Despite improvements regarding certain specific matters, purchasing real estate in Greece continues to be a fairly time-consuming and bureaucratic procedure that demands the involvement of lawyers, notaries and civil engineers. In most cases, the assistance of a specialized accountant is also necessary, especially when the buyer is a non-Greek or an overseas resident.
However, one advantage of all this red tape is that if the aforesaid advisers have been chosen properly, the buyer will make a quite safe purchase without any unpleasant surprises on account of unknown encumbrances, defects, damage, debts to third parties, town planning infringements or other hidden drawbacks of the property, since the compulsory participation of specialists can, under normal conditions, protect the legal and financial interests of real estate buyers in Greece.
The process of purchasing real estate in Greece involves three phases: The initial phase of choosing the right property; the phase of checks, negotiations and preparation and the phase of signing the contract before a notary public and its registration at the local Land Registry Office and in the National Cadastre.
I. Choosing the right property
When making the choice of the right property, it is advisable to seek help from real estate agencies, preferably those agencies which now provide reliable services in Greece. Nevertheless, in contrast with other European countries, many owners in Greece still offer their properties directly for sale on Internet sites such as www.property-abroad.com and www.property-in-greece.com without the mediation of a broker. By way of indication, the factors that should be taken into consideration by prospective buyers when choosing the right property include the following:
Factors relating to the location
- green spaces
- noise levels
- proximity to airports
- rail or other mass transit connections
- seismic activity of the area
- available parking space
- ease of access to schools, public services, hospitals
- disruptive activities in the area (industry, airports, etc.)
Factors relating to the property itself
Particularly in the phase of choosing the right property from among real estate located in the same or in comparable areas, interested buyers should evaluate and compare properties on the basis of the following information:
- Actual size of the property as well as the size of the property as stated in the contract, in the relevant tax declaration and on the electricity bill, since it is on the basis of this bill that taxes and duties on the property are determined. Foreign buyers especially should be aware that on account of town planning violations, there are often discrepancies between actual surface area and the surface area declared in contracts.
- Compliance with town planning regulations. In particular, whether there have been any town planning
infringements and, if yes, whether they have been addressed.
- Technical condition of the property.
- Existing buildings and possibility of construction on adjacent plots.
- View from the property.
- The possibility of renting the property and its rental price.
Having the above information, interested buyers can compare more properties on the basis of the price for the legally established size of the property before deciding on the offer that represents the best value for money.
II. Checks and Negotiations
After choosing the best property, a legal and technical assessment of the real estate is recommended. Non-Greeks and overseas residents are advised at this point to refer the matter to a law firm that will undertake the legal assessment, assign the technical assessment, make preparations for negotiations with the seller in a manner that will safeguard the buyer’s interests and coordinate all steps necessary for the purchase of the property.
Commitment of the Seller – Preliminary Agreement Deposit Prior to the legal assessment, overseas residents in particular are advised to obtain a commitment from the seller of the property that he or she will not sell the latter to any other person for as long as it takes to carry out the legal and technical assessments. In the past, it was usual to pay a deposit for this purpose. In the present circumstances, however, and thanks to the speeding up of procedures, it is now possible to secure a unilateral commitment on the part of the seller without the payment of any deposit. Otherwise, deposits are usually paid only in cases in which the seller needs cash for the settlement of town planning infringements relating to the property. Once the relevant undertaking of the seller has been signed, the legal and technical assessments can be carried out.
III. Legal Assessment
The legal assessment is absolutely necessary and should include an inspection not only of the title deeds (to verify that the property indeed belongs to the seller and has no encumbrances) but also of the following:
- The validity and authenticity of all documents and certificates
- The documents evidencing settlement of town planning infringements
- The deed establishing a horizontal property
- The property ownership declarations (E9 income tax form) of the previous owner
- Electricity bills, to verify that they state the correct surface area and zone rates on the basis of which taxes are calculated
- Verification that there are no common expenses owing
- The insurance policy
In such cases, when a deposit is paid to cover the expenses of putting the property in order, it should be accompanied by the signing of a notarial preliminary agreement.
