Buying a property in Crete
There are a number of steps and statutory checks that have to be carried out before a property purchase can be successfully completed. Your lawyer must know these, and only advise you to go ahead when they are satisfied with the checks. A further safeguard exists in the form of the Notary Public, who will not proceed unless all is satisfactory.
In Greece, it is normal to pay a deposit of 10% to secure the property. You should do this with a written and legally-binding “pre-contract” written by your lawyer and signed before a Notary. If you change your mind, you lose your deposit. If problems are found with the property, your deposit is refunded and all parties walk away. If the buyer changes their mind, they must pay you twice the deposit (in theory). If all goes well, your deposit is deducted from the agreed price and you pay the balance at the final contract.
Once a client has decided to purchase a property, we recommend that they employ a local Greek lawyer to act on their behalf. They are able to make the necessary searches to confirm clear title to the property, and have good knowledge of local laws and planning rules.
Power of Attorney
While you are in Crete, it is a simple and cheap procedure to grant Power of Attorney (PoA) to a Greek lawyer, who can then complete the buying process on your behalf. Once you have returned to your home country, it is possible to grant this in the local Greek Consulate, however it is time-consuming, slow and expensive.
Granting PoA also means that there is no need to return to Crete to sign the various papers – so clients don’t incur the costs of return flights and accommodation, loss of holiday entitlement, etc. It also means that the tight deadlines imposed by having to catch a return flight are removed, so if there are any last-minute delays it really doesn’t matter.
PoA can be granted for all the steps in the property purchase, and we highly recommend this method. The standard PoA allows the lawyer to:
- Obtain tax codes for you
- Open a bank account for you
- Access the bank account
- Resolve problems
- Pay the purchase price, taxes and fees
- Sign the purchase contract
- Negotiate with utility companies, etc.
Obtain tax code
Under Greek law, you need to have a Greek tax code (AFM) to purchase a house, because it is entered into the purchase contract and is later used for your Greek tax purposes. This process is now fairly simple for your lawyer to do – you need to provide:
- PoA for your legal representative
- Copies of legal passports or European identity cards
- Marriage or partnership contract with Apostille. If the PoA is made in a foreign country and the marriage / partnership details are submitted before the notary or Embassy there and this is stated in the PoA, it is not necessary to re-submit them in Greece unless there is another reason.
- Birth certificate is not necessary if full details are written into the PoA.
Open bank account
Realistically, you will need a Greek bank account to buy a house: for receiving the completion funds from your home country; to obtain proof you have legally imported the funds; and for paying locally at completion of purchase. It will also prove useful for day-to-day expenses later.
Obtain topographic plan
Under Greek law, a topographic plan (“topo”) of the property is required, which shows the exact location, boundaries and measurements of the land, together with details of any buildings, community limits and permitted building rights.
Greek law also states that the topo should be provided and paid for by the vendor. However, because of the expense of the survey on larger plots, this is sometimes not carried out until a potential buyer is found or when the legal checks have completed. We strongly recommend that the buyer commissions a separate surveyor/engineer to check the vendor’s topo, because it may be out of date, or incorrect, or even falsified.
Your lawyer must check that the measurements in the topo agree with the previous title documents, and are cross-referenced in the new purchase contract. The Notary Public will also check this at time of purchase.
The vendor must be able to prove they have “clean” title in order to sell the property. This means that anyone with an interest in the property under Greek inheritance laws, must also agree to sell. A typical situation is where one relative says “No”, when all other relatives have agreed – in which case the property cannot be sold until negotiations change the situation.
The vendor may or may not have a formal title deed. Often with older properties, it can be legally deemed that the vendor has title after using the property for a number of years (“adverse possession”), however this can sometimes be problematic if seeking a building permit. The vendor will need to provide documents to confirm their legal title, which could be a lifetime gift, a will, a court decision, etc.
The property, vendor and the purchaser must be free of any registered debts, such as bank loans or tax arrears. Both vendor and purchaser must be registered for Greek taxes before the purchase can proceed.
Most of the taxes and legal fees are based on the “objective value” of the property. This is the tax authorities’ assessment of the value of the property.
Nowadays, the objective value is calculated by the Notary, with a computerised valuation system. The objective value can be higher or lower than the actual sale price: if higher, then the objective value must be used to calculate the purchase taxes etc.
The Notary Public will calculate the taxes required, based on the objective value or sale price of the property, whichever is higher. These must be paid by the purchaser, and any tax debts paid by the vendor, at the appropriate tax office before the purchase contract can be signed. A tax receipt will be issued, which must be presented to the Notary public and is filed with the purchase contract.
Once your lawyer is satisfied with all the checks, the draft purchase contract can be prepared. The Notary Public will require “clean” title and the topographic plan before calculating the transfer taxes and drafting the purchase contract. From this stage up until final signing of the purchase contract, they may request further information until they are satisfied all is in order.
The day of purchase is often a lively affair, with the following people present at the Notary public’s office:
- the Notary Public
- you and/or your appointed lawyer with Power of Attorney
- the vendor (and usually several of their family)
- the vendor’s lawyer
- the surveyor/engineer
The Notary Public together with the lawyers, will read out the purchase contract, line by line, and cross-check various documents, including the title and topographical plan. The Notary Public may ask questions of the various people present, and may make telephone calls to check certain items.
Minor corrections to the draft contract are often made during this process, however if a major problem arises, the Notary Public will call a halt to the proceedings and ask for additional documents or signatures to be provided before re-convening on another day.
When the Notary public is satisfied that all is in order, the final purchase contract will be prepared, all necessary signatures made, and the relevant payments exchanged. At that point, the property is effectively yours.
You have good cause to celebrate – you now own your perfect home in Crete!
Following signing of the purchase contract, the Notary public must make copies of the contract (which will now contain title documents, topographic plan and tax receipts) and register the contract at the Land Registry. In practice, this usually happens about a week after completion of the purchase contract.
As a rule of thumb, we advise clients to allow around 10% of the actual purchase price for all purchase taxes and fees. The minimum cost is usually around €4,000, as follows:
- Taxes 3% without VAT
- Agency 2% (minimum of around €2,000) plus VAT
- Notary 1% (minimum of around €500) plus VAT
- Lawyer 0.5% (minimum of around €500) plus VAT
- Land Registry 0.475% (minimum of €15) without VAT