Cyprus: Buying Property In Greece - Update

Last Updated: 11 November 2011
Article by George Gaganas

INTRODUCTION

Greece is and will always be very attractive for foreigners who are interested in buying real estate property abroad. Especially, in the light of the financial crisis that Greece faces, it seems that the next two years will be a period that great opportunities may appear for persons who seek to invest in immovable property in Greece or simply want to buy a holiday or retirement house in one of the various Greek resort areas.

FIRST STEP

As a first step it is recommended to get in contact with a reliable real estate agent to help you find a property which corresponds to your needs and secondly to obtain legal assistance at the very beginning of the transaction. Apart from the fact that according to the Greek Law, the presence of a lawyer is obligatory during the drafting and signing of the sale's contract, legal assistance is necessary in order to avoid any possible complications and have a clear view of all legal aspects related to the purchase or sale of the property.

PERMISSION TO ACQUIRE IMMOVABLE PROPERTY IN BORDER AREAS

Irrespective of nationality, anybody can be owner of immovable property in Greece and all owners have the same rights and obligations. However, some restrictions apply only in relation to acquisition of immovable property in border areas, such as regions of Northern Greece and Dodecanese Islands. It should be noted that the restrictions applying to EU citizens and EU registered companies are exactly the same as those applying to Greek citizens and practically can very easily be lifted by virtue of a decision of the council of the competent local Prefecture. In relation to non-EU citizens or legal entities registered in non-EU countries, a permit by the Minister of Defence is required for acquisition of immovable property in border areas, following an application of the interested person, accompanied with certain documentation, a service which our office provides.

DUE DILIGENCE

Once the immovable property which corresponds to the buyer's needs is found, his lawyer must proceed with a due diligence investigation on the ownership title of the immovable property and its current legal status. At this point it should be noted that the abovementioned investigation takes place either in the Land Registry of the region that the property is located or in case that there is no Land Registry, in the Registry of Mortgages (Ypothikofilakion) of the region in question. In the next few years the Land Registry, which is a modern and well organised system of public registry for titles of immovable property, will replace the Registry of Mortgages in all regions of Greece.

As regards the investigation on the ownership title, this includes the chain of transfers of the ownership rights and the confirmation that the appeared buyer is truly the legal owner of the immovable property. Moreover, regarding the legal status of the property, the investigation includes the existence of any charges, encumbrances or rights of third parties on the property, such as mortgages, liens, claims, suspenses or claims. If the property in question is a plot of land, it should also be examined by a civil engineer the possible constraints for a development and the validity and extent of any building permits.

CONCLUSION OF THE SALE PURCHASE AGREEMENT

According to the Greek Law, a contract of sale of immovable property is not valid, unless it is drawn up by a notary public and signed in the presence of him and the parties' lawyers. The notary public is a public officer responsible for drafting of the contract and verifying that all the requirements of the law for the transaction are met. The notary public is chosen by the purchaser, who pays also his fees that amount to 1% of the property's value.

In order for the agreement to be concluded it is necessary for both the buyer and the seller to have a Tax Registry Number in Greece which can be issued by the competent Tax Authority, a service provided by our office.

REGISTRATION OF THE CONTRACT AT THE LAND REGISTRY THE REGISTRY OF MORTGAGES

According to the Greek Land Law, in order for the transfer to be finally effected and for the owner to be secured against third parties, it is necessary to register the contract at the Land Registry or in case that there is no Land Registry at the region that the property is located, at the Registry of Mortgages. The registration fees for purchase/sale of immovable property are estimated at 0,475% of the property's value appeared in the contract, plus some other much smaller amounts for the Lawyers' Pension Fund and the Municipality of the property's location.

TAXES RELATED TO THE TRANSFER OF THE PROPERTY

As from May 2010, the tax system related to the transfer of immovable property in Greece has been amended. According to the new system, there are two different kinds of taxes imposed in different situations, i.e. either the buyer has to pay V.A.T. or the Transfer Tax.

a) V.A.T

V.A.T. 23% is only charged in the situation that the developer, a person whose business is to build and sell buildings, houses or apartments sells for the first time a newly built property. According to the law, a newly built property is a property that was built in the last five years and has never been sold or used. A further requirement of the law for the V.A.T. to be charged is that the building permit must have been issued after 1.1.2006. In case the building permit is issued before 1.1.2006, or the application for its issuance has been filed until 25.11.2005, then only Transfer Tax can be charged. V.A.T is charged on the basis of the property's value appeared in the contract, in case this value exceeds the value estimated for that property by the Tax Authority (objective value). If the property value's appeared in the contract is lower that the objective value, then the V.A.T. is estimated on the objective value.

b) TRANSFER TAX

Transfer Tax is imposed only in the situations that V.A.T. cannot be imposed. On this basis, Transfer Tax is imposed on the purchase of plots of land, buildings that their building permits were issued before 1.1.2006 and buildings that are not sold by professional developers.

The rates are on a graduated scale and are calculated as follows:

PROPERTY VALUE (EURO)

TRANSFER TAX RATE(%)

0 – €20.000

8%

€20.000 and over

10%

Example: If the property value is €100.000, then the payable transfer tax is calculated as follows:

€20.000 x 8% = €1.600, €80.000 x 10% = €8.000

Transfer Tax Payable €1.600 + €8.000= €9.600

LAWYER'S FEES

As already mentioned above, according to the Greek Law, the presence of a lawyer is obligatory during the drafting and signing of the sale's contract both for the buyer and the seller. As regards the lawyer's fee, although this is the subject of an agreement between the lawyer and his client and it depends in great extent on the circumstances of each case, the law provides for minimum reference fees on the basis of the property's value, as follows:

PROPERTY'S VALUE

MIN LAWYER'S FEE (%)

0 - €44.000

1%

€44.001 - €1.467.000

0,5%

€1.467.001 – €2.934.000

0,4%

€2.934.001 - €5.810.000

0,3%

€5.810.001 - €14.673.500

0,2%

€14.673.201 – €29.347.000

0,1%

€29.347.001 - €58.694.000

0,05%

€58.694.001 and over

0,01%

Example: If the property's value is €100.000, the minimum reference fee according to the law is

€44.000 X 1% = €440, €56.000 X 0,5% = 280, €440 + €280 = €720

PROPERTY FINANCE

A wide variety of financing products are offered by the Greek Banks for buying immovable property in Greece. Moreover, our office cooperates closely with investment consultants, who can guide you thoroughly and suggest various financing solutions in order to materialize any investment projects related to the development of land and tourism.

SERVICES PROVIDED

Our law firm provides legal assistance and guidance through all stages of the transaction and can handle all legal formalities and complications that may appear.

Our services include, inter alia:

  1. Introducing you to a reliable real estate agent
  2. Visiting the competent Land Registry or the Registry of Mortgages and investigating on the ownership title of the property and its current legal status
  3. Applying for a permit in case the immovable property is located in border areas
  4. Preparing the contract of sale and negotiating any amendments in favour of our client's interest
  5. Visiting the competent Tax Authority and applying for a Tax Registration Number
  6. Calculating and arranging the payment of the taxes to the competent Tax Authority
  7. Representing the client at the notary public's office for the signing of the contract
  8. Drafting a power of attorney in case the client does not want to appear personally for the signing of the contract
  9. Registering the contract at the competent Land Registry or Registry of Mortgages
  10. Cancelling the contract of sale, where necessary

To read an earlier version of this article, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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