The world is experiencing rapid globalization and merging of economies and cultures.  In his book, The World is Flat, Thomas Friedman discusses how the internet, modern travel, and communications are commoditizing just about everything.  Where globalization is not happening quite so quickly is in real estate which is still, very much, a local business.  As citizens of the United States, we take property rights for granted.  Ownership is black and white - you either own something or you don't, right?  Well, not necessarily once you leave our borders.

As one of our clients expanded rapidly into South and Central America and the Caribbean, we had to help them quickly open offices in diverse locations such as Trinidad, Argentina, Panama, and Columbia.  In each location, we identified local legal representation and worked with the best local firms to identify sites.  In one case, we found an ideal site and requested a lease.  When the document came, our local attorney pointed out that the individual leasing to us was not the owner of public record.  "He has an arrangement with the owner to lease the building, and is subleasing to you", we were told by the landlord's (unlicensed) local broker.  And that would be fine as long as we could review the master lease. 

Eventually, the sub-landlord did produce a document (in Spanish of course) that authorized him to offer the property to let.  The problem was, however, the person granting him the right also was not the owner of record.  Instead, he was the nephew of the owner of record.  The owner, apparently, had died some time prior.  While this would not be difficult to prove, since the deceased didn't leave a will we would have also had to get releases from every heir.  Of course, we moved on.

The above story illustrates just how absurd the property system can be outside the U.S.   Complicating the issue was that our client wanted quasi-retail locations that were often controlled by mom and pop landlords.  When available, spaces in larger institutionally-owned buildings made things much simpler, at least from a right to title perspective. 

I could fill a few more blogs relating issues on foreign construction.  TIP:  Don't expect anything to be standard.  The size of a door, thickness, accuracy of right angles, number of hinges, placement of the doorknob, construction material, stain color, likeness to other doors within the space, and the gap beneath it and the floor are examples of specifications that must not ever be taken for granted.  And that's just one door.

With due respect to Mr. Friedman, the world is not flat when it comes to real estate.  Instead, I recommend The Mystery of Capital by Hernando de Soto.  He's an advisor to the President of Peru and led a major property reform program in that country to get millions of unregistered buildings and homesteads registered.  His firm estimates that over 50% of all urban dwellings in Peru are extralegal.  They are not built to code and have no clear title.  In rural areas, it is over 80%.  And Peru is in better shape than many other countries that are profiled in the book, such as Haiti, Egypt, and the Philippines.

Life, Liberty, and Property Rights.  Go global, although tread carefully in less developed nations.