Public record system for real estate property in Greece
In Greece, the old system maintained to record real estate properties and the persons’ rights on such properties was (and still is in parts of Greece) that of the Land Registries. The problem with that system is that research at these records can only be made based on the identity of the person who enjoys a right in rem over real estate property and not by the property itself.
Therefore, the system of the Cadastre was launched, under which research can be made through a series of criterion like the identity of the person that enjoys a right in rem over property, by the address of the property, the location of the property (in the Cadastre map) and the Cadastral number which is a unique number assigned to each property.
Even if the Cadastre operates in the area where the interested buyer seeks to buy property, which provides a greater degree of certainty as to that person’s good title and if there any encumbrances set, it is nevertheless suggested, not to mention necessary, to make also research at the competent Land Registry to verify good title of the property and any old encumbrances set.
Ways to acquire real estate property in Greece
The main ways to acquire real estate property in Greece are the following:
- Directly by a notarial sale purchase deed which is the most commonly observed transaction. This Q&A will mainly regard this type of acquisition.
- Directly through public auction (again through notaries acting as official authority for the auction).
- Indirectly by acquiring a legal entity that owns the property, which is a structure that is quite often observed, especially when the property is of significant value and/or the buyer intends to financially exploit the asset.
What legal checks should be done before buying a property?
It is recommended that the buyer seeks professional legal advice for the entire process and shall at least perform legal research at the land registry and cadastre to verify good title and encumbrances set on the property. It is also prudent to receive proof of payment of recent water bill (debt to the water-sewage company passes on to the new owner) and electricity bill.
Additional attention shall be given when the seller is a third country national (outside the EU – EEA), the buyer intends to buy the property to receive regulatory benefits (residence permit or tax benefits) or the seller is a legal entity.
The buyer is also advised to assign an engineer to proceed with technical due diligence which will usually regard compliance with town planning and building regulations in place.
Assigning an engineer is critical, especially when the buyer intends to purchase a plot and proceed afterwards with constructing a building.
What is the procedure for buying property by way of notarial sale purchase deed
Purchasing directly real estate property in Greece can only be effected through a notarial sale purchase deed ( i.e. a sale purchase contract which is drafted by the notary and signed before a notary) and the procedure is in general terms the following:
After commercial negotiation between the parties, in most cases they proceed with the signing of a preliminary agreement under which an advance payment is provided (usually not exceeding 10% of the purchase price). There are several types of such agreements, though, attention shall be drawn on the fact that only notarial preliminary agreements are valid and may be directly enforced as opposed to private agreements which may only serve a proof of payment of the advance payment which may be recovered only be recourse to courts. Nevertheless, in commercial practice, most preliminary agreements take the form of private agreements as it is less expensive and less time-consuming to get it signed.
The notary is assigned by the buyer. Although not required by law, the buyer usually appoints a lawyer to do the necessary title deed research and liaise with the notary, the seller’s lawyer and the engineer. The seller shall appoint an engineer (civil or architect) who will undertake to procure to the notary the necessary documents (certificates, drawings etc.). The buyer may assign an engineer to perform technical due diligence of the property.
The seller is required to provide the notary with the title deed and other documents and certificates. Indicatively, the seller (or his advisors, i.e. lawyer and/or engineer) shall present, in most cases : (a) certificate of the electronic identity of the building, (b) a certificate from the seller’s engineer filed with the electronic identity of the building, verifying that there is no illegality as regards the property, (c) any declaration of legalization of any illegal construction along the engineer’s report, (d) floor plans and topographic diagram (in case a plot is been transferred or the property under sale is a detached house or the property is situated outside town planning zone), (e) building permit, (f) energy performance certificate, (g) excerpt of cadastral diagram (when the property has been recorded at the cadastre), (h) certificate providing that the state property tax (ENFIA) has been paid, (i) certificate providing that the municipal property tax (TAP) has been paid, (j) tax clearance certificate (withholding of tax debt is permitted in most cases) and (k) social security clearance certificate (withholding of tax debt is permitted in most cases).
In the event the buyer is not a Greek national, he shall obtain Tax Identification Number (TIN) in Greece. This is done before the competent tax authority by a proxy (usually a lawyer) who is assigned by the buyer via a notarial power of attorney (if not signed before a Greek notary then has to be apostilled) or a power of attorney or authorization signed before a Greek consulate.
