Cross-border property deals: Legal pitfalls and payment risks every lawyer should avoid

As the global property market becomes increasingly interconnected, legal professionals are finding themselves at the forefront of complex international transactions.

Whether it’s a UK buyer investing in a holiday home in Spain or a Brazilian family relocating to Portugal, cross-border real estate deals are fraught with potential legal pitfalls and payment risks.

For lawyers managing these transactions, it’s crucial to understand and proactively mitigate the risks. This article covers the common legal pitfalls of cross-border property deals and how to overcome them.

Payment risks in cross-border real estate transactions

Sending large sums of money across borders creates opportunities for fraudsters and cybercriminals. Unsecured communication channels – such as email – remain a common vector for impersonation fraud and payment redirection scams, where fake instructions lead to funds being diverted to criminal accounts.

These attacks are increasingly sophisticated, with scammers able to spoof or hack into email chains so their requests for funds seem legitimate. In 2024, a Silicon Valley executive wired $400,000 to a criminal after they infiltrated her broker’s email system.

Operational errors can also creep in during manual payment processing, particularly when multiple currencies, banking systems, and intermediaries are involved. The result? Misplaced funds, settlement delays, and – in some cases – legal liability.

The key here is to develop robust safeguarding and fraud-prevention practices. As well as improving your understanding of payment risks, educate your clients on the need to verify payment details and how to spot a scam.

Ideally, you should also use an encrypted communication system as well as a secure payment platform to mitigate the risk of impersonation and payment diversion.

Regulatory red tape and jurisdictional mismatches

No two jurisdictions handle property ownership, taxation, or land registration in quite the same way. From differing title deed structures and inheritance laws to unfamiliar local taxes and documentation requirements, the lack of harmonisation between countries can introduce significant delays and legal complications.

For legal professionals unfamiliar with local regulations, the risk of non-compliance is real – and potentially costly. Maintaining a working knowledge of international property law is a vital step in navigating the red tape.

It's also important to recognise where your expertise ends and local legal support begins. Partnering with trusted local specialists can be invaluable when it comes to cross-border regulation. It can also be mutually beneficial, as you can provide each other with business and give your clients a seamless experience.

Weak AML and KYC processes

Anti-money laundering (AML) and know-your-customer (KYC) checks are critical safeguards in any property deal – but in cross-border transactions, their importance is amplified. Identity fraud, shell company structures, and forged documentation are harder to detect when clients and counterparties operate in different jurisdictions.

Manual onboarding processes and rushed due diligence can leave firms exposed. Instead, robust, automated solutions for identity verification, document authentication, and compliance screening offer a more secure and scalable alternative. For international real estate lawyers, investing in the right digital tools is no longer a luxury – it’s a necessity.

Currency fluctuations and settlement delays

Between contract signing and final settlement, exchange rates can shift dramatically, which in turn can derail budgets and eat into profitability. Add that to possible bank processing times and you're looking at a recipe for financial and legal headaches.

If funds arrive late due to transfer delays – or if FX volatility means the buyer receives less than anticipated in the local currency – the knock-on effects can be significant. A shortfall could leave the buyer unable to cover agreed costs such as taxes, legal fees, or the final balance on the property, stalling the transaction at a critical stage.

This can put lawyers in a difficult position, potentially having to renegotiate terms, request deadline extensions, or manage disputes between parties. In worst-case scenarios, deals can collapse entirely – not because of any legal misstep, but due to overlooked financial risk.

While managing currency transfers may fall outside a lawyer’s formal remit, there are still steps you can take to mitigate FX risks, helping to protect the transaction and avoid last-minute crises. Likewise, advising clients to plan ahead, consult a currency specialist such as Currencies Direct or TorFX, or use a dedicated payment platform can help keep finances on track.

Poor communication and human error

International transactions often involve multiple parties spread across different time zones and speaking different languages. Miscommunication around payment instructions, contract terms, or client data isn’t just inconvenient – it’s dangerous. It can lead to incorrect transfers, missed deadlines, or even successful fraud attempts.

Streamlined, centralised communication platforms and clear documentation protocols can go a long way in reducing misunderstandings. Legal professionals must prioritise clear, traceable communication – particularly where client funds are involved.

It’s also good practice to work with trusted translators who specialise in legal processes or real estate. Because of the precise and technical nature of legal language, mistranslations can be costly.

Why secure payment platforms are essential

At Redpin, we’ve built a platform designed specifically to address the pain points legal professionals face in cross-border real estate. Our secure, purpose-built solution replaces manual processes with smart automation, encrypts sensitive client data, and simplifies identity verification.

With features like multi-factor authentication, AML/KYC support, real-time payment tracking, and centralised audit trails, Redpin offers the confidence lawyers need when dealing with high-value international transactions. By taking care of the complexities behind the scenes, we help legal teams stay compliant, reduce risk, and deliver a seamless experience for their clients.

If you want to find out more about our services, speak to an expert today.