Have a Lawyer Review The House Purchase Contract

Benefits of having an experienced lawyer review a purchase agreement

Given the complexities of real estate transactions in Greece, legal guidance can ensure that your interests are protected and that the transaction proceeds smoothly.

The following are some of the key benefits of having a Greek real estate lawyer review your purchase agreement.

1- Due Diligence on Property Ownership and Title

When buying property in Greece, one of the most important steps is to verify the ownership and status of the title. The expertise of an attorney will ensure that you are buying from the rightful owner and that the property is free of legal encumbrances such as mortgages, liens or third party claims. These encumbrances, if not discovered, could result in significant financial loss or litigation long after the purchase is complete.

An attorney will conduct a thorough title search at the Greek Land Registry or Cadastre, reviewing the legal history of the property. This process uncovers any hidden problems, including pending lawsuits, inheritance disputes or conflicting claims to the property. By ensuring that the seller has clear and undisputed title, your lawyer will protect you from costly mistakes and give you confidence that the property’s title is secure.

2- Ensure compliance with Greek law

Greek property law can be complicated, especially for foreign buyers who may not be familiar with local legal requirements. An expert lawyer familiar with Greek law will ensure that the purchase agreement complies with all national and local laws, reducing the risk of future legal problems. In addition, some regions of Greece, particularly border areas or islands, have specific restrictions on foreign ownership, and your lawyer will ensure that your purchase complies with these rules.

By navigating these legal complexities, your lawyer will protect your investment. Whether it is ensuring that the construction of the property complies with local building codes or making sure that you are in compliance with tax obligations, an attorney’s involvement will ensure that you are in compliance with all legal requirements. This legal oversight can prevent you from inadvertently violating local laws, which could result in penalties, lawsuits, or even the invalidation of your purchase.

3- Clear contract terms and risk protection

In any real estate transaction, the purchase agreement forms the basis of your legal relationship with the other party. An attorney will ensure that the contract is clear, precise and contains all the necessary provisions to protect your interests. Attorneys are trained to identify vague or unfavorable terms that may expose you to unnecessary risk. For example, they will make sure that key clauses regarding payment schedules, property conditions, and deadlines are clear and enforceable.

Without legal expertise, you may overlook critical terms or misunderstand the implications of certain clauses. An attorney not only reviews the terms, but also negotiates on your behalf to ensure that contingencies – such as financing approval, property defect resolution, or zoning approvals – are part of the agreement. This level of detail ensures that you are not left vulnerable should something go wrong, such as hidden defects or the seller defaulting.

4- Tax and financial advice

Buying or selling property in Greece comes with various tax obligations, from property transfer tax to potential capital gains tax. An attorney can provide essential advice on how to navigate these financial obligations. Without proper guidance, you may face unexpected costs or miss out on potential tax breaks or deductions. For example, an attorney will calculate the real estate transfer tax (usually a percentage of the purchase price) and ensure that it is paid promptly to avoid penalties for late payment.

In addition, an attorney can help you plan the financial aspects of your transaction. This could include advising you on the best way to transfer funds from abroad to comply with Greek banking regulations, or explaining how property ownership affects your overall tax situation. If structured properly, your attorney can help you minimize tax liabilities by advising you on ownership options, such as buying in joint names or through a legal entity. This financial foresight is critical, especially for foreign buyers unfamiliar with the Greek tax system.

5- Avoid scams and fraud

Real estate scams, while not rampant, can occur in Greece, especially in high-demand areas such as islands or tourist hotspots. Having an attorney is a safeguard against falling victim to these schemes. An attorney’s due diligence extends beyond legal documents; they will also verify the legitimacy of the seller and the accuracy of the property’s description. In some cases, scammers have attempted to sell properties they don’t own or have misrepresented crucial aspects of a sale, such as the legal status of the property or the true dimensions of the lot.

By scrutinizing the transaction, your attorney can spot these red flags early in the process, preventing you from losing your deposit or becoming embroiled in litigation. They also ensure that all payments are made through secure, verifiable channels, further reducing the risk of fraud. Their vigilance ensures that your investment is safe and that you’re not getting involved in a fraudulent or high-risk transaction.

6- Guide to Greek bureaucracy

The bureaucracy involved in buying property in Greece can be daunting, especially for non-Greek speakers.The purchase process involves several steps, including registering the property with the Land Registry or Cadastre, obtaining necessary building permits, and ensuring compliance with local building regulations. Navigating these procedures alone can lead to delays or even legal problems if something is overlooked.

