Initially, the lawyer of the prospective buyer will examine a series of matters concerning the real estate purchase at the locally competent Land Registry (Ypothikofylakeio) (title check of the property). More specifically, the check is conducted to ascertain whether there are any encumbrances on the property, that is, whether there are any prenotations of mortgage, mortgages, or whether claims or pending lawsuits have been raised against the property. We study the title deeds with great care, in order to verify the chain and the legality of the manner of acquisition by the transferring owner or predecessors in title. Once the check is completed and the property is “clean” of encumbrances, it is then advisable to obtain a copy of the title deeds before the purchase of the property, which will be needed for the subsequent drafting of the deed of sale.
Town Planning Authority
The lawyer of the prospective buyer continues the check on the property at the locally competent Town Planning Authority (Poleodomia). More specifically, they study the building permit of the property to ascertain whether it is unauthorised or not, and whether there are any town-planning infringements or excesses in relation to the permit.
Tax Office
In order for the deed to be drawn up, the prospective buyer must pay in advance certain taxes at the locally competent tax office (DOY), corresponding to the property they intend to purchase, which are determined on the basis of its objective tax value. If the objective tax value of the property has not been set, it is determined by a notary public. It is critical at this point to clarify whether the property constitutes a primary residence.
Notary Public
The signing of the official deed takes place at the notary’s office in the formal presence of the notary public, the seller, the prospective buyer, and the lawyers of both contracting parties to the sale. Once the deed has been read clearly and both sides declare that they fully understand it and agree to its terms and content, the deed is signed by both parties.
Registration of the Deed
Officially, the transfer of ownership takes place upon registration of the signed deed at the locally competent Land Registry, where the sale procedure and the ownership of the property are also formally established in the file of the buyer and new owner.
Lawyer’s & Notary’s Fees
The remaining costs for the final signing of the deed include:
i) Lawyer’s fee: amounts to 1% on the value of the deed up to the sum of €44,020.00 and 0.5% on the remaining value of the deed exceeding €44,020.00. The lawyer’s fee may be adjusted upwards, depending on the complexity of the deed.
ii) Notary’s fee: amounts to 1.6% on the value.
iii) Registration costs at the Land Registry: amount to 4.7‰ on the value of the deed.
What is examined during the legal due diligence
Who the owner(s) is/are and in what percentage.
Encumbrances attaching to the property (mortgages, seizures, claims by third parties).
Correct sequence of titles.
Verification of registrations of the deeds.
Verification of the deed of horizontal (or vertical) property and the building regulations of the apartment building together with any amendments thereto.
Verification at the national land registry (Ktimatologio) for manifest errors.
The next step after the due diligence
If encumbrances are found, there is no particular cause for concern, as they can be settled before the purchase. For each encumbrance there is a specific procedure for its discharge, provided of course that the corresponding debt has been paid. In any event, knowledge of the existing encumbrance affects negotiations regarding payment of the price. There are safe methods by which the buyer may proceed with the purchase of an encumbered property. There are also cases in which the debts have been settled but the encumbrance still remains. In such cases, the procedure to remove it from the national land registry/Land Registry is a formality.
At the down-payment stage
The down payment is usually given by means of a private agreement, in which the terms agreed orally are recorded. Particular attention should be paid in cases where the sellers are represented by third parties or are not yet owners and have a mere expectation of right (e.g. pending acceptance of inheritance, suspensive conditions, etc.), where, for the buyer’s security, the corresponding documents must be checked in each case. At the same time, cases involving multiple sellers must be examined further, so as to anticipate in good time any forced cancellation of the sale.
Depending on the circumstances, a notarial preliminary purchase agreement may be chosen, which has stronger legal force, with greater safeguards for the buyer for the completion of the purchase.
Regarding the remaining terms
In a private agreement, beyond the names of the contracting parties, the property and the price, it is important that other information and agreed terms also be stated, which play a significant role in any subsequent unwanted and bad-faith withdrawal by the counterparty, especially in cases where a large down payment is given and a withdrawal is more likely to lead to a court dispute. Our experience in court disputes has taught us important matters that should be recorded in a private agreement for the future protection of the buyer. Therefore, before signing a private agreement, you should consult your legal adviser experienced in real estate sales matters.
