of the purchasers in the full amount of their deposits. Some of them were, however, confined to compensation in respect of that part of their deposits that had been paid to the agents. In dismissing the firm’s challenge to the judge’s ruling, the Court of Appeal could detect no error of law in his conclusions.