Inspection of the Transfer Records at the local Land Registry Office to verify that the property being conveyed indeed belongs to the seller and whether it has belonged to him/her for at least 20 years.
Inspection of the Encumbrance Records at the local Land Registry Office to ascertain whether there are any mortgages, prenotations of mortgage, foreclosures or litigation in the name of the seller or his/her predecessors.
IV. Technical Assessment
As of 2011, the seller of a property is obliged to furnish an engineer’s certificate, for the issuance of which the engineer must inspect the property to establish whether it infringes any town planning regulations and, if yes, which. At the same time, an energy rating certificate is also issued. This procedure, which places no financial burden on the buyer, gives the latter an initial idea about the condition of the property. If, however, the buyer requires further information about the quality of construction, the degree of seismic protection, etc., he or she is advised to request a technical inspection by the civil engineer of the seller.
In the case of purchase of a building plot, the civil engineer checks:
- Whether the plot fulfils the relevant requirements for construction or development
- Whether there are any pending matters with regard to outstanding contributions in land or cash, suspension of the issuance of building permits, expropriation for reasons of public interest, the performance of road or other projects, the possible designation of the plot as a wooded area, forest land or land earmarked for reforestation, as a natural habitat, foreshore, archaeological site, military zone, etc.
- The permitted and prohibited land uses
V. Preparation – Power of Attorney
Along with the legal and technical assessments, it is also important – especially for non-Greeks and overseas residents – to make the proper preparations for the purchase of the property. More specifically, these include:
a. Opening an account at a Greek bank
In Greece, the purchase price is usually paid by bank check upon signing the contract. For this reason and in order to obtain stronger proof of the importation of capital from abroad, foreign nationals buying property in Greece are advised to open an account at a Greek bank, which in any case they will also need subsequently for the day-to-day management of the property.
b. Enhanced power of attorney
In the event that the buyer is represented by a lawyer, a power of attorney to this effect must immediately be drawn up. The document can be signed at a Greek Consulate or a notary public abroad. Due to the fact that public services in Greece recognize only explicit instructions, and because each power of attorney signed abroad is quite costly, prospective buyers are advised to sign a power of attorney containing many clear instructions, even if only some of these are required before the process is completed. Apart from the instructions pertaining to the specific property, it is advisable to include also the following mandates which may be useful before or after the purchase of the property:
- Application for and receipt of a Tax Registration Number from the Tax Office for Overseas Residents.
- Receipt of Taxisnet codes and key numbers (for online tax services).
- Receipt of a tax clearance certificate (attesting fulfillment of all tax obligations).
- Assignment of a survey of the property to an engineer (technical assessment).
- Certificate attesting compliance with town planning regulations.
- Appointment of a notary public.
- Signing of any preliminary purchase agreement.
- Payment of deposit if required.
- Signing and filing of tax declarations with the local Tax Office (in the area of the property).
- Securing of benefits on account of primary residence status, subject to entitlement.
- Payment of any taxes due.
- Signing of final contract.
- Payment of the purchase price.
- Payment of the notary public.
- Signing of documents evidencing mortgage repayment and release or the lifting of conditions subsequent (if any exist).
- Mandate to appear and represent the buyer before all courts and authorities (especially tax and administrative courts, up to the Council of State) in the event of any problem arising.
- Mandate to institute legal proceedings regarding any matter arising in the future from the purchase of the specific property.
- Registration in the National Cadastre.
- Remedying of any legal matters arising due to erroneous registration in the Cadastre (error on the part of government authorities).
- Appointment of an accountant.
- Filing of Tax Return (E1, E2 and E9 forms).
The legal and technical assessments are usually followed by final negotiations, in the framework of which written undertakings/guarantees, supporting documents, corrections or adjustment of the purchase price may be requested. In every case, buyers are advised to conduct final negotiations always in the presence of lawyers.