Before the Deed
When the seller has gathered the necessary documents for the signing of the deed, a fresh legal due diligence at the Land Registry/national land registry must necessarily be carried out, in order to confirm that the legal status of the property has not changed in the intervening period. It is critical to know that the legal status of the property may change at any moment, for example, if someone claims the property or a third party records a seizure or mortgage in the meantime by court judgment, given that the seller is still the owner of the property. Ownership is acquired upon publication of the deed of sale at the Land Registry/national land registry, which is why, after signing, the immediate filing of the deed at the competent Land Registry/national land registry is imperative.
On the day of the deed, the lawyer must verify the propriety of the procedure and check the deed for any errors or irregularities that might cost the immediate registration of the deed at the Land Registry/national land registry. Therefore, the buyer’s choice of notary and lawyer plays a very significant role in the proper completion of the procedure, without delays in its registration.
It is noted that, upon signing the final deed and its registration at the competent national land registry/Land Registry, the property must be declared on the E1 and E9 forms at the Tax Office, and the issuance of the Real Estate Property Tax (ENFIA) will follow, which must be paid every year.
SPECIAL ISSUES
ELECTRONIC BUILDING IDENTITY
It is now mandatory by law for an electronic building identity to be issued in order to complete the purchase. The most common issues observed which delay the deeds are, on the one hand, obtaining original floor plans and topographical drawings from the town planning authority of the area in which the property is located, and on the other hand, the difference in square metres found during the current measurement which deviates from the older one. In most cases, this issue is resolved by means of a unilateral amendment to the deed of horizontal property, which is executed together with the purchase deed. There are also other cases involving more complex legal issues which require specialised treatment.
FINANCING
Provided that there is individual pre-approval for the loan, banks then proceed with a check for loan pre-approval for the specific property. The bank begins with the standard title check of the property. CAUTION: the bank examines the property for specific matters concerning the financing and does not safeguard the purchase procedure on your behalf. Subsequently, it conducts an on-site inspection with an engineer and then estimates the value of the property and the loan amount it will disburse.
For the financing, specific terms must be provided for in the deed, otherwise the debtor cannot grant approval for a prenotation of mortgage to the bank. The prenotation procedure takes place after the registration of the deed at the competent national land registry/Land Registry, by means of a court procedure conducted by the bank’s lawyer and the borrower’s lawyer. The disbursement procedure is usually completed within three months after the deed. Subsequently, once the loan is disbursed and the remaining credited amount is paid, the notarial deed of discharge must be signed.
PAYMENT OF THE PRICE FOR A PROPERTY WITH SUBSEQUENT REMOVAL OF MORTGAGE PRENOTATION
It is a common occurrence for there to be a prenotation of mortgage on properties, since a large proportion of purchases are made on the basis of a loan agreement. Many sellers are unable to discharge the loan before selling the property and receiving the price. In such cases, special treatment must be applied to the manner in which the price is paid by the buyer, depending on the amount owed for the property.
There is a wide range of methods to ensure for the buyer that the loan will be discharged and that the removal of the prenotation by the seller will be completed. It is entirely safe, since there is a remaining price sufficient to cover any outstanding obligations. In the event that the remaining price is insufficient to cover all outstanding obligations, then there are other special methods for completing them, depending on the case.
EXEMPTION FROM REAL ESTATE TRANSFER TAX
It is important for the buyer to check whether they qualify as a beneficiary of exemption from the real estate transfer tax, which is calculated at 3.09% on the market or objective tax value (whichever is higher) of the property they are purchasing.
Exemption from the real estate transfer tax for the purchase of a primary residence is granted only to natural persons (married or unmarried, or persons who have entered into a civil partnership), provided that they reside permanently in Greece or intend to settle there at the latest within two years of the purchase. The exemption for an unmarried person is also granted to a spouse who is separated, on condition that an application or lawsuit for divorce has been filed at least six months before the purchase of the property, and provided that the marriage will be dissolved within five (5) years of the purchase.
