Real Estate in Greece the Research Proposal

(Economou and Trichias, 2009)

Remuneration is stated to be as follows for each of these actors:

(1) real estate brokers -- Commission based on percentage of the transaction value;

(2) lawyers -- Commission based on percentage of the transaction value;

(3) Notaries -- Commission base don percentage of the transaction value;

(4) Civil Engineers -- According to specific regulations, taking into account elements of the property in question; and (5) Constructors -- percentage of the land. (Economou and Trichias, 2009)

Minimum required formalities for real estate sale and purchase are stated to be those as follows:

(1) payment of taxes related to the transfer in the Tax Office of the District where the real estate is situated;

(2) obtaining a Good Standing Tax Certificate and declarations of the Seller regarding the real estate's income and its inclusion in the previous two years tax returns to be attached in the notarial deed (Article 81 of Law 2238/94 as amended by Article 26 of Law 3220/2004 and 32(2) of Law 2459/97;

(3) Drafting and signing of a notarial deed (Article 1033 of the Greek Civil Code); and (4) Registration of the above deed with the Land Registry of the district where the real estate is situated. (Economou and Trichias, 2009)

It is reported that after all parties are satisfied with the purchase price that the paperwork must meet legal compliance and then an offer can be made to the lawyer representing the property owner and upon acceptance a pre-contract agreement is executed which outlines "…the names of the two parties involved in the transaction, the contents of the property, demographic plans, boundaries, selling price and payment schedules. A purchasing deposit of 10% of the costs of the selling price in Greece secures the property in your name. It is important to note that under Greek law if the purchaser for any reason terminates the pre-contract agreement after the deposit is paid and accepted then the 10% deposited money is forfeited. In the case of the vendor terminating the pre-contract, then the original deposit is repaid plus an indemnity to the value of the original deposit amount." (the Greek Property Society Lawyers, 2009)

Additionally reported is that the purchaser needs the representation of a lawyer for the purpose of acting on their behalf and for providing support "…with the Local Regulations fixing the "assessed value" of the property or land and more importantly, securing the property title deeds. The lawyer representing the purchaser must carryout searches with the Land Registry confirming property title ownership and that the titles are clean for selling, prior to the final contract being signed." (the Greek Property Society Lawyers, 2009)

It is reported that the "…final exchange takes place at the office of the Public Notary with the two lawyers representing vendor and seller. The Notary is not authorized to permit any sale of a property if all the presented documents of ownership including deeds and tax papers are not in order. Always insist all papers are correct before seeing the Notary. Purchasing a property in Greece requires a tax registry number which is issued by the Inland Revue Services. This tax number is also valid for your own personal taxes as all transactions require a tax number in Greece. The property taxes owed by the seller have to be paid in full to the local Inland Revenue Service prior to the completion of a property transaction. Copies of the title, and a certificate from the Registry of Mortgages are required to register the property under the buyer's own personal name at the office of the Land Registry. If the land registry is not in operation within a province where the property is being purchased ownership of property can be registered with the local Registry of Mortgages. The lawyers then secure the property by registering ownership with the Register of Mortgages. A fee of 0.5% of the value of the property is payable. Always make payments on time to avoid delays." (the Greek Property Society Lawyers, 2009)

IV. MARKET STRUCTURE

The work of Cruz (2008) entitled: "Housing Transactions Costs in the OECD" states "In Greece, EU nationals can freely purchase property, while there are few restrictions for non-EU nationals. Acquiring property near national borders and in some islands requires special permission from the Local Council. Such permission is not granted to non-EU nationals." (Cruz, 2008) it is reported that as of June 17, 2008, "the cadastral survey procedure commences in 107 new regions of Attica and Thessaloniki prefectures and the capitals of prefectures that have not been surveyed during previous programs. Citizens who have real estate property in these regions are asked to declare it to the Hellenic Cadastre from June 17th until October 31st 2008, while expatriates and people living permanently abroad can declare their real estate property until December 30th 2008." (the Hellenic National Cadastre, 2008)

The market structure of the Greek real estate market is therefore understood as "The Hellenic National Cadastre" which is characterized by the following:

(1) to definitely secure, without a doubt, the real property of the citizens

(2) to irrevocably adjudicate the state and municipal property, the forests and the coastal zones

(3) to limit bureaucracy and simplify the real property transactions

(4) to improve the protection of the environment by limiting encroachment and unauthorized development of land

(5) to establish an absolutely secure environment for investments in the real estate market. (the Hellenic National Cadastre, 2008)

The previous Mortgage Bureaus system has been transitioning since 1994 to the fully digital Cadastral System. This system was designed "as a parcel-based land information system, serving as a legally recognized record of land ownership." (Dimopoulou, Labropoulos, Nikolaidou, and Zentelis, 2003)

It is reported that the previous Registrations and Mortgages System in Greece "operated under the French-originated system of registrations and mortgages. Each personal record lists all the real property transactions performed by a single person in a given area (person-centered system). The institution of the registrations and mortgages system ensures the publicity of the registrations, but it does not provide legal security of the registered ownership rights. Because the system is organized around the persons, it does not offer the capability of identifying the owner of a particular real property which is observed in the field." (the Hellenic National Cadastre, 2008)

Stated to be problems with the previous system are the problems listed as follows:

(1) the lack of legal titles of a great number of properties;

(2) the government does not know its real estate assets;

(3) the lack of legal security in real estate transactions;

(4) the intense migration from the rural and mountainous areas which caused many properties to be abandoned, forgotten, encroached or disputed

(5) the difficulty to locate land parcels in rural areas; and (6) the existence of customary ownership rights in specific areas of the country. (the Hellenic National Cadastre, 2008)

It is further stated that certificates will be delivered during the first semester of 2008 to those who are real property owners or those who "…have other registrable in the Cadastre rights in the Municipalities in which the cadastral survey has been completed and the Cadastral Office is already operational. These certificates will represent the content of the first inscriptions that have been registered in the respective Cadastral Sheet of each property" so that the completeness and correctness can be attested to and in the case of an error there will be a requirement of submission of an application to correct the error at the competent Cadastral Office. (the Hellenic National Cadastre, 2008)

The work of Lainiotis (2007) entitled: "Important Tax Changes in the Greek Property Market" reports that the Ministry of Finance, as of March 1, 2007 "…implemented an increase in tax values for all real property located in Greece. Prior to March 1st, 2007 tax values for real-estate in Greece did not reflect market/sales values."

Lainiotis reports that the "…differential between tax values and market/sales values ranged from an astonishing 10% to 1,000 +%" which is dependent upon the following factors:

(1) a property's location and (2) whether a property is located within or outside of the planning zone. (Lainiotis, 2007)

Lainiotis reports that this discrepancy in tax and market values "…was predominantly the result of a significant increase in real estate values in the last 8 years." (2007) Lainiotis additionally reports that the plan of the Greek Government to bring about equalization in the tax and market values of real estate is a two-year plan and the Ministry of Finance announced that…