7 Steps of Buying Property in Greece and Deposit Security

Greece has become one of the most attractive real estate markets for foreign investors in recent years. Especially buying off-plan (from project) homes attracts great interest because it can be more affordable than completed properties and has high rental income potential. However, the property acquisition process in Greece, which does not have a central and state-guaranteed title system like Turkey or Dubai, requires comprehensive legal preparation.

So, what does the idea of securing the property with a 10% deposit (advance payment) during the real estate sale mean in Greek law and how can you secure your investment? Here is a step-by-step guide for progressing risk-free in the Greek real estate market.

1. Why is Off-Plan Purchase Attractive?

Investors generally prefer off-plan residences in Greece due to high capital value increase and superior rental potential.

• High Profit Potential: Properties purchased from the project can gain value by an average of 20-30% when completed.
• Higher Rental Income: These homes built with modern, minimalist designs and new standards are much more attractive for high-income tenants. The rental price difference between new and existing homes can reach up to 100%.
• Customization and Low Maintenance: Buyers can customize details such as kitchen and tiles, and since they are new, they require minimum maintenance for the first five years.

Main Risk of Off-Plan Purchase: Developer Reliability

While the risk of an existing property is title cleanliness, the primary risk of off-plan purchase is construction delay or the financial situation of the contractor. Therefore, legal due diligence should focus not on the project itself, but on the contractor's past and financial strength. The presence of penal clauses that provide financial compensation for delays in the contract is of vital importance.

2. First Legal Steps to Be Taken in the Real Estate Purchase Process

The property purchase process in Greece cannot be completed in a single day as in Turkey; it requires complex preparation.

Mandatory Prerequisites

1. Tax Identification Number (AFM): It is mandatory to obtain AFM from the local tax office in order to perform any legal or financial transaction in Greece.
2. Appointing a Greek Lawyer: Due to the complexities and legal risks in the system, lawyer support is "practically mandatory" for a foreign buyer. Your lawyer can manage the entire process remotely with a power of attorney (POA) and control the situation.
3. Bank Account: A Greek bank account must be opened for the transfer of transaction funds and taxes.

Critical Security Step: Notarised Preliminary Agreement (Prosymfono) and Deposit

The idea of 'reserving' an apartment by taking a deposit (advance payment) varying between 1% and 10% of the property value during the real estate sale must be made with a notarised preliminary agreement (Prosymfono) in order to gain legal validity in Greek law.

• Legal Obligation: It is legally mandatory for any preliminary agreement regarding real estate purchase and sale to be made in the presence of a notary in order to be valid. Only a private or written agreement is considered legally unenforceable in case of a dispute.
• Deposit (Earnest Money) Protection: This deposit, which generally varies between 1% and 10% of the property value, is a guarantee showing the buyer's intention to purchase. For the security of this money, it is strongly recommended that the deposit is held not directly by the seller, but in the escrow account of the buyer's lawyer or notary.
• Refund Conditions: The preliminary agreement must clarify the deposit refund conditions. If the buyer withdraws without a valid reason specified in the contract (such as legal cleanliness not being provided), he may lose the deposited deposit. However, if the seller withdraws unfairly, he not only has to refund the deposit he received, but also has to pay the same amount of compensation (a total of 2 times).

3. Title Registration in Greece: The Biggest Legal Risks

Registration of ownership in Greece is not under state guarantee as in Turkey. The buyer's lawyer must conduct a comprehensive title investigation to ensure that there is no mortgage, lien or third-party rights on the property.

Illegal Structure Risk (Afthaireta)

Illegal or unlicensed renovations (Afthaireta) are common in old properties or rural areas in Greece. If these violations are detected:

• Sale Obstacle: Greek law prohibits the sale of properties containing illegal structures, subject to the legalization of these violations.
• Engineer Certificate: To protect against this risk, a construction engineer appointed by the buyer's lawyer must issue a certificate confirming that the property complies with zoning laws and that there is no illegal situation.

4. Costs and Financial Planning

In addition to the purchase price, taxes and fees can constitute approximately 10 to 12% of the total cost. Correct calculation of these costs is important in terms of the profitability of the investment.

Main cost items: Transfer tax 3.09%, notary fee, lawyer fee (~1.5%), real estate agent fee (~2%), land registry fees. Total extra costs usually fall in the 10-12% range.

Financial Trap: Low Value Declaration

Buyers may deliberately show the property value low in the contract to reduce the transfer tax. However, this can create difficulty in legally explaining the source of high profit when the property is sold later and can restrict money transfer abroad. This is a practice that should be avoided in terms of long-term financial security.

5. Final Contract and Registration

After all legal and technical checks are completed and taxes are paid, the transaction is completed with the final sales contract (Deed) signed in the presence of a notary. This is the legal moment when ownership is transferred.

Immediately afterwards, your lawyer has the title registration done at the relevant Cadastre (Ktimatologio) or Land Registry (Ypothikofilakeio) office so that the ownership has legal effect against everyone (erga omnes).

Summary and Action Plan: How to Secure Your Investment?

In order to safely apply the 10% deposit model in the real estate sales process in Greece, you need to strengthen your legal guarantees with a Notarised Preliminary Agreement (Prosymfono).

What Needs to Be Done:

1. Establish the Legal Trio: Be sure to work with a Lawyer, Notary and Construction Engineer who will obtain AFM in Greece, give POA (Power of Attorney) and be authorized.
2. Sign the Contract at the Notary: Instead of an ordinary written document in return for the advance payment you receive from the investor, arrange a notarised Prosymfono.
3. Protect the Deposit: Ensure that the deposit is held in the lawyer's escrow account. This secures both the buyer's right of refund and the seller's penal clause obligation.
4. Have Technical Control Done: The sale should be subject to the Engineer Certificate showing that the apartment complies with zoning laws and the Lawyer Report showing title cleanliness.

As Nadlan Star Global Real Estate, we are aware of the vital importance of minimizing legal and financial risks in overseas real estate transactions. Therefore, we provide the necessary legal support and expert consultancy to our customers in the real estate purchase process in Greece. You can contact us to take safe steps in your investment journey.