The purchase procedure

Buying a house step by step

The first stage in buying a property in Greece is usually the signing of a preliminary contract drawn up by agreement between both parties, usually in consultation with their lawyers.

The purchase procedure

Notaries can draw up a preliminary contract, although this is unusual. It’s also possible to go to a notary in Greece and have him draw up the final purchase contract without having a preliminary contract, but, when you’re paying a deposit (see below), it’s necessary to have a preliminary contract drawn up. Note that before signing a contract, it’s important to have it checked by a lawyer. One of the main reasons is to safeguard your interests by including any necessary conditional clauses in the contract.

Contracts are subject to a clear title being obtained and any necessary government permits. Builders, developers and estate agents often have ready-made contracts that are drafted to protect their own interests; these should be scrutinised by your lawyer. You should also instruct your lawyer to obtain the necessary permits and not leave it to an estate agent or developer. It’s sometimes possible to sign an option or reservation agreement, where you pay a small deposit to secure a property for a period, e.g. 30 days, while waiting for funds to arrive from abroad. This deposit is usually lost if you back out of the purchase.

Deposits

When you sign the preliminary contract for a new or resale property or a plot of land you must usually pay a deposit (see below). If you’re buying a resale or a new finished property (i.e. not off plan), you usually pay a deposit of 5 to 10 per cent when signing the contract (the percentage may be negotiable, but 10 per cent is normal), the balance being paid on completion when the final purchase contract is signed.

Deposits are refundable under strict conditions only, notably relating to any conditional clauses such as failure to obtain a mortgage. A deposit can also be forfeited if you don’t complete the purchase transaction within the period specified in the contract. If you withdraw from a sale after all the conditions have been met, you won’t only lose your deposit, but may also be required to pay the estate agent’s commission.

The contract can be cancelled by either party, the buyer forfeiting his deposit or the vendor paying the buyer double the deposit. However, in some cases, if one of the parties wishes to withdraw from the sale, the other party can demand that he goes through with it or that he receives compensation for damages.

WARNING
Always make sure that you know exactly what the conditions are regarding the return or forfeit of a deposit.

Note that many estate agents don’t have legal authority to hold money on behalf of their clients and that deposits should be kept only in a separate, bonded account. It isn’t wise to make out cheques for deposits or other monies in the name of an estate agent.

Tax File Number

All foreigners purchasing property in Greece require a Greek Tax File Number ( Arithmo Forologiko Mitro/AFM – known as the  ‘A-Fi-Mi). This can be obtained from the local tax office usually within a few days of application. Your lawyer or representative can obtain this for you. The AFM must be presented to the notary at completion and is recorded on the final purchase contract. You also need an AFM if you wish to apply for a mortgage.

Importing Funds

The origin of funds used to buy property in Greece must be declared to the Bank of Greece using an official import document, popularly known as the ‘ pink slip’. You should open a local bank account, through which all payments relating to the property purchase must take place (particularly if you’re paying in stages). Your bank should provide you with an import form (‘ pink slip’) for every transfer you have made from abroad. This will provide an accurate record of payments and show that they emanated from abroad.

Conditional Clauses

Contracts, whether for new or resale properties, usually contain a number of conditional clauses that must be met to ensure the validity of the contract. Conditions usually apply to events out of the control of either the vendor or buyer, although almost anything the buyer agrees with the vendor can be included in a contract. If any of the conditions aren’t met, the contract can be suspended or declared null and void, and the deposit returned. However, if you fail to go through with a purchase and aren’t covered by a clause in the contract, you will forfeit your deposit or could even be compelled to go through with a purchase.

Note that if you’re buying anything from the vendor such as carpets, curtains or furniture that’s included in the purchase price, you should have them listed in an inventory that is attached as an addendum to the contract. Any fixtures and fittings present in a property when you view it (and agree to buy it) should still be there when you take possession, unless otherwise stated in the contract. You should discuss with your lawyer whether conditional clauses are necessary.

There are many possible conditional clauses concerning a range of subjects, including the following:

  • Being dependent on obtaining a mortgage;
  • Obtaining planning permission and building permits;
  • Obtaining special permits from the local authorities, e.g. non-EU nationals wishing to purchase property close to Greek borders require official permission.
  • Being unable to obtain a residence permit;
  • Confirmation of the land area being purchased with a property;
  • Plans to construct anything, e.g. roads, railways, etc, that would adversely affect your enjoyment or use of a property;
  • Pre-emption rights or restrictive covenants over a property such as rights of way;
  • Dependence on the sale of another property;
  • Dependence on a satisfactory building survey or inspection.