Notary Public, Land Registry and Cadastre
Once a binding document has been signed by the seller, the buyer of the property can instruct the notary to draw up the contract. When the notary is instructed to draw up the contract, the seller of the property must furnish the following documents:
- Certificate of Tax Clearance from the competent Tax Office attesting that the seller has no outstanding tax obligations.
- Certificate from the local municipality or community attesting that no Real Estate Tax is owing.
- Application/Certificate from the competent Tax Office, evidencing that all tax obligations have been fulfilled with regard to inheritance, parental gift or donation when the seller has acquired ownership of the property through inheritance, parental gift or donation.
- Certificate from the Social Insurance Institute evidencing the seller’s payment of social security contributions, whenever required.
- Energy Performance Certificate from a civil engineer.
- Certificate from a civil engineer attesting that the property does not infringe any town planning regulations.
- Certificate from a civil engineer attesting completion of the procedure for making the property subject to the provisions of article 24, Law 4014/2011, in the event of town planning infringements.
- Certificate from the competent Town Planning Office attesting completion of the procedure for the legalization of semi-open spaces or a change of use.
- Topographic plan.
- Extract of the cadastral map.
- Copy of the planning permission, if the building permit was issued after 14-3-1983.
- Certificate from the competent Tax Office attesting payment of all Real Estate Tax, in the event that the seller is a legal entity.
- Certified photocopy from the competent Tax Office of the receipt evidencing payment of the Single Property Tax for 2009, containing a description of the property being conveyed, along with a certificate attesting payment of the applicable distributive tax for the property being conveyed.
The buyer must furnish the following documents:
- Identity card or valid passport.
- Receipts from the competent Tax Office evidencing payment of the Property Transfer Tax for the real estate that is to be purchased. For the purpose of calculating and paying this tax, the buyer will have submitted to the competent Tax Office – prior to the signing of the contract – a special declaration drawn up by a notary.
- Tax Registration Number: In the case of non-residents of Greece, an application for a tax registration number must have been submitted to the Tax Office for Overseas Residents in Athens.
- The payment amount for the property, usually in the form of a bank check. This requirement concerning the immediate settlement of the payment amount upon signing the contract may appear unusual to many foreign investors, given that the corresponding procedures in their own countries are usually carried out by means of bank transfers or the use of an escrow account. At any rate, foreign investors are advised to open an account at a Greek bank, to which the payment amount is transferred, so that a bank check can subsequently be issued for settlement of the payment amount. The same procedure is also recommended for smaller sums, e.g. the payment of tax liabilities, since it evidences the importation of the corresponding amount into the country.
After the signing of the contract and issuance of a photocopy thereof by the notary public, the lawyer undertakes the task of registering the contract in the Land Registry Office of the area in which the property is located or in the competent Cadastral Office if the area has been incorporated in the National Cadastre. Registration completes the transfer of the property to the new owner and a Registration Certificate is issued to this effect, which must be kept along with the contract since it will be necessary for any future conveyance of the property.
VII. Post-Purchase Obligations
Prospective buyers often overlook the fact that the purchase of real estate gives rise to a number of obligations toward public services and third parties, as well as a number of tax liabilities which must be settled during or immediately after the property purchase. In addition to registration and recording in the Cadastre, buyers should bear in mind the following:
- Public Power Corporation (DEI)
- Athens Water Supply and Sewerage Company (EYDAP)
- Common expenses: Notification to the apartment building superintendent
- Public Gas Corporation (DEPA)
- In the case of rented properties: Notification to the tenant regarding the change of owner and the way in which the rent is to be paid
- Declaration of the property on the E9 income tax form
- Declaration of income from renting the property
- Non-Greeks and overseas residents should in every case consult a specialized accountant who will take care of all the necessary declarations
- Non-Greeks residing abroad who rent property in Greece during the summer as tourist accommodation should be aware that income from such rentals is taxed in Greece, even when the rent is paid abroad
The expenses for purchasing real estate, based on the transfer of an old property with a value of €100,000 will probably equate to around 15%.