Exemption from the real estate transfer tax for the purchase of a primary residence is available to:
a) Greeks.
b) Greek diaspora citizens from Albania, Turkey and countries of the former Soviet Union. Persons of origin from Northern Epirus and Turkey, if they have acquired the citizenship of a third state other than Albanian or Turkish, cannot be granted exemption from the tax.
c) Citizens of the Member States of the European Union and the European Economic Area.
d) Recognised refugees, in accordance with the provisions of Presidential Decree 96/2008 (A’ 152).
e) Third-country citizens enjoying long-term resident status in Greece, in accordance with the provisions of Law 4251/2014 (A’ 80).
f) Third-country citizens holding a second-generation residence permit in Greece.
It is possible to submit an application for the granting of the exemption even after the submission of the real estate transfer tax declaration, until the case is finalised by any means. Together with the application, the necessary supporting documents are also submitted, and the refund of the tax is requested. After verification of the supporting documents and confirmation that the conditions for exemption are met, a supplementary act to the deed is drawn up, in which the exemption is referred to, and after its registration, the tax is refunded.
The extent of the exemption granted is as follows:
For purchase of a residence: by an unmarried person up to the amount of €200,000; by an unmarried person presenting a disability of at least 67% due to mental retardation or physical disability up to the value of €250,000; by a married person up to the value of €250,000; while by a married person presenting a disability of at least 67% due to mental retardation or physical disability up to the value of €275,000. This amount is increased by €25,000 for each of the first two children and by €30,000 for the third and each subsequent child.
For purchase of a plot of land: by an unmarried person up to the value of €50,000; by a married person up to the value of €100,000. This amount is increased by €10,000 for each of the first two children and by €15,000 for the third and each subsequent child.
If the value of the property exceeds the above tax-free thresholds, the exemption is granted up to the corresponding tax-free amount, and the real estate transfer tax is owed on the additional value.
In the case of purchase of a residence, the exemption amount also includes the value of one parking space and one storage area (whether they are separate horizontal properties or accessories of the property being transferred), of an area of up to twenty (20) sq.m. each, provided that they are located in the same property and are acquired simultaneously by the same purchase deed.
LEASED PROPERTY
Where there is a tenant in the property, the lawyer must also examine the lease agreement, so that proper information may be provided regarding the terms binding on the next owner. At the same time, an amendment to the lease must be made as regards the lessors, recording in the lease agreement the manner of acquisition of the property as well.
PURCHASE OF PROPERTY BY A FOREIGN NATIONAL
The procedure for the purchase of a property by a foreign national does not differ from the usual sale between Greek citizens; certain steps simply need to precede the purchase of the property.
Among the first and most basic steps is obtaining a VAT number (AFM). In addition, opening a bank account at a Greek bank is also recommended, so that the payment procedure may be more straightforward. It is noted that the assistance of a lawyer with power of attorney is regarded as particularly important for the prompt handling of all necessary tasks.
If the prospective buyer is unable to attend the signing of the deed of sale, then a notarial power of attorney must have been previously drawn up in favour of the lawyer who has undertaken the handling of the sale.
REAL ESTATE AGENTS
Most purchases are conducted through real estate agents, who undertake to point out the purchase opportunity to prospective buyers. It is worth noting that, in the event of signing of the assignment or referral instruction, and provided that a valid contract is concluded, the principal then has an obligation to pay the agreed brokerage fee. Valid contracts (for cases of real estate sales) are the notarial preliminary agreement and the final deed of purchase, with respect to the first of which, by virtue of the law, the agent is entitled to half of the agreed fee, while for the second, they receive the entire fee. The real estate agent has only the obligation to point out the opportunity, and nothing more. Organised real estate agents typically have legal advisers who carry out checks at the Land Registry and national land registry, and identify sales conducted in their absence, and subsequently pursue the brokerage fee through the courts. Our office has experience in matters of brokerage fees and can correctly guide you on similar issues regarding how they should be settled.
