Recently, I had the opportunity to travel to Greece to attend a conference sponsored by FIABCI. This organization is the International Real Estate Federation founded in Paris in 1949. It links professionals in the real estate industry in a multi-lingual, multi-cultural, multi-disciplinary network around the world. FIABCI is the only international real estate organization with representation in the United Nations, and has over 5,000 members in 57 countries worldwide specializing in brokerage, appraisal, counseling, development, financing and management. 

The venue for the meeting this year was Athens, Greece. The city and local FIABCI organization were wonderful hosts and provided a week of great speakers and networking sessions. I have come back from this conference with great respect for the people and experiences which I had. The efforts Greece has gone to improve their city before the 2004 Olympics are still evident with the clean, efficient metro system, and the good signage throughout town.

Every occasion I have to learn more about real estate in another country, reminds me how delicate and important a process it is for a country to develop private real estate ownership. Greece is taking their real estate ownership into a public registry system, and this evolution will enable more people to safely own real estate. We often take for granted the fact that for centuries, land was owned by only a few and the majority of the population never had the ability or finances to own their “own piece of heaven.” Tenant use or rental of land was the only choice for the population who was forbade from owning outright. Serfs were actually chattel and a part of the land. We take for granted today that we are not bound to land we do not own. We are not “property” belonging to large land owner.

Let’s look at where Greece is now in its ability to offer private ownership.

RESTRICTIONS FOR FOREIGNERS ACQUIRING REAL ESTATE IN GREECE 

Certain areas qualify as frontier regions because they are of huge importance from a military or security point of view. A purchaser may acquire property, only if they hold official permission. Contracts entered into without such permission are treated as null and void. This reminds us of the fidecomiso trust in the restricted zone in Mexico.

Frontier areas with theses special restrictions include some of the Greek islands and other jurisdictions. The designated frontier areas may be changed by virtue of a Presidential Decree at anytime, and therefore, an interested purchaser should obtain advice before engaging into negotiations. Restrictions apply to Greeks and foreigners alike, but the procedures for lifting the restriction are different. It is important to use a specialized lawyer knowledgeable on the current applicable law.

Greece has been a member of the EU since l981. All EU citizens have equal rights concerning the purchase of property in Greece. Like Greek nationals, they should apply for the lifting of restrictions at the governments office in which the property to be purchased is situated.

Third party country nationals may also make applications to the Greek Ministry of Defense. These would be those countries eligible for property ownership, which are not part of the Economic Union Community.

OTHER GENERAL PURCHASE OR BUILDING RESTRICTIONS

Apart from the legal procedure mentioned above, there are numerous restrictions of acquisition and uses of real estate. These restrictions apply to both foreign and Greek citizens. These restrictions are implemented to protect common wellbeing and the public interest. These additional restrictions are not readily available to the general public, so you are advised to use a specified lawyer prior to starting negotiations for a purchase.

Because there is also a strong effort to protect the forest and monuments of historical value, as well as the fragile ruins of archaeological sites, these areas are off limits for real estate purchase. On the coastline and fresh water shores, no private ownership can be acquired. In Mexico, the government owns the beaches and ocean fronts. They are public areas.

BUILDING RESTRICTIONS

Land built upon which is adjacent to the seashore must be a minimum distance from the beach of 35 meters from the winter high tide line. Mexico has a measurement from the high tide line to establish where the private and public lands meet.

Building permits within a city jurisdiction allow access to a public street and utilities for hookup. Outside the city designated area, there is a requirement of a minimum size of land, in order for a party to be eligible for a building permit. As in our city of Puerto Vallarta, surface coverage is determined by coefficients as to maximum number of stories permitted, as well as the total amount of meters of coverage.

LAND REGISTRY SYSTEM IN GREECE

Greece is in the process of moving all real estate properties into a public registry system. There are now two Registries. This has not always been the case. There still exists a Registry of Mortgages, which is in reality, a registry of persons, not real estate. This Registry of Mortgages is contained in four books and the legal status of the real estate asset required is determined by going through all books to determine if there are mortgages, liens. Because the Registry of Mortgages enjoys no public confidence, it does not have the authority of the Public Registry. An investigation in the Registry of Mortgages examines only the typical compliance with the law and not the legitimacy or validity of the registrations made. This means that these registrations are not subjected to a legality test. Therefore, the purchaser may register a purchase deed also in those cases that the seller does not appear in the Registry of Mortgages as owner.

In Greece the law does not recognize that because a purchaser is buying in good faith, he has acquired the property, unless there is legal evidence that the seller is indeed the legal seller. An invalid property transfer contract cannot be remedied through registration with the Registry of Mortgages. Despite the existence of a validly notarized purchase, transfer deeds and registration thereof, no ownership of the property has been acquired, if the sellers was not the legal owners or he was legally hindered upon transfer. For this reason, the potential purchaser should be sure, through the assistance of a qualified lawyer, that the asset to be purchase is owned by the seller.

REAL ESTAE VALUES AS A CALCULATION OF REAL ESTATE TAXES AND FEES IN GREECE.

Greece uses two systems to compute real estate taxes, duties and fees. If the area is within city planning, a system is used of “objective values.” This value of the asset is calculated by the Tax Office using a standard method set by the state. This system uses criteria of the location and construction of specific real estate. Based on experience, this value set for tax purposes is 20-50% lower than the market value. The parties to the transaction, therefore, sometimes set the objective value as the purchase price in the transfer contract. This discrepancy between the contractually agreed price and the sale price may give rise to legal risks for the purchaser. In Mexico, a low deed not indicating the true sales price can be a legal risk for the purchaser, as well.