Notaries can draw up a preliminary contract, although this is unusual. It’s also possible to go to a notary in Greece and have him draw up the final purchase contract without having a preliminary contract, but, when you’re paying a deposit (see below), it’s necessary to have a preliminary contract drawn up. Note that before signing a contract, it’s important to have it checked by a lawyer. One of the main reasons is to safeguard your interests by including any necessary conditional clauses in the contract.

Contracts are subject to a clear title being obtained and any necessary government permits. Builders, developers and estate agents often have ready-made contracts that are drafted to protect their own interests; these should be scrutinised by your lawyer. You should also instruct your lawyer to obtain the necessary permits and not leave it to an estate agent or developer. It’s sometimes possible to sign an option or reservation agreement, where you pay a small deposit to secure a property for a period, e.g. 30 days, while waiting for funds to arrive from abroad. This deposit is usually lost if you back out of the purchase.

Deposits

When you sign the preliminary contract for a new or resale property or a plot of land you must usually pay a deposit (see below). If you’re buying a resale or a new finished property (i.e. not off plan), you usually pay a deposit of 5 to 10 per cent when signing the contract (the percentage may be negotiable, but 10 per cent is normal), the balance being paid on completion when the final purchase contract is signed.

Deposits are refundable under strict conditions only, notably relating to any conditional clauses such as failure to obtain a mortgage. A deposit can also be forfeited if you don’t complete the purchase transaction within the period specified in the contract. If you withdraw from a sale after all the conditions have been met, you won’t only lose your deposit, but may also be required to pay the estate agent’s commission.

The contract can be cancelled by either party, the buyer forfeiting his deposit or the vendor paying the buyer double the deposit. However, in some cases, if one of the parties wishes to withdraw from the sale, the other party can demand that he goes through with it or that he receives compensation for damages.

WARNING
Always make sure that you know exactly what the conditions are regarding the return or forfeit of a deposit.

Note that many estate agents don’t have legal authority to hold money on behalf of their clients and that deposits should be kept only in a separate, bonded account. It isn’t wise to make out cheques for deposits or other monies in the name of an estate agent.

Tax File Number

All foreigners purchasing property in Greece require a Greek Tax File Number ( Arithmo Forologiko Mitro/AFM – known as the  ‘A-Fi-Mi). This can be obtained from the local tax office usually within a few days of application. Your lawyer or representative can obtain this for you. The AFM must be presented to the notary at completion and is recorded on the final purchase contract. You also need an AFM if you wish to apply for a mortgage.

Importing Funds

The origin of funds used to buy property in Greece must be declared to the Bank of Greece using an official import document, popularly known as the ‘ pink slip’. You should open a local bank account, through which all payments relating to the property purchase must take place (particularly if you’re paying in stages). Your bank should provide you with an import form (‘ pink slip’) for every transfer you have made from abroad. This will provide an accurate record of payments and show that they emanated from abroad.

Conditional Clauses

Contracts, whether for new or resale properties, usually contain a number of conditional clauses that must be met to ensure the validity of the contract. Conditions usually apply to events out of the control of either the vendor or buyer, although almost anything the buyer agrees with the vendor can be included in a contract. If any of the conditions aren’t met, the contract can be suspended or declared null and void, and the deposit returned. However, if you fail to go through with a purchase and aren’t covered by a clause in the contract, you will forfeit your deposit or could even be compelled to go through with a purchase.

Note that if you’re buying anything from the vendor such as carpets, curtains or furniture that’s included in the purchase price, you should have them listed in an inventory that is attached as an addendum to the contract. Any fixtures and fittings present in a property when you view it (and agree to buy it) should still be there when you take possession, unless otherwise stated in the contract. You should discuss with your lawyer whether conditional clauses are necessary.

There are many possible conditional clauses concerning a range of subjects, including the following:

  • Being dependent on obtaining a mortgage;
  • Obtaining planning permission and building permits;
  • Obtaining special permits from the local authorities, e.g. non-EU nationals wishing to purchase property close to Greek borders require official permission.
  • Being unable to obtain a residence permit;
  • Confirmation of the land area being purchased with a property;
  • Plans to construct anything, e.g. roads, railways, etc, that would adversely affect your enjoyment or use of a property;
  • Pre-emption rights or restrictive covenants over a property such as rights of way;
  • Dependence on the sale of another property;
  • Dependence on a satisfactory building survey or inspection.

Further reading

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