An experienced attorney familiar with these bureaucratic requirements can streamline the process and guide you through each necessary step.They will coordinate with notaries, tax authorities and other government agencies to ensure that all paperwork is filed correctly and on time. They will also help you secure any permits or certificates that may be required for the sale, such as proof that the property is zoning compliant. With their help, you can avoid unnecessary delays and ensure that the sale proceeds efficiently.

7- Representation in the event of a dispute

Even with thorough due diligence, disputes may arise before or after the purchase. If there is a disagreement with the seller over issues such as the condition of the property, undisclosed defects, or compliance with the terms of the contract, having an attorney already involved in the process is invaluable. They will be familiar with the specifics of your case and can step in to negotiate or represent you in court if necessary, ensuring that your rights are protected.

Your attorney can also help mediate disputes and avoid costly litigation by reaching out to the other party’s legal team. Whether it’s resolving disagreements over payment terms, property defects, or post-sale agreements, legal representation ensures that your interests are defended and issues are resolved efficiently and fairly. In more serious cases where legal action is inevitable, having an attorney on board means you are prepared for a swift and organized defense.

8- Ensure a smooth transaction

A real estate transaction involves many parties – real estate agents, notaries, tax offices and the seller’s representatives. Without legal guidance, coordinating these parties can be difficult, and mistakes or delays can occur. By hiring an attorney, you can ensure that the transaction stays on track by having an attorney handle communication between all parties and ensure that all required documentation and payments are completed on time.

The involvement of an attorney significantly reduces the chances of unexpected delays or disputes during the sale process. They will ensure that deadlines are met, contracts are signed on time, and all legal and financial conditions are properly met. This helps you avoid unnecessary stress and ensures that the entire transaction, from initial negotiations to final registration, goes as smoothly as possible.

9- Protection of deposits

In Greece, a deposit is usually required once a preliminary purchase agreement has been signed. This deposit, usually around 10% of the total purchase price, is at risk if the terms are not properly outlined in the contract. Your lawyer will ensure that the conditions under which the deposit is refunded or forfeited are clearly defined, protecting you from losing a significant amount of money if the deal falls through.

In addition, if problems arise and the seller defaults on the contract, your lawyer can take legal action to recover the deposit or ensure that it is applied to future costs. This added level of protection gives you peace of mind knowing that your deposit is protected under clear legal terms and that you will not be unfairly penalized if something goes wrong with the transaction.

10- Peace of mind

Perhaps one of the greatest benefits of having an expert lawyer involved in your real estate purchase is the peace of mind it provides. Buying property, especially in a foreign country like Greece, can be a complex and stressful process. With the legal complexities, bureaucratic hurdles and potential risks involved, having a knowledgeable attorney handling the details allows you to proceed with confidence, knowing that all aspects of the transaction are being thoroughly managed.

Your attorney will take on the burden of ensuring that the transaction is legally sound, protecting you from future liabilities, and making sure that you are informed of every step. This peace of mind allows you to focus on the excitement of your new property, rather than worrying about legal pitfalls or unforeseen complications. In the long run, having a trusted legal advisor will ensure a smoother process and greater security for your investment.

Problems that can arise with a house purchase contract

A number of problems can arise in a house purchase contract in Greece for both the buyer and the seller, ranging from legal and financial issues to miscommunication and breach of contract. These challenges can complicate or delay the transaction, and in some cases even result in litigation.

Below are the main issues that both parties may face.

Problems for the Buyer

• Title issues and title disputes: One of the most significant risks for buyers is discovering after the purchase that the seller does not have clear title to the property. This can occur if the seller has incomplete documentation proving ownership, if the property is involved in a family inheritance dispute, or if there are unresolved claims or pending lawsuits by third parties against the property. Such issues can prevent the buyer from obtaining full and undisputed title, potentially resulting in protracted litigation or financial loss.
• Encumbrances and liabilities: Buyers may also face problems with undisclosed encumbrances on the property, such as mortgages or loans secured by the property. Without proper due diligence, these liabilities could become the buyer’s responsibility after the sale, resulting in unexpected financial burdens.
• Non-compliance with building or zoning regulations: Many properties in Greece, especially older or rural properties, may not comply with current building or zoning regulations. Buyers may later discover that the property has unapproved additions or illegal structures that require fines or demolition, or that the use of the property (residential, commercial, etc.) is restricted by zoning laws, preventing the buyer from using the property as intended. Correcting these issues can be costly and may delay the buyer’s plans for the property.
• Financial and tax implications: Buyers unfamiliar with the Greek property tax system may face unexpected tax obligations, such as overpayment of property transfer taxes due to incorrect calculations.
• Delays in completion or delivery of the property: Delays can occur for a variety of reasons, including problems obtaining necessary permits, outstanding obligations of the seller, or legal disputes. These delays can prevent the buyer from taking possession of the property as agreed, lead to additional costs such as extended rent payments or interest on loans, and cause frustration if the property is intended for immediate use, such as a vacation home.
• Breach of contract by the seller: The seller may fail to fulfill his or her obligations under the purchase agreement, such as failing to vacate the property by the agreed-upon date, failing to make promised repairs or resolve legal issues, or providing false or misleading information about the property’s condition or legal status. These breaches can lead to costly disputes and may require legal action to resolve.