- See also article Sale of Real Estate
- See also article Fraud against Property Buyers by Sellers
- See also article Action for Division of Real Estate
- See also article SYPOTHA – Unauthorised Constructions
- See also article Fines for Unauthorised Constructions
- See also article Annulment of SYPOTHA Decision
- See also article Acquisitive Prescription
- See also article What is the KAEK?
- See also article Prenotation of Mortgage
- See also article Eviction of Tenant
- See also article Professional and Commercial Leases
- See also article Correction of Manifest Error – Unknown Owner – National Land Registry
FREQUENTLY ASKED QUESTIONS ON REAL ESTATE PURCHASE
1. What do I check before paying the down payment for the property?
Before any sum is paid, the buyer’s lawyer examines the title deeds at the competent Land Registry or national land registry, in order to ascertain the correct chain of acquisition, the seller’s percentage of ownership, and any encumbrances such as mortgages, prenotations, seizures, or claims by third parties. In parallel, a check is conducted at the Town Planning Authority for the building permit, unauthorised constructions, and town-planning infringements, as well as a check of the deed of horizontal property and the building regulations of the apartment building. It is critical that the electronic building identity be requested and that the square metres on the floor plan be cross-checked against the current actual condition of the property.
2. How do I safeguard my money against fraud?
The down payment is, as a rule, given by means of a private agreement in which all the terms are clearly recorded. In cases of large down payments, multiple sellers, representation by power of attorney, or where the seller has not yet completed acceptance of inheritance, the notarial preliminary agreement is preferred, as it has stronger binding force. Where there is a prenotation of mortgage on the property, secure techniques of price payment are used, such as deposit of part of the sum directly into the seller’s bank in order to remove the prenotation. The proper drafting of withdrawal clauses and penalty clauses protects the buyer against any bad-faith conduct on the part of the seller.
3. What risks are there in purchasing a property?
The most common risks are unauthorised constructions that have not been settled, deviations of square metres from the title deeds, encroachments on boundaries, discrepancy between the legal and actual status, as well as manifest errors at the national land registry. Furthermore, until the registration of the final deed, the seller remains the owner and third parties may record a seizure or mortgage. For this reason, a second check is conducted on the eve of, or on the day of, the deed, and the registration is filed immediately. In leased properties, the lease agreement is examined, so that the new owner may be aware of the obligations they assume vis-à-vis the tenant.
4. What is the total cost of purchasing a property?
Beyond the price, the buyer is charged with a transfer tax of 3.09% on the higher of the market value or the objective tax value, unless they qualify for the primary residence exemption (up to €200,000 for an unmarried person and €250,000 for a married person, with increases per child). The notary’s fee amounts to approximately 1.6% on the value, the registration costs to 4.7‰, and the lawyer’s fee to 1% for the first €44,020 and 0.5% for the excess. To these are added engineer’s fees for the electronic building identity and topographical drawing, any brokerage fee, and the Real Estate Property Tax (ENFIA), which is borne by the buyer from the following tax year.
5. How long does the procedure take to complete?
Where there are no outstanding matters, the procedure is usually completed within one to two months, from the assignment up to the signing of the deed and the registration. Where there is financing, the disbursement takes place approximately three months after the deed, with the prenotation of mortgage being recorded after the registration by means of a court procedure. Delays are usually caused by the issuance of the electronic building identity, the obtaining of older floor plans from the Town Planning Authority, deviations in square metres requiring a unilateral amendment to the deed of horizontal property, the acceptance of inheritance on the seller’s side, as well as the removal of existing prenotations or seizures.
6. What role does the lawyer play in the purchase of a property?
The buyer’s lawyer conducts the legal due diligence at the Land Registry and the national land registry, studies the title deeds and the deed of horizontal property, drafts the private down-payment agreement or the notarial preliminary agreement, and negotiates the terms with the counterparty. They review the draft deed before signing, identify errors that would impede registration, and ensure prompt filing. In special cases (foreign-national buyer, loan, encumbered property, leased property, brokerage fee), they design the safest method of price payment. Our firm’s experience in court disputes arising from real estate sales enables the prevention of problems that are often overlooked.