Every local European market has its own cultural quirks and regulatory challenges. From restrictions on foreign ownership to diverse local customs and practices to taxation on fees and services, the European property market is a spreadsheet of information begging to be misunderstood.

If your company is considering acquiring or leasing real estate in Europe, it's important to partner with a service provider that has strong access and insight into the local markets and fully comprehends "the rules" - both written and unwritten.

Custom made trouble

Real estate professionals must be aware of customs and practices that vary from country to country prior to conducting a property transaction in Europe. Issues specific to each market include:

* property ownership by foreigners

* taxation liabilities

* standardized contracts

* lease length

* statutory rights and obligations for renewal or termination

* reinstatement or restoration provisions

* rent reviews and its basis or indexation

* respective obligations of the parties as defined by civil code or by contract

In terms of lease renewals, for instance, the UK's Landlord and Tenant Act of 1954 entitles tenants to demand a new lease during the final year of their existing lease. On the other hand, Switzerland takes a different approach to the process, as landlords will automatically renew leases for another five years if tenants fail to give proper notification in advance.

It is also important to note that European statutes, which cannot be removed from the language of contracts, typically protect tenants.

Although it is necessary to understand the local practices in each U.S. state, they are typically not part of any civil code and can be modified considerably as long as the two parties entering into a transaction concur and affirm the agreement in writing.

Even with the formation of the EU, there is no discernible trend toward a similar understanding in Europe. Rather, Europe remains a conglomeration of nation-states that are very proud of their individuality, which translates directly to their approaches in defining how real estate transactions are consummated.

That's now how we do it in the U.S. . . .

Despite the importance of understanding local customs and practices governing real estate transactions, sensitivity to cultural diversity is the most significant inhibitor (or enabler) to successfully completing a property transaction.

Europeans are increasingly exposed to foreigners and are becoming more forgiving to their visitors. Comments or gestures that are intended to be friendly, but are perceived by Europeans as offensive, embarrassing or confusing are not necessarily the deal killers as they were years ago.

As much pride as Americans take in their negotiating abilities, Europeans are every bit as capable, and may take advantage of any weakness that they perceive in the transaction process. It is not uncommon for Europeans to take advantage of the impatience of Americans during transaction negotiations by intentionally including breakfast and lunch breaks to delay the process.

It is this aspect of the transaction process that truly cries out for the services of a local expert, someone who is a guide through the potential pitfalls. Beyond the real estate practitioner who will develop the basis for interpreting and understanding the value of a transaction, someone who can interpret local cultural aspects at the negotiating table will add tremendous value to the process for both sides.

Dino Piccini is president in New York and James Kennedy-Cooke is senior vice president in London of DTZ Staubach Tie Leung, which provides full-service real estate services to companies and organizations in 42 countries worldwide. They can be reached at Dino.Piccini@staubach.com and James.Kennedy-Cooke@dtz.com.