Problems for the Seller

• Buyer Financing and Payment Issues: One of the most common problems for sellers is when the buyer has difficulty securing financing. If the buyer is unable to obtain a mortgage or raise the necessary funds, it can delay the closing of the sale and even force the seller to put the property back on the market, potentially losing time and value. Disputes over the buyer’s earnest money deposit are also common if the terms of the contract regarding financing are unclear or not properly followed.
• Buyer breach of contract: The buyer may fail to comply with the terms of the contract, such as failing to pay the agreed deposit on time, failing to complete payment by the agreed deadline, or failing to obtain necessary permits or approvals in a timely manner, causing delays. Such breaches may entitle the seller to claim damages or retain the buyer’s deposit, but pursuing legal remedies may be time consuming and costly.
• Tax liabilities and financial miscalculations: Sellers may face unexpected tax liabilities or financial complications, such as capital gains taxes, which may be higher than expected if the property has appreciated significantly. In other cases, there may be estate or transfer tax issues if the seller inherited the property or if the title was previously unclear. These financial issues can reduce the seller’s net gain from the sale and complicate the transaction if not resolved early.
• Disputes over the condition or defects of the property: The seller may face claims from the buyer regarding the condition of the property, such as hidden defects or problems with the structure, plumbing or electrical systems that were not disclosed during the negotiation phase. Such disputes can lead to legal challenges, delays and potential claims for damages and compensation or repairs if the buyer discovers significant defects after the transaction closes.
• Regulatory or Legal Challenges: Sellers may face challenges related to the legal or regulatory status of the property. For example, the property may have unresolved zoning issues or non-compliance with building codes that must be resolved before the sale can proceed; disputes over the exact boundaries of the property or access rights may also arise, complicating the transaction. These legal or regulatory obstacles can delay the sale, reduce the value of the property, or even prevent the transaction from going through.

Key Points of The Purchase Agreement Important to Sellers

For sellers in a real estate transaction in Greece, several key points in the sale and purchase agreement are particularly important as they directly affect their rights, obligations and financial security.

By ensuring that these key points are addressed in the purchase agreement, sellers can protect themselves from financial risks, legal liabilities and potential delays, ultimately facilitating a smoother, more secure transaction.

A well-drafted purchase agreement can protect the seller from litigation, ensure timely payment, and clearly define the terms under which the property is transferred.

Here are the key elements that sellers should prioritize.

Payment Terms and Security

Payment terms are critical to sellers because they determine how and when the seller receives the full purchase price. A strong purchase agreement will clearly outline

• Total purchase price: The agreement must state the exact amount the buyer will pay for the property. This includes clarifying whether the price includes taxes, fees, or other additional costs.
• Payment schedule: Typically, the buyer will pay a deposit upon signing the preliminary purchase agreement, followed by the balance at closing. Sellers must ensure that the payment schedule is feasible and protects them from unnecessary delays.
• Financing contingencies: If the buyer is obtaining a mortgage, the seller should ensure that the purchase agreement includes a clear deadline for approval of the financing. That way, the seller won’t have to wait indefinitely if the buyer’s financing falls through.
• Bank guarantees and secure payments: Sellers can include provisions to secure the final payment, such as using an escrow account, a bank guarantee, or ensuring that payments are made through reputable financial institutions. This helps reduce the risk of non-payment.

Deposit clauses and remedies for breach

A deposit is usually paid by the buyer at the time of signing the purchase agreement. For the seller, it is important that the contract specify the conditions under which the deposit will be forfeited or returned. Important points include

• Forfeiture of the deposit: The seller should ensure that the contract allows the seller to retain the deposit if the buyer breaches the contract or fails to complete the purchase without valid legal justification.
• Termination clauses: The agreement should clarify what happens if the buyer defaults or fails to meet contractual obligations (e.g., securing financing or completing payment by a certain date). These provisions should clearly give the seller the right to terminate the contract and retain the deposit.

