You've just returned from the greatest vacation in the neatest area, plus your cousin lived nearby. You had such a good time! Gee, things were so cheap compared to the old Rock. While your living down here isn't exactly sumptuous, maybe you could just swing a little place in the United States.

So you've got your eye on the cutest condo in a gated community attached to a golf course. No wait, you like the idea of a single family house in a more gentile older part of the town. You contact your realtor, the check book comes out and you make a firm offer.

Besides the physical, emotional, and quality characteristics of choosing the community itself and the structure of the individual real estate property (see prior articles), there are other criteria that must be considered: Financial (can you afford this, where to go for financing, should you rent or leave vacant etc); Legal & estate planning (titling & beneficiaries); Insurance and risk exposure; and the dreaded tax consequences. - time to get those finances in order, you walk into a US bank and apply for a mortgage only to face an abrupt reality. Most lenders won't fund a loan to a non-resident alien, although there is a large mortgage market with more flexible guidelines to grant credit to non-resident aliens. It comes with a cost - significantly higher interest rate to compensate for the lender for a higher perceived risk. So if you finance in the US, expect to fill out all of the forms you have had to do here plus a few more.

If you hold a US portfolio, your US investment firm might consider a secured loan against its value. If you have significant equity in your Bermuda property, you can seek a domestic home equity loan secured against your house. - pure and simple - you must have adequate insurance. Typically, in any US mortgage/real estate loan structure, the expense for house insurance is automatically prorated and included in the monthly payments, as is real estate town/county taxes. But have you insured for all contingencies? What kind of amenities does your new property have? A pool, a pond, a series of stairs? Will you be allowing other family members and friends to use the property unsupervised. If you rent, will you allow your tenant to have an animal, say a dog, or small children. If you do, you must carry additional liability insurance, suggested in the region of 2 Million, generally obtainable as a rider on your home insurance. Why?

The United States is a litigious country. Lawyers routinely take on contingency cases; that is, they are paid (rewarded) if they win the case, taking a third of the award or more. In some areas, there are individuals who are professional litigants (they sue everyone). It's a great gravy train day for them if they should just happen to slip and fall after leaving a shopping mall (or the front steps of your home). Insurance companies consider them nuisance suits, and if the injuries are not serious, will often settle them quickly out of court because they are simply to costly to defend.

Under the US legal system, there exists the doctrine of tort law which is defined as a wrong under civil law that causes loss to another. The harmed individual (purportedly) may initiate a suit for damages (in some cases punitive damages) as a result of the wrong done. Try proving someone slipped down your stairs deliberately.

The tort of negligence is the broadest of the torts and the basis of most personal injury cases. Its four classic elements are as follows: duty, breach, causation, and damages. In simple language, you as the homeowner must show of due care acting as a reasonably prudent person to any and all guests/visitors (even uninvited ones) to your new home. You cannot be negligent in this duty by having an attractive nuisance (a pool whose fence is broken), or keeping (or your guests) what can be construed as dangerous animals. Whether any given injury can be brought as a negligence claim depends upon whether a lawyer can convince a court that the you owed the defendant a duty of due care to not inflict the particular injury at issue. In many respects, these laws may not differ that much from Bermuda law, but the results can be far more difficult if an injury occurs. Legal mores and justice can be swift, or maddening slow to conclusion, but almost always an emotional and possibly financial drain. Caveat: make sure you have a good US lawyer, preferably in a firm that can also provide tax and estate planning.

You may wonder why estate planning is linked with legal issues. That's because the two are intertwined; in fact, you simply cannot make a financial decision in isolation, particularly in a tax structure country. Titling: who is going to own this? And how, joint tenants, tenants-in-common joint with rights of survivorship, community property state, foreign corporation? Are you a dual-citizen marriage? How much other property do you own abroad, including securities and other investments? Is the title clear?

Is this an investment? Are you hoping for good appreciation and a quick profit? Will you rent this property? How long are you planning to stay in the property at any one time? How do you think the way this asset is titled will affect your US estate if one of you should die prematurely?

These are not simple issues. US Internal Revenue Service has placed additional pressure and reporting requirements on Realtors and Rental agents who deal with foreign owners of US real estate in order that they may not be subject to certain substantial personal liabilities for improper US tax reporting compliance. US tax rules that apply to ownership and disposition of US real estate property by foreign persons, including foreign corporations holding US property interests, are different than those that apply to US citizens and are clarified in the Foreign Investment in Real Property Tax Act (FIRPTA) legislation.

And with that incredibly officious sounding paragraph, plan on reading next weeks final article. Tax issues, estate issues, and can you really earn a great profit on US real estate? And will Uncle Sam take some of it away?