After the notary receives all necessary documents and the buyer gets a Greek TIN, proceeds with filing the transfer tax declaration which the buyer is liable to pay.
Once the transfer tax is paid, a respective certificate of payment is issued and the notarial sale purchase deed may be signed.
In the event the buyer is a third country national, he/she may sign the deed only in case of legal entrance in Greece.
The deed may be signed by a proxy assigned through a notarial power of attorney (if not signed before a Greek notary then has to be apostilled) or a power of attorney signed before a Greek consulate.
Once the deed is signed, it shall be registered at the cadastral office (or land registry when the property has not yet been recorded at the cadastral system). Take notice that in some cases, registration may take more than 2-3 months.
Buying a property off-plan means buying it before it’s been built. The buyer signs a notarial sales deed and a building contract with the developer. The purchase price is usually paid according to the progress of construction works.
The buyer is envisaged to incur the following costs/fees when purchasing real estate property:
– Transfer tax 3,09% on purchase price or tax objective value (whichever is higher). VAT on buildings (imposed on properties with building permit issued after 1/1/2006) has been postponed until 31/12/2024. If the buyer is an EU-EEA citizen and decides to change his/her permanent residence to Greece, he/she may be exempted from that tax if he/she does not have any other property that may not be used as his/her primary residence and after certain other criteria are met. He/She shall maintain ownership and make use of the property as his/her primary residence for the following 5 years.
– Registration fees, approx. 0,5% on purchase price or tax objective value (whichever is higher) plus VAT (24%).
– Notarial fees, approx. 1% on purchase price or tax objective value (whichever is higher) plus VAT (24%). The rate is variable and also a certain cost per page of the deed is charged.
– Real estate agent fees, approx. 2% on purchase price, plus VAT (24%).
– Legal fees are usually calculated on the purchase price, plus VAT (24%).
Anti-Money Laundering considerations
Lawyers, notaries and real estate agents constitute obliged entities in cases of real estate property transactions exceeding the amount of 10.000,00EUR and they have to comply with the respective anti-money laundering legislation in place (i.e. proceed with KYC checks, risk assessments, etc.).
Buyers that are tax resident in Greece should be able to justify the level of the purchase price, based on their historic income.
Buyers that are tax resident outside Greece, are not subject to such an obligation, in so far it is proven that all funds used to pay the purchase price and associated costs (notarial, lawyer and real estate agent fees as well as registration fee) derive from foreign bank accounts (thus it is recommended that all payments are made through bank transfers/bank checks).
Also, legal entities that own a property, are not listed and make the majority of their income out of that property, are in principal subject to the special property tax (EFA), unless it is provided by proper documentation that are owned (directly or indirectly) by persons with Greek TIN. A respective file shall be kept on a yearly basis and an annual exemption petition shall be filed in most cases. This tax has been subject to substantial judicial scrutiny since it’s enactment in 2003 and especially after its amendment in 2010.
Buyers that are tax residents outside Greece may transfer their tax residence in Greece and pay fixed income tax of 100.000,00 EUR on a yearly basis (for 15 years), provided they acquire real estate property for a purchase price of at least 500.000,00 EUR.
Greek “Golden Visa”
Buyers that purchase real estate property in Greece may obtain a five-year residence permit for them and their direct ascendants or descendants that are not older than 21 years old. The permit is renewable provided the applicant still owns the property. The general minimum amount of purchase price required is 250.000,00EUR and 500.000,00 EUR for certain areas such as the city center, northern and southern suburbs of Athens, the city center of Thessaloniki and the islands of Santorini and Mykonos (buyers who by 31/07/2023 pay an advance payment of at least 10% of the purchase price and under other specific requirements, including signing a preliminary agreement, may proceed with a purchase of at least 250.000,00EUR. The final notarial sale purchase deed should however be signed and registered by 31 December 2023). The purchase price should derive from foreign bank account of the buyer and/or his/her spouse (it may also be transferred to a Greek bank account of the buyer) and be deposited to the seller’s bank account (by way of bank transfer of delivery of bank check).
The buyer of real estate property is liable to pay the state property tax (ENFIA) and utility bills. Municipal property tax (TAP) and other municipal taxes are usually incorporated in the electricity bill and paid as such.
This Q&A note shall not be construed as legal advice.