Conditions for delivery of the property (Handover of Keys)

Sellers must define the conditions under which the property will be delivered to the buyer. This is especially important to avoid misunderstandings or legal disputes later. Key terms to include are:

• Time of delivery: The purchase agreement should specify the exact date or conditions under which the seller must hand over the keys and vacate the property. Typically, this is upon completion of the final payment.
• Possession and use: The seller retains the right to use the property until the transaction is complete. The agreement should protect the seller in the event of delays or problems with the buyer’s financing or legal approvals, and ensure that the seller is not forced to vacate the property prematurely.
• Final condition of the property: Sellers should clearly state the condition in which the property will be delivered (e.g., whether the property will be vacant, furnished, or include certain fixtures). This will help avoid disputes over what items are included in the sale or what repairs or improvements are expected.

Disclaimers for property defects

To protect themselves from post-sale disputes, sellers should include disclaimers or warranties regarding the condition of the property. This can help protect them from future claims or demands by the buyer regarding defects in the property:

• As-Is Condition: The seller may include a clause stating that the property is being sold “as is,” which means that the buyer accepts the property in its current condition without any obligation on the seller to make repairs or improvements, unless specifically agreed otherwise.
• Disclosure of known defects: In some cases, Greek law requires sellers to disclose certain known defects. Sellers should ensure that they comply with these disclosure requirements while limiting their liability for any undisclosed defects or problems that were not known at the time of the sale.
• Limitation of liability: Sellers can include disclaimers that limit their liability for structural or latent defects that become apparent after the sale. This protects them from potential lawsuits where the buyer seeks compensation for issues such as faulty plumbing, wiring, or structural integrity.

Transfer of title and legal obligations

The purchase agreement must clearly outline the process for transferring ownership of the property and address the seller’s obligations leading up to the sale:

• Clear title warranty: The seller must warrant that he or she has the legal right to sell the property and that the title is free of any encumbrances, such as mortgages, liens, or third-party claims. Ensuring that the title is clean and that all debts have been paid is crucial to avoiding post-sale legal challenges by the buyer.
• Property taxes and fees: The contract should specify that the seller is responsible for paying all taxes and city fees owed up to the date of transfer. Any outstanding property taxes, utility bills, or other fees must be paid before or at the closing to prevent the buyer from being saddled with the seller’s past obligations.
• Transfer costs: In Greece, notary fees, land registry fees and taxes related to the sale can be substantial. The contract must clarify which party is responsible for paying these fees. While the buyer usually pays most of the transaction costs, the seller may agree to pay certain amounts depending on the negotiations.

Timelines and Deadlines

Clear timelines for each step of the transaction are essential to protect both parties and ensure that the process moves forward without undue delay. For the seller, it’s important that the agreement includes:

• Closing date: The agreement must set a specific date for the final closing of the sale to ensure that all payments, document signings, and title transfers occur on or before that date.
• Contingencies: If the buyer’s purchase is contingent on certain conditions, such as obtaining financing, the seller should ensure that there are clear deadlines for these contingencies. If the buyer fails to meet these deadlines, the seller should have the right to terminate the agreement or seek compensation for delay.

Force majeure and contingency clauses

Unexpected events can delay or disrupt the sale process. Including force majeure clauses can protect both parties, but the seller must ensure that the agreement is balanced:

• Force Majeure Events: The agreement should define what constitutes a force majeure event (e.g., natural disasters, political instability, or pandemics) and outline what happens in such cases. This can protect the seller from claims by the buyer if the transaction is delayed for reasons beyond the control of either party.
• Remedies for Delays: The agreement should outline specific remedies if the buyer causes unnecessary delays, such as penalty payments or forfeiture of the deposit. This helps to ensure that the seller is not left in limbo if the buyer is unable or unwilling to complete the transaction on time.

Dispute Resolution Mechanisms

The purchase agreement should include provisions for resolving any disputes that may arise before or after the sale.

• Jurisdiction and governing law: The agreement specifies that Greek law governs the transaction and defines the jurisdiction (usually local Greek courts) where any disputes will be settled.
• Alternative dispute resolution: Sellers may also want to include a clause requiring mediation or arbitration in the event of a dispute, as this can be a quicker and less expensive alternative to litigation.

Key Points in the Purchase Agreement Important to Buyers

For buyers of real estate in Greece, the purchase agreement is a crucial document that not only sets out the terms of the transaction, but also protects their financial and legal interests.

The purchase agreement must carefully address several key points to protect their interests and ensure that the transaction proceeds smoothly. These points range from verifying the legal status of the property to ensuring that all contractual obligations are met by the seller.

By paying attention to these key points and working closely with a legal professional, buyers can protect their investment and ensure a smooth real estate transaction in Greece.

Here are some of the most important elements buyers should focus on in a purchase agreement.

Verification of clear title and encumbrances

One of the most important aspects of the purchase agreement is ensuring that the property has clear title and is free of any legal claims, liens or encumbrances. Buyers must verify that:

• The seller is the legal owner: The contract should confirm that the seller has clear title to the property, backed by official documentation. This usually involves a thorough title search through the Greek Land Registry or Cadastre, confirming that no one else has a legal claim to the property.
• No outstanding mortgages or liens: The property must be free of mortgages, tax liens or other financial obligations that could affect the buyer’s ownership. The contract should include a clause requiring the seller to provide proof that any such encumbrances have been removed before the sale closes.
• Seller’s Declaration: It is advisable that the contract include a statement from the seller confirming that the property is free of any litigation, restrictions or third-party claims. This will protect the buyer from any future title issues.

Description of the property and what is included in the sale

A detailed description of the property and all items included in the sale is critical for buyers to avoid misunderstandings.

• Physical description: The contract should clearly define the exact size, location, boundaries, and any additional structures (such as garages, swimming pools, or outbuildings) of the property. The property must match the description in both the contract and public records.
• Fixtures and fittings: If the buyer expects certain items (such as kitchen appliances, built-in furniture or air conditioning) to be included in the sale, they should be specifically listed in the contract. If the seller intends to remove any fixtures, this should also be specified.
• Land and easements: If the property includes land (such as gardens or agricultural land), the contract must specify the exact size and legal use of the land, especially if there are any zoning or land use restrictions.

Assurance of property condition and disclosure of defects

Buyers must ensure that the property is in the condition expected and free of any undisclosed defects. The contract should include:

• Property condition and defects: The seller should make representations about the condition of the property, particularly regarding any structural problems, plumbing, electrical systems, or compliance with building codes. The contract may include a clause requiring the seller to disclose any known defects. If the buyer is aware of significant defects prior to the sale, these should be outlined in the contract to avoid future disputes.
• Inspection contingencies: It is often wise to include a contingency that allows the buyer to conduct a professional inspection. If the inspection reveals major problems, the buyer can negotiate repairs or possibly walk away from the deal without penalty.
• Warranties or repairs: The buyer can also negotiate warranties from the seller, especially for newer properties, or require the seller to make repairs before the sale closes.

Establish a clear delivery date and possession terms

The purchase agreement should specify when the buyer will take possession of the property:

• Delivery date: The agreement should include a specific date for delivery of the property and keys. This ensures that the buyer knows exactly when they will have full access and possession of the property. The delivery date is usually tied to the completion of the final payment.
• Occupancy status: The contract should specify whether the property will be vacant at the time of delivery. If tenants are occupying the property or if the seller needs additional time to vacate, these terms should be clearly stated, including any rent or compensation the seller may pay for continued occupancy.

Contingencies and conditions precedent

Buyers should ensure that the purchase agreement contains contingencies that allow them to terminate the agreement or renegotiate the terms if certain conditions are not met. Key contingencies may include:

• Financing contingency: As mentioned earlier, buyers can include a contingency that allows them to back out of the purchase if they are unable to secure a mortgage or other financing by a certain date.
• Inspection or survey contingency: If a survey or inspection reveals problems with the property (e.g., boundary disputes, structural defects, or zoning issues), the buyer may have the option to renegotiate the price or cancel the purchase without penalty.
• Permits and legal approvals: If the property requires additional legal approvals or permits, the buyer can include a contingency that ensures the purchase can be delayed or canceled if the necessary documentation is not provided. This is especially important in areas with complex zoning or land use regulations.

Legal protection and dispute resolution

Buyers should protect themselves by including provisions that outline how any disputes will be handled:

• Governing law and jurisdiction: The agreement should state that Greek law governs the transaction and specify which courts have jurisdiction over any disputes. This will ensure that both parties are clear on how any disputes will be resolved.
• Dispute resolution mechanism: To avoid lengthy court battles, the agreement can include a clause requiring mediation or arbitration in the event of a dispute. These alternatives may provide a quicker and less expensive resolution.