Real Estate Law in Greece – Purchase Contract, Conditions, Mortgage, Adverse Possession

Purchase contract and the transfer of title

Greek law, too, distinguishes between the contract of sale under the law of obligations (the obligatory transaction) and the transaction in rem transferring ownership (the disposition). A parallel to the German principle of abstraction exists, however, only to a limited extent: under Greek law, ownership of a property cannot pass independently of the existence or validity of the underlying obligatory transaction. The validity of the disposition therefore depends unconditionally on a valid legal cause — such as a valid purchase contract or a gift.

The contract is formed by offer and acceptance; the general provisions on the validity of legal transactions and declarations of intent, for example concerning authority to represent a party, must always be examined separately. It must likewise be examined whether the seller is in fact entitled to dispose of the property — a question of particular importance because Greek law does not, to date, recognise good-faith acquisition of real property.

As under German law, both the obligatory transaction and the conveyance require notarial authentication; in practice, both are combined in the same instrument. If the notarial form is not observed, the contract is incurably void — neither the obligatory nor the transaction in rem comes into effect, and not even registration in the land registry can cure this invalidity. Different requirements for a claim therefore also apply in the case of a disposition by a person not entitled to dispose, compared with German law.

Following notarial authentication, the deed must be registered with the land registry or cadastre; only upon this — constitutive — registration does the transfer of ownership take effect. Registration is usually carried out by the lawyer involved, but may also be effected by a third party with a demonstrable legal interest. It is not subject to any time limit.

Conditional (“auflösend bedingt”) transfer of ownership

Irrespective of the agreed purchase price, the tax office sets a so-called objective value (Einheitswert) for every property, which is applied as a minimum amount for taxation purposes. In the past, these objective values sometimes deviated significantly from actual market values and lay well below them; they have since been brought closer into line with actual property values. Where the notarised purchase price exceeds the objective value, the purchase price is applied for taxation purposes; where it is lower, the objective value governs.

In Greek practice, it is customary to make the transfer of ownership subject to the resolutive condition that the purchase price be paid in full. The contract is nevertheless registered in the land registry without reservation. Once payment has been made in full, a notarial declaration of discharge is executed and noted in the land registry or cadastre, permanently removing the resolutive condition.

Preliminary contract and mortgage

Where the final purchase contract cannot be concluded immediately — for example because a financing commitment or an official permit is still pending — both parties often nevertheless wish to obtain certainty that the contract will come into being. For this purpose, the notarial preliminary purchase contract (Prosymfono) is available, by which the parties undertake to conclude the future main contract with content already fixed. Since preliminary contracts concerning land are subject to the same formal requirement as the final contract, they too must be notarised; a deposit is regularly agreed at the same time.

So that the conclusion of the contract can be enforced even if one party refuses to cooperate, it is customary in practice to agree a right of self-contracting: the party that has complied with the contract can complete the conclusion of the contract by way of self-contracting, without having to sue the other party in court for its declaration of intent. Contractual penalties for culpable non-performance, as well as submission to immediate compulsory enforcement, are likewise customary means of security. Deposits can, in addition, be secured by registering a priority notice — a practice used in particular by banks in connection with loans.

Purely private, non-notarised agreements do not have the same effect: the defect of form renders them void, and the compulsory-enforcement remedies described above are not available. At most, they give rise to claims for damages under the law of obligations, but they do not secure the actual acquisition of ownership.

A further security device is the creation of a mortgage (Ypothiki), which corresponds to the German registered security mortgage (Buchhypothek); Greek law does not recognise a land charge (Grundschuld). The mortgage requires a title — generally a notarial declaration of intent by the owner, a notarial contract, or a court judgment — as well as registration in the mortgage register. Once the secured claim falls due, the mortgage creditor may enforce against the property with priority over personal creditors and subordinate creditors holding rights in rem; once an enforcement order has been issued, the instrument creating the mortgage can itself serve directly as an enforcement title. In practice, however, this comparatively cost-intensive instrument is used relatively rarely.

To be distinguished from this is the mortgage priority notice (Prosimiosi Ypothikis, Article 1274 of the Greek Civil Code), which, despite the similar name, does not correspond to the German priority notice (Vormerkung) under section 883 BGB. Whereas the German Vormerkung secures a claim to a future change in rights in rem, the Greek mortgage priority notice is better understood as a reservation of priority ranking, or a conditional mortgage, based on a court order issued in summary proceedings and likewise to be registered in the mortgage register. Unlike under German law, it is therefore not suitable for securing the buyer’s claim to the transfer of ownership.

Adverse possession

Because not all plots have to this day been registered in the land registry or cadastre, and ownership rights have in some cases not been secured by a notarial instrument followed by registration — a situation particularly affecting rural areas — the question of proof of title arises frequently in practice, both in cases of inheritance and of resale. In such cases, the institution of adverse possession can subsequently give rise to a lawful title, provided the statutory requirements are met; the title thereby acquired can then be registered in the land registry or cadastre.

No mandatory legal representation for notarial authentication

Since the reform of Law 4194/2013, legal representation is no longer mandatory when concