ARiadni Real Estate Blog

The process of buying and selling a property

13 January, 2020

The process of buying and selling a property
ARiadni Real Estate’s experienced team of consultants can help you, by clearly explaining how the whole process works. 
Read the following useful information, which will be our guide for any action, and ask us if you have any further questions.

Natural or legal entities interested in a property must take into account the following:

1. BUYER
The person interested in purchasing property in Greece must have a tax identification number or TIN (referred to in Greece as AFM). If the buyer is a natural person, they must have enough capital — “pothen esches”, the asset and funds-source declaration for the past five (5) years — to cover the cost of the purchase and the other expenses of the property transfer (property transfer tax, representation by an attorney, notary fee, registration fee), which generally come to 12-14% of the cost indicated in the contract. Similarly, in the case of Greek legal persons, the above amounts must be covered by their capital, while natural or legal entities abroad must prove that the above amounts have been transferred to Greece from abroad in their name, through the use of Foreign Exchange Import Certificates (also known as Pink Slips).

2. CHECKING TITLE DEEDS
Interested parties must assign an attorney to check the property’s title deeds. This check must cover a time period of at least 20 years and certify that there are no current liens (mortgage underwriting, mortgages, seizures) or claims on the property.

3. CHECKING THE PROPERTY’S LEGALITY
If the property being sold is a plot of land or a land parcel, the buyer must assign an engineer to certify that the property is not located in a forest area (if it is a land parcel outside the zoning area), that it is fit for construction, that it has the boundaries mentioned in the title deed of the seller, and that it is not being claimed by the State or a Local Government Agency, etc.
If the property being sold includes a building (house or flat), the buyer must ask the seller for the building permit, a recent topographic diagram and floor plans, and appoint their engineer to check the legality of the building’s construction, as well as to certify that no laws regarding illegal buildings have been violated, that the building coefficient has not been exceeded, and that any debts to IKA (Social Insurance Institute) have been paid.
Lastly, the buyer, through their engineer, much check if the area in which the property being sold is located has been incorporated in the National Cadastre, and must ask the seller for the Extract of the Cadastral Diagram from the Cadastral Agency.

4. PROPERTY TRANSFER TAX
The interested party must submit to the IRS (Internal Revenue Service) of the region in which the property to be bought is located, the Property Transfer Tax statement and Value Calculation Sheets for the property in question, which are prepared by the notary who will also draft the transfer contract, which will be signed by the seller and the buyer. The property transfer tax must be paid by banker’s cheque, issued to the IRS of the region in which the property is located.
Currently the property transfer tax, which is also determined by the number of buyers, comes to 9% or 11% approximately, and is calculated based on the price or objective value of the property, depending on which is greater. In the case of natural persons who meet the requirements of the law, there is the possibility of being exempt from the transfer tax when purchasing a first home.
In areas where there is no objective property value determination system in place (mainly in the rural areas of Greece), the comparative data in the books of the IRS of the region in which the property is located, and specifically the price per square metre of the immediately previous transfer of a similar property in the same area, is taken into account. In this case, the Inspector decides on the value of the property being sold and the buyer has the right to pay the tax, subject to further reduction.

5. BAR ASSOCIATION BILL — CONTRACT AUTHENTICATION
If the price of the sale exceeds 29,350 euros, the interested party must pay in advance to the Bar Association of which the attorney representing him is a member, the amount required for him to be represented by said attorney. This amount comes to approximately 0.5% + 250 euros of the transfer price or the objective value of the property, depending on which of the two is higher. For this payment a corresponding Representation Bill is issued, but it should be pointed out that the recorded amount is the minimum payment to the attorney required by law, and attorneys may request higher fees than the minimum.
Furthermore, the draft of the transfer contract signed by the attorneys of the buyer and the seller must be submitted to the competent Bar Association for the authentication of the signatures of the representing attorneys for a very small fee of 10-15 euros approximately.

6. SIGNING THE CONTRACT
The sale of the property may either be agreed upon in advance with a notarial preliminary agreement, if the parties have not gathered all necessary documentation, but want to urgently make the commitment, or may be prepared with the final contract before a notary.
The notarial preliminary agreement, which is signed by the buyer and the seller in the presence of the notary, but which is not registered with the Land Registry, identifies the price of this transfer as well as the buyer, and it stipulates that if the seller does not sign the final contract, the buyer may draft the final contract by deed poll, if they have paid the agreed price. However, we should also note that if a preliminary agreement has been signed, the seller may transfer the property to a third party acting in good faith and will only bear liability (civil and criminal) towards the initial buyer, obligated to compensate them for the damages they underwent due to the cancellation of the sale.
The authorised attorneys of the buyer and seller must be present at the reading and signing of the transfer contract, along with the seller and buyer, who must bring proof of identity, if they are not represented by other parties by way of special authorisation or notarial power of attorney. If the buyer is a legal entity, full legitimisation must be submitted to the notary, along with a special power of attorney or the decision of the competent body of the legal entity, which must appoint the competent agent for the signing of the contract.
The contract must include the data of the buyer and the seller, the description of the property being sold, how it came into the possession of the seller, the price and the method of payment (payment in full, credit, loan, etc.). The act of transfer is made by the notary in the presence of all attending parties and signed by all attending parties.
The notary’s fee comes to 1.20% of the price plus the cost of the copies.
Within 2 or 3 days, the notary prepares the certified copies of the contract to be transferred, and the request for the registration with the competent Land Registry and issuance of the relevant certificates.

7. REGISTRATION OF CONTRACT
Under care of the notary or the authorised attorney of the buyer, a certified copy of the contract is submitted to the competent Land Registry of the region in which the property is located, along with a copy of the Property Transfer Tax Statement and the relevant application, in order for the contract to be entered into the registration books, and so that a series of certificates (entry into a volume and number of the Registration, Liens and Claims Ledger) may be issued. The cost of registering the contract comes to 4.5% of the price, plus expenses for certificates, etc.
After the contract has been registered, the buyer is considered as the owner of the property.

8. SUBMISSION OF THE CONTRACT TO THE MUNICIPALITY
The buyer must submit a photocopy of the contract for the purchase of the property to the Municipality in which the property is located, in order for a file to be opened in their name and the corresponding Real Estate Duty to be charged to them.

9. SUBMISSION OF THE CONTRACT TO THE NATIONAL CADASTRE
Despite the fact that local land registries are obligated to inform the National Cadastre of changes in property ownership, it is in buyers’ best interest to ensure this happens by submitting a photocopy of the contract of purchase of the property to the competent local land registry.
EXPENSES IN THE SALE AND PURCHASE OF THE PROPERTY
P.T.T. (Property Transfer Tax)
This tax is included when calculating the value of the contract, as it is set by the buyer’s notary. When purchasing a home, the tax percentage for the first €15,000 is 9%, while for the remaining amount it is 11%. First homes are exempt from this tax up to the amount of €65,000 for single buyers, €100,000 for married buyers, with an additional €20,000 for each of the first 2 children, and €30,000 for the third child. Based on the tax amount that arises, an additional 3% municipal tax will be calculated. The corresponding amounts for the purchase of a plot of land decrease. The P.T.T. is paid to the IRS before the contract is drafted, so that when it is signed there is proof of payment of the tax.
R.E.D. (Real Estate Duty)
This is owed by the seller. The coefficient is determined by the municipal council of the area, ranging from 0.25% to 0.35%, approximately.
LAND REGISTRY
The fees of the Land Registry are set at 4.5% of the value of the property, as it appears on the contract, and they are incurred by the buyer. Each certificate issued costs approximately €5.
REAL ESTATE AGENCY
The fee comes to 2% of the actual price plus VAT. Payment is made when the contract is signed.
LAW FIRM
For sales of over €29,347, the buyer and seller must be represented by attorneys. The minimum legal fee for each comes to 1% for the first €44,020 and 0.5% for amounts up to €1,467,351. The percentage gradually decreases for the remaining amount.
The buyer is also burdened with the attorney’s fee for checking the title deeds, which comes to approximately 1% of the price. Attorney fees may vary and be higher, depending on the case.
NOTARY FEES
Notary costs are incurred by the buyer and come to 1.20% of the contract’s value, plus €130. From the arising amount, 9% corresponds to the Lawyers’ Fund, 6% to the Notaries’ Insurance Fund and 85% to the fee of the notary. Each copy costs €9.27.