REAL ESTATE PURCHASES

Before starting to negotiate the legal terms of purchasing a property, there are several documents that need to be checked and settled before signing the final purchase contract. To start the negotiations of a real estate property, legal research must be done at the competent land registry of the area where the property belongs, in order to establish its legal status.

LEGAL SERVICES FOR THE REAL ESTATE PURCHASES:

• Legal research of titles at the competent mortgage office and land registry
• Check any lease agreements – private or professional.
• Drafting and control of private purchase agreements.
• Legal support for notarial preliminary agreements – securing transaction and advance payment.
• Legal support and monitoring of the process until the signing of the final contract.
• Additional title legal research on the day of the final contract to ascertain its legal status on the day of the contract.
• Representation in the final contract or even signing on behalf of the buyer.
• Control of the additional action of complete payment in case of a price credit in the final contract.
• Transcription of the final contract at the competent land registry.
• Procedure for transferring the lease agreement to the new owner – Modification of the Private lease Agreement.
• Procedure for registration of a mortgage notice – court appearance – in the case of a mortgage loan.

In any case, the essential service that the lawyer must provide in a real estate purchase is the title legal research before the private agreement and before the final purchase contract. Depending on how complicated the terms of the purchase are or how special the contract situation is, the other services are considered equally necessary.

LEGAL RESEARCH OF PROPERTY TITLES

During the legal research at the land registry, the lawyer checks:

1. The name of the owner and his/her percentage.
2. The property burdens that follow the property (mortgages, seizures, third party claims).
3. The correct order of registered titles
4. The owner’s portion of the contracts that were transferred.
5. Control on the establishment of horizontal (or vertical) property and Multifamily Regulation together with any amendments thereto.
6. Checking the land register for obvious errors.
7. Pending transactions in the land register.

The next step after the legal research

If any property burdens are found, there is no need to worry as they can be settled before the purchase. For each property burden, there is a specific legal procedure for its cancellation, as soon as the corresponding debt has been paid. In any case, knowledge of the existing property burden differentiates the negotiations as to the payment of the price. There are safe ways so that the buyer can proceed with the process of purchasing a property that is encumbered. There are also cases where the debts are settled but the burden still exists. In this case, the process is standard to remove it from the land registry/mortgage register.

Private Agreement

A payment deposit is usually transferred to the seller after both parties have signed a private agreement, which mentions the terms that have been agreed orally. Particular attention should be paid in cases where the sellers are represented by third parties or are not yet owners and have an expectation of entitlement (e.g. anticipation of acceptance of inheritance, deferred hereditaments, etc.), where for the buyer’s safety the relevant documents should be checked each time. At the same time, the cases of multiple sellers should be further checked in order to anticipate a forced cancellation of the sale in time.

Depending on the circumstances, a notary preliminary purchase agreement may be chosen, which has stronger legal force with more guarantees for the buyer to complete the purchase.

Regarding the other terms of the private agreement

In a private agreement, apart from the listing of the parties, the property and the price, it is important to include other information and agreements, which play an important role in a subsequent unwanted and bad faith withdrawal by the contracting party, especially in cases where a large deposit payment in advance is given, and a withdrawal is more likely to lead to litigation. Our experience in litigation has taught us important things that should be written into a private agreement for future security for the buyer. Therefore, before signing a private agreement, you should consult with your lawyer experienced in real estate purchase and sale cases.

Before the Contract

When the seller has collected the necessary documents for the signing of the contract, a second legal research of titles must necessarily be made again at the land registry to verify that the legal status of the property has not changed in the meantime. It is crucial to know that the legal status of the property can change at any time, for example, someone may claim the property or a third party may register a seizure or mortgage by court order in the meantime, since the seller is still the owner of the property. Ownership is acquired after the publication of the contract of sale and purchase in the land registry, which is why, after signing, the immediate deposit of the contract in the competent land registry is mandatory.

On the day of the contract, the lawyer should check the correctness of the procedure and the contract for any errors, or irregularities that may cost the immediate transfer of the contract to the land registry. Therefore the choice of Notary and lawyer by the buyer plays a very important role in the correct completion of the process, without delays in the transcription of the deed.

It is noted that with the signing of the final contract and its transcription at the competent Land Registry, the property will have to be declared in forms E1 and E9 to the Tax Office, and the issue of ENFIA will follow, which will have to be paid every year.

SPECIAL PURCHASE ISSUES

ENGINEER ELECTRONIC IDENTITY OF PROPERTY

It is recently mandatory by law to be issued an electronic property ID from engineers for the completion of the final contract. The common thing that has been observed that delays contracts is both the receipt of original floor plans and topography from the planning department of the area where the property is located and the difference in square footage found during the current measurement which deviates from the old one. In most cases, this issue is solved by a unilateral amendment of the recommendation which is made together with the purchase contract. There are other cases with more complex legal issues which require specialized treatment.

LOAN

If the individual pre-approval for the loan is in place, the banks then proceed to check for loan pre-approval for the specific property. The bank starts with the formal title legal research of the property. CAUTION the bank checks the property for specific things related to the loan and does not secure the purchase process for your interests. It then proceeds with an inspection by an engineer and estimates the value of the property and the amount of the loan to be disbursed.

For the loan to be granted, specific conditions must be stipulated in the contract, otherwise, the debtor cannot give approval for a mortgage. The mortgage procedure is carried out after the contract has been registered at the competent land registry/mortgage office through a judicial procedure carried out by the bank’s lawyer and the buyer’s lawyer. The disbursement process is usually completed within one quarter after the contract. Then once the loan has been disbursed and
the remaining amount credited has
been paid, a notarized repayment deed must be signed.

PAYMENT OF A PRICE ON A PROPERTY WITH SUBSEQUENT CANCELLATION OF A MORTGAGE

It is common for there to be a mortgage on properties, as a large percentage of purchases are made under a loan agreement. Many sellers are unable to repay the loan before selling the property and receiving the price. In this case there should be special treatment in the way the buyer pays the price depending on how much is owed on the property.

There are plenty of ways to ensure the buyer that the loan will be repaid and that the seller will complete the release of the mortgage. It is perfectly safe, as there is a remaining price which is sufficient to cover any outstanding payments. In case the remaining price is not sufficient to cover all the outstanding issues, then there are other special ways to complete them depending on the case.

EXEMPTION FROM TRANSACTION TAX IN PROPERTY PURCHASE

It is important for the buyer to check whether he/she is entitled to exemption from transfer tax, which is calculated at 3.09% of the selling price or the objective price (whichever is higher) of the purchasing property. Objective price are prices that tax office recognizes depending on the real status of the property.

The exemption from transaction taxis for the purchase of a first home is granted only to natural persons (married or unmarried or persons who have entered into a civil partnership, if they permanently reside in Greece or intend to settle in Greece within two years of the purchase at the latest. The exemption of the TAX is also granted to a spouse who is separated, provided that a petition or divorce action has been filed at least six months prior to the purchase of the property, provided that the marriage will be dissolved within five (5) years from the purchase.

Exemption from transaction taxis for the purchase of a first home is granted to:

• Greek citizen
• People from Albania, Turkey and countries of the former Soviet Union. People from Northern Epirus and Turkey, if they have acquired citizenship of a third country other than Albania and Turkey, cannot be exempted from the tax.
• Citizens of the member states of the European Union and the European Economic Area.
• Recognized refugees, in accordance with the provisions of P.D. 96/2008 (A’ 152).
• Citizens of third countries who enjoy the status of long-term residents in Greece, according to the provisions of Law No. 4251/2014 (Α’ 80).
• Third country nationals holding a second generation residence permit in Greece.

It is possible to apply for exemption even after the submission of a tax return, until the case is finalized in any way. Along with the application, the necessary supporting documents shall be submitted and a refund of the tax shall be claimed. After checking the supporting documents and establishing that the conditions for the exemption are met, a supplementary deed to the contract is drawn up, in which the exemption is mentioned, and after transcribing it, the tax is refunded.

The scope of the exemption granted is as follows:

For the purchase of a house: by a single person up to the amount of 200.000 €, by a single person with a disability of at least 67% due to mental retardation or physical disability up to the amount of 250.000 €, by a married person up to the amount of 250.000 €, and by a married person with a disability of at least 67% due to mental retardation or physical disability up to the amount of 275.000 €. This amount is increased by €25,000 for each of his first two children and by €30,000 for his third and each of his subsequent children.

For the purchase of land: for unmarried persons up to the value of 50.000 €, for married persons up to the value of 100.000 €. This amount is increased by €10,000 for each of his first two children and by €15,000 for his third and each of his subsequent children.

If the value of the property exceeds the above tax-free limits, the exemption is granted up to the corresponding tax-free amount and VAT is due on the additional value.

In the case of purchasing a residence, the amount of the exemption includes the value of a parking space and a storage space (whether they are separate horizontal properties or annexes of the transferred property), for an area of up to twenty (20) sq.m. each, if they are located in the same property and acquired at the same time with the same purchase contract.

LEASED PROPERTY

In case there is a tenant in the property, the lawyer should check the lease and the tenancy agreement so that the next owner is properly informed about the terms that bind the next owner. At the same time, a lease amendment should be made with regard to the lessors, mentioning in the lease how the property was acquired.

FOREIGN PURCHASER

The process of buying property from a foreigner is no different from the usual purchase and sale of property between Greek citizens, but certain steps must be taken before the property is purchased.

One of the first and most basic steps is to obtain a tax identification number (TIN) and it is also recommended to open a bank account in a Greek bank to facilitate the payment process. It should be noted that the contribution of a lawyer is considered particularly important for the immediate completion of all the necessary tasks.

If the interested buyer is unable to attend the signing of the purchase and sale contract, then a notarial power of attorney must be drawn up beforehand for the lawyer who has undertaken the handling of the purchase and sale.

BROKERAGE AGREEMENTS

Most purchases are made through brokers who are responsible for pointing out the purchase opportunity to prospective buyers. It is worth noting that in the event of the signing of an assignment or recommendation order, and if a valid contract is concluded, the principal is now obliged to pay the agreed brokerage fee. Valid contracts (for real estate purchase and sale cases) are the notarial preliminary contract and the definitive purchase contract, where in the former, by law, the client is entitled to half of the agreed fee, while in the latter he/she receives the total fee. The estate agent has only the obligation to indicate the opportunity and only the opportunity. Organized estate agents usually have lawyers who carry out checks in land registers and find out about purchases made outside their presence and then claim the estate agent’s fee in court. Our firm has experience in real estate fee matters and can properly guide you on how similar issues should be settled.