Before you commit to buying a retirement home overseas, it can be smart to test out a potential retirement spot by renting for six to 12 months. Maybe your chosen location won’t turn out to be all you imagined it to be. You could find that the country suits you, but the neighborhood doesn’t. Moving on is easy when you haven’t invested in the purchase of a home.
Renting keeps you mobile. When you’re ready for your next adventure, you need to wait only until the term of your lease is up. You don’t have to find a buyer for your home. Renting also means you don’t have to worry about maintenance expenses, property upkeep and property taxes.
Here are 12 important things to know before you sign a lease in a foreign country:
1. Clarify what’s included in your monthly rent.
2. Find out if appliances are included.
3. Understand how to pay rent.
4. Check for a sales clause in your lease.
5. Understand who is responsible for setting up the utilities.
6. Get an estimate of utility costs.
7. Ask what documentation you’ll have to produce to be able to rent.
8. Find out what repairs and maintenance you are responsible for.
9. Document any existing damage.
10. Understand when the rental period begins.
11. Have a professional review written agreements.
12. Don’t be surprised if you’re not asked to sign anything.
1. Clarify What’s Included in Your Monthly Rent
Make sure the lease establishes what your rent covers. Take care to ask who is responsible for building or homeowners association fees, water, utilities, phone and internet.
[See: The Best Places to Retire Overseas in 2020.]
2. Find Out if Appliances Are Included
Understand what you’re getting when renting furnished versus unfurnished. In some places, unfurnished means no refrigerator, no stove, no lighting fixtures and maybe even no kitchen cabinets or counters. Find out whether a furnished apartment includes air conditioning units.
3. Understand How to Pay Rent
Make sure you know where and to whom you pay bills each month. You might be asked to deposit the rent directly into the owner’s bank account, pay a rental manager or hand-deliver the check to your landlord. In Europe, rent is most often paid by direct debit from your local bank account, which means you need a local bank account. Often building and homeowners association fees are paid to a different person or organization and by a separate check, not as part of the rent.
4. Check for a Sales Clause in Your Lease
What protection do you have against the owner selling the apartment and giving you limited notice that you have to move out? The lease should include a compensation allowance in case the place is sold while you’re renting.
[See: 10 Affordable Places to Rent an Apartment in Retirement.]
5. Understand Who is Responsible for Setting Up the Utilities
Will the utilities remain in the landlord’s name or be transferred to your name? There are pluses and minuses either way. For example, what is your liability if the electric bill is transferred into your name? On the other hand, a utility bill in your name can be a useful asset and might be required to open a bank account in another country.
6. Get an Estimate of Utility Costs
If you’re liable for utilities, look into the previous renter’s average costs. In some countries the cost of utilities can be a shock. Your attorney should be able to help with this research.
7. Ask What Documentation You’ll Have to Produce to Be Able to Rent
In France, you need to satisfy the landlord that you can afford to become his tenant. Most people do this by creating a thick dossier of financial documents, bank statements, pay stubs, reference letters, bank letters and guarantor letters. It’s a serious effort that you can’t undertake lightly.
8. Find Out What Repairs and Maintenance You Are Responsible For
In some countries, renters can be responsible for structural repairs, such as cracks in the façade or a leaky roof.
9. Document Any Existing Damage
Take photos of the current condition of used fixtures or appliances. If a conflict arises when you decide to move and the landlord wants to withhold part of all of your security deposit, you’ll be able to show what you are and are not responsible for.
[Read: How to Find an Apartment as a Senior.]
10. Understand When the Rental Period Begins
The start date of your rental doesn’t always coincide with the date you take up occupancy.
11. Have a Professional Review Written Agreements
Renting abroad can come with complications you may not expect. It could be helpful to engage an attorney who speaks fluent English and who has experience helping foreign renters. If you are unfamiliar with tenant rights in the country where you’re renting, you shouldn’t sign a lease until it has been reviewed by an attorney who is familiar with relevant local laws and customs.
In addition, your lease will be written in the language of the country where you are planning to rent. Even if you’re fluent in that language, it’s risky to sign a binding agreement without professional help.
12. Don’t Be Surprised If You’re Not Asked to Sign Anything
Outside the main cities in countries like Panama and Nicaragua, the protocol for renting a house might be a handshake, not a written agreement. This shouldn’t necessarily make you nervous.