The lawyer responsible for drafting the contract beside inserting the fair terms and conditions for the protection and interest of the buyer will examine the deeds of the property sold by obtaining a copy from the vendor or the Land Registry Office and generally he will make sure that all the details correspond to the property in question and that it can be sold to the prospective buyer assuring that at the end the buyer will be able to register the title deed into his name free of any encumbrances. When the contract is ready at the satisfaction of the buyer it can be signed by the buyer himself or by his lawyer by virtue of a power of attorney that can also be used for all other necessary acts and documents until the completion of the transaction
Once the contract is signed the purchaser is responsible for the payment of stamp duty at the rate of 0.15% towards the purchase price up to the value of Euro 170.860.14 thereafter the rate is 0.20%. The amount should be paid within 30days as from signing the contract in order to avoid the payment of a fine.
For example, if the purchase price is € 256.290.22
The first €170.860.14 x 0.15% =€ 256.29
Next € 85.430.08 x 0.20% = € 170.86
Total € 427.15
As from the date of signing the contract of sale the buyer has the right within 6 months from that date to lodge the contract with the Land Registry Office for what is called “Specific Performance” purposes. This is very important for the protection of the buyer mainly for two reasons. First, once the contract is lodged the buyer is considered the beneficial owner of the property until the time he becomes both the beneficial and legal owner of the property by transferring the title deed into his name. Therefore, there is a clear declaration that he bought the property in question, the Land Registry Office is aware of this transaction and his interest is protected e.g. by preventing the vendor to resell the same property to somebody else or by having a mortgage over the property.
The second main reason is to secure that the title deed will pass to the buyer on completion of the transaction
Before a transfer of the title deed of the property into the name of the purchaser permission must be sought from the Council of Ministers (district Office) by the written application which must be submitted by the purchaser after the agreement is signed. However, this permission is granted more or less as a matter of course to all bona fide purchasers. This procedure may take 2 – 3 weeks but in the meantime, purchasers can take possession of the property without any restriction.
The transaction is concluded with the transfer of ownership by a simple process of registration of the Land Registry Office once the necessary permissions are granted (as prescribed above) and as soon as separate title deed for the property sold is issued by the Land Registry Office reflecting the property erected on the land. At this stage, the buyer is responsible for the transfer fees. The rates are on a graduated scale towards the purchase price.
Any property transaction NOT subject to VAT is eligible for a 50% reduction of Transfer Fee costs.
Transfer Fees- Rate Scale
0 – 85.430 Euro @ 3%
Euro 85.430 – 170,860.14 @ 5%
Over €170.860.14 @ 8%
TOTAL less 50% reduction
Any property transaction subject to VAT is exempt of Transfer Fee, irrespective of the purchaser’s country of origin or permanent residency.
VAT applicable is at the rate of 19%, however, a reduced 5% VAT rate applies on a property used as the main residence after an application has been submitted to the VAT authorities
Disclaimer: While every effort has been made to provide true and accurate information, this is only meant for guidance purposes and any information contained in this presentation, while correct at publication, should always be checked by a lawyer and errors & and omissions are expected and accepted