The grey zone of real estate market in Greece – S1 2023

The grey zone of real estate market in Greece - S1 2023

In recent months, most of real estate lawyers in Greece _and more specifically in areas where the market is tense, such as Athens and some of the islands where there is mass investment_ are facing difficulties regarding the ongoing demand for investment and the scarcity of quality properties under 100,000 euros. Indeed, certain areas such as Pagrati or Kolonaki, which are victims of their popularity, are now considered to have reached saturation point at this budget. In fact, the remaining available and accessible properties are essentially those that several months ago were considered unsaleable or unworkable: small areas, basements, semi basements, ground floors, blind flats, flats that do not conform or have construction irregularities. The attractiveness of selling unfit properties to foreigners with little regard for housing needs is a trend that is intensifying. The difficulty for legal professionals, in charge of the legal part of the transaction, to finalize the transaction under these conditions is part of this trend. The conditions mentioned refer mainly to properties that do not meet the following requirements:

  1. Regulatory and technical :
  • Goods with defects or malfunctions that do not allow the digital ID of the property to be issued, due to previous engineers wrongdoings.
  1. Administrative :
  • Property mortgaged to a lending institution such as a bank,
  • Property financed by outstanding bank loans, especially those in the process of being foreclosed,
  • The accounting situation of the seller who has not fulfilled the payment of his various taxes.

The impact of technical issues and regulatory deficiencies

Some (administrative) deficiencies can be discovered at the stage of the legal check at the land registry office, i.e., upstream of the procedure, others, such as technical and regulatory deficiencies, can only be discovered after the legal check. Depending on the quality of the service provided to the client, and the experience of the lawyer, notary, engineer and accountant working together, certain situations may be discovered late, which in the worst case may result in either the cancellation of the sales contract or delays in concluding the contract. This is not to mention the potential difficulties in registering the newly acquired property with the local authorities after their due diligence. As a result, the property can neither be sold nor purchased, at least not legally.

And it is based on this prior explanation that, apart from properties with difficulties, unsuitable properties are available on the Greek property market, ideally offered to foreigners who are poorly represented by their lawyers, or who choose to take the first steps without a legal professional to advise them in the knowledge of the aforementioned vicissitudes. The result is a substantial loss to the client, both in terms of time and money, and difficulties for the honest lawyer to provide his or her services and see the case through.

Basic traps

The fraudulent actions of estate agents, notaries or even lawyers who organize or facilitate this fraud is a reality that must be prevented because of the current crisis in the market for the sale of properties under 100,000 euros. Even more so if we consider that the typical profile of the vulnerable investor meets (or accumulates) the following criteria :

  • Uninformed, isolated individual with no local contacts,
  • Seeking to invest a sum corresponding to the lowest segment of the average investment,
  • Whose belief is that they can make a profit by using unofficial, undeclared intermediaries (opaque or underground networks),
  • Having been co-opted by strangers from professionals whose existence or activity it is impossible to verify,
  • Wishing to drive down the prices of professionals at the risk of meeting professionals whose quality of service is also poor or even nonexistent.
  • Not speaking or reading English (which is the second language spoken in Greece).

The behavior of the discerning buyer

In terms of basic advice that can be given to the potential small investor, whether he or she is interested in obtaining a residence permit at the same time, we remind you that it is essential to be assisted by a serious real estate agent and by a competent lawyer to guide you through the investment process. If you are part of a company or a franchise, your preliminary search for properties available for sale is definitely more controlled (please refer to our previous article). An honest and competent lawyer will complete the transaction in a short time and protect your interests, even if the situation is complex.

On the other hand, you need to calibrate your budget in advance, which must include a financial availability margin of around 15% to 20% on the basis of an investment of 100,000 euros. It includes the payment of related costs such as agency fees, payment of taxes set by the State, lawyers’ fees, the opening of a bank account and other local contracts, but also the possibility of travelling and staying on site (count two to three times before and during the acquisition of the property) to sign the pre-contract or the final contract at the notary’s office, especially if no power of attorney has been given to the lawyer in charge of representing you.

In conclusion, it is important to understand that in order to secure a transaction, it is necessary to be physically present and to give yourself time to carry out visits. This availability is essential in order to discover the areas proposed by the agents, to explore the environment, the quality of life in the area and even to get an idea of new surrounding areas. The more the investors are prepared, the better they can secure their budget and therefore the integrity of their investment.

 

Emilie LE BON
Jurist in International Law & Economics
Theodorou Law Office and Associates
All reproduction prohibited

 

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