Thankfully I got it in writing!

You may remember from a previous post where I mentioned that the purchase contract seemed a little light on details and remedies in case something went wrong. At the time I felt pretty good about adding in language that would protect us. Now I’m positive that future me time traveled back to July 17th to warn me of what was to come.

Let me explain. The original “standard real estate” contract that the realtor presented to us basically said that if the seller fails to sell us the property then the seller would owe us 2x our down payment. However, if we had a change of heart and backed out of the deal, for any reason, then we would forfeit our down payment. The contract was so short that it fit onto a single sheet of paper. It just felt too risky for me for such a large sum of money so I essentially rewrote a large part of the contract. The realtor was afraid (rightfully so) of losing the sale, so he reluctantly went along with what I wanted. And we all signed it.

Last week the final assessment/appraisal of the property came back. It took 2 months due to August holidays and COVID. I’m sure the house’s appraised value would have been fine but the assessor discovered that there were several additions to the house that hadn’t been recorded with the county so they weren’t included in the appraised value. In the US, when such a discovery is made, the addition must be removed and the property owner usually pays a fine as well. The unauthorized additions to our house represented about 25% of the house. Not a good start! But that’s not all. It was also discovered that about half of the upper terrace and all of the lower terrace overlooking the Atlantic was not the seller’s to sell – this included the wine cellar. (Clearly a variation of #2 in my previous post Make sure you are only selling something that you own) The official property line ended about 15 feet beyond the back of the house structure. I don’t think anyone else would have swooped in and claimed that property, but it also means that an insurance company wouldn’t be covering it as well.

The absolutely crazy part of this whole arrangement is that none of this prevents the seller from being able to sell the house to us and fulfill their end of the contract. Then it would have become our problem. Either we would have had to walk away from our down payment or go ahead with the sale and then pay to make the property match the county records – but we’ve been told it may not be possible due to how close it is to an environmentally sensitive area – aka a cliff overlooking the beach. Luckily our contract saved us from making an expensive mistake. One of the clauses I had inserted stated that if the house didn’t appraise for a certain amount then we would get our money back. I know US real estate pricing but I wanted to make sure I was covered in case I grossly overestimated the value of this house. The other real estate listings in the area indicated that the asking price was in the ball park of comparable homes so I wasn’t too concerned with this when we made our offer. Oh boy, dodged a bullet here!

The official appraisal only included the parts of the house that were recorded with the county. That meant that the appraised value was much too low to satisfy the appraised value clause in the contract. I think that if the appraisal hadn’t exposed those liabilities we would have gone forward with the purchase anyway. It is an incredible house in an incredible location.

The other clauses that I had added to the contract could also have come into play but those arguments were not as concrete as this particular clause no matter which language you translated it into. We could have argued that the property wasn’t as advertised but then that leads into a “we said/they said” type of situation. I’d prefer to avoid that messy debate. Numbers are able to transcend subtle language nuances and generally are not open to interpretation.

My takeaway from this whole experience is that I need to be extra cautious when purchasing property. We got super lucky this time and I think next time I’m going to have an attorney handle the contract part and also have them look at the county records prior to any offers we make. While living in this house for the past 2 months has been great, it also created a lot of uncertainty for us while we waited to finish processing the paperwork. Portugal is much like Spain in that the required bureaucracy is so very slow. I don’t think the sellers were trying to mislead us and I’m incredibly grateful for their generosity in letting us spend two months in their beach home.

We are heading back to El Compartimento in Valencia this weekend. I’ll miss all the extra space that a house with a yard provides. I’ll miss the feeling of security of living in a sparsely populated area. Our last visit to Valencia was a stark reminder of just how densely populated the city is. I’ll miss the friendly people of Portugal. Literally everyone we met here has been so nice.

I’m going to take a couple months off before resuming our search for the perfect forever home. October 31 is the last day that the UK can work out a trade deal with the EU. I say “last day” but I’ve been wrong before. Hopefully they don’t keep dragging this thing out. The real estate implications might end up working in our favor. I’ve already started noticing properties for sale with banners like “Urgent” or “Motivated Seller” on the their listings and property descriptions worded like a native English speaker wrote them and not just the result of a Google Translation. I think that there may be more options to choose from in the coming months.

So we shall see.

7 thoughts on “Thankfully I got it in writing!

  • Oh, what a giant disappointment! I’m glad you guys are finding the bright side … a beautiful spot for a couple of months isn’t bad. Hang in there … another ‘right’ spot will reveal itself to you!

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  • So sorry to read about this. It was so great to read about and share your excitement in finding your forever home. Thank goodness for your wise contract additions. The lord works in mysterious ways. Something better is just around the corner. Stay safe.

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  • Holy cow, thank goodness you had the foresight to add the verbiage to the contract. Sorry this didn’t work out but I’m happy you enjoyed your stay. Take it as a sign from the universe.

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  • Sorry Jeff, I just noticed that you wrote this one so…..
    Damn Jeff! I am so sorry that it didn’t work out for you guys, etc, etc, etc. 😁

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  • Damn Kelli!!! I am so sorry that it didn’t work out for you guys. I know how much you love that house and location. I am not surprised to read about the problem with the additions to the house not being registered as being part of the house. People do it all the time because of the well known red tape and permit issues. That house just did have your name on it but there is one out there. I hope that you will still consider Galicia. 😊

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    • Thanks Carol. Of course we are sad. But we also need to be practical on what we are signing up for. We had a long hard discussion on the risks of taking on a property thats partially unpermitted and not completely in the property records. For the sellers this never mattered before because they built the house. I’m not sure they even realized they had an issue. But we are philosophical about it. We will find the right situation, we learned a ton wo it costing anything and we stayed in a gorgeous location for 2 months. Galicia is still our #1. Perhaps the universe is telling us that.

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