Legal Requirements

The different legal status in the US

Legal Requirements

There are no legal constraints for foreigners in the US to buy real estate.

However, foreigners can be classified into three different classes and that will impact on the minimum down payment required to buy the property, on the taxation status and on mortgages opportunities:

  • Permanent Resident Alien: this is equivalent to green card holders and people falling in that category will have the least trouble to obtain the right paperwork done as well as mortgages.
  • Non-permanent Resident Alien: this refers to someone that has been granted permission on staying in the US on a temporary basis and that may have permission to work.
  • Nonresident Alien: this last category refers to people that cannot stay in the US for any extended period of time, but who can still enter the US (e.g. with a tourist visa).

For non-permanent resident and non-resident alien, the possibility of being denied entry in the US further in time will have to be considered. This implies looking into the mechanisms of re-selling the property remotely and the tax that will apply in that case, and this as early as in the buying phase.

Nonresident aliens will have to make a minimum of 20% down payment to obtain a mortgage and show availability of liquid funds for a period from 3 to 6 months, and this only if the purchase of real estate is for “recreational purposes”. On the other hand, if the purchase is for investment, a down payment of 30% will be required, with liquidity reserves for one year.

A lawyer can be hired in order to have the legal proceedings happening as smoothly as possible. They can check the purchase agreement and are also able to help with the tax exposure. They can also make sure that the land/property is in good order (encumbrance certificate), that the land is not pledged (or that it has been paid entirely), and that the title deed are conformed and changed to the new owner’s name properly. If there is also a title insurance, the lawyer/attorney can review it and help with the pitfalls.

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