In the Greek countryside, where there is no city planning department, there is little ability to have a system of objective value set by the State. In theses cases, “comparative values” are used whereby the local tax authorities estimate the value of a real estate asset, taking into account values on past contracts of similar assets located close by or in the same area of the subject property.

In the case when the contractually agreed upon price is higher than the “objective “or “comparative” value of the asset, the former is used to calculate the basis for taxes and fees.

STEPS FOR SAFE ACQUISITION OF PROPERTY IN GREECE.

1. A LAWYER MUST REPRESENT YOU. 
   
   You need a lawyer to oversee the signing of a contract deed. It is required by law that purchases with a value over €29,000 euros in the areas of Athens and Piraeus obtain the services of a lawyer. The obligation to use an attorney applies to all other parts of Greece for transactions of €11,739 euros or more. 
   
   The Greek lawyer drafts the contract deeds and gives legal advice to the contracting party. If the asset is not yet included in the Land Registry system, the lawyer must conduct a factual search at the Registry of Mortgages to insure that the seller holds title to the property. If the seller has possessed the asset in good faith for over 20 years the record, he has gained original ownership.
   
   The lawyer must also make sure that the property is unencumbered and free of liens and mortgages. The lawyer has to determine if the construction has received lawful building permission and if all real estate taxes have been paid. The lawyer often plays a significant role in negotiating the transfer.
    

2. TAX REGISTRATION NUMBER.
   
   It is necessary for foreigners and Greek citizens alike to acquire a Tax Registration Number.
    

3. TRANSFER FEE
   
   The real estate transfer tax is paid by the purchaser. The rate is currently set for 9% for values up to €15,000 euros and 11% for an excess above. If there is no fire brigade service, the rates are lowered to 7% and 9% respectively. A surtax amount to 3% shall also be levied. Transfer of Mexican real estate also involves a tax of approx. 2% of the sales price. There is a scale, which the notary will follow to establish the exact amount of transfer tax to be paid by the buyer in Mexico.
   
   There are cases of principal residences being eligible for tax waivers. This exemption can also apply to Greek citizens living aboard if they meet certain criteria. There are also tax breaks for persons entrusted with parental care of minor children.
    

4. PUBLIC NOTARY
   
   The public notary function and duties are limited in Greece to the respective transaction. The lawyers for the contracting parties usually suggest a notary of their preference and trust.
   
   Notary fees are set also, and currently the amount is 1.2% of the total transaction value. The amount collected is paid into a Jurists’ Fund and Notaries Social Security Fund. Another fee may be charged related to the size of the documents. Notaries in Jalisco and Nayarit have fees for their services, which may vary some, and there are set fees for documents and appraisals. The state sets some of these fees, and the Office of Foreign Registry Permits in Mexico City has a specific fee for the cost of fidecomisos for foreign purchasers.
    

5. SIGNING OF THE PURCHASE AND TRANSFER DEED
   
   Purchase and transfer contracts require notarization; otherwise they are null and void without possibility of remedy. For the notarization of a purchase deed, a number of formal documents are required, including paid tax statements, planning permission, in addition to a statutory declaration by the seller that he has not made a profit of the sale of the property in the two prior fiscal years. Mexican real estate law also has procedures for notarization to formal the legality of documents.
   
   A foreign purchaser or Greek citizen living out of Greece can handle the notary requirements at the Greek Consulate in that particular country. There are no chargeable fees for this service. There is usually a fee to use the Mexican Consulate, if you need to sign documents related to a sale or purchase, but their office and authority are available to you if you are not in Mexico itself.
   
   Each contracting party can also give authority to another person as their representative with a Power of Attorney. This POA must be specific and if a foreign notary is involved in the documents, an “Apostille” form must accompany the POA. The apostille certifies the legality of the notary public in the state where the principal giving the POA resides.
    

6. FORMAL REGISTRATION
   
   The notarized contract for transfer of property can only be effective if it is registered with the Registry of Mortgages or the Land Registry. This registration becomes the transfer of ownership. In Mexico, when a deed or agreement is notarized and filed in the public registry, it is in force and recognized legally.
    

7. ONGOING PROCESS
   
   When a region is taken out of the system of Registry of Mortgages and put into the Land Registry system, existing property owners are required to declare their property rights within a specific deadline. The declaration costs amount to €20 euros per property right entitled to registration. The rights declared shall be verified to determine their legality. This declaration and filing of property rights on real estate assets in the new Land Registry system is a prerequisite for the completion of property transactions and granting of planning permissions. Mexico gave owners of real estate a time in the past, to enter their properties into the public registry. If they did not by a certain deadline, they would not be recognized as owners of the property.
   
   Greece has developed their own system to handle the transition of private contracts to a public registration to protect the public. Mexico had to do this also, by creating a public registry and changing to law to recognize publicly registered deeds over private ones. The majority of private contracts which gave title to property as “gifts,” were ended. Persons had a period of time to declare their proper ownership in the land. The private system of avoiding government scrutiny taxes was abolished.
    

Information for this article has been provided by Dimitris Ziouvas, Attorney at Law, Ziouvas and Partners.

Harriet Cochran Murray

This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller conduct his own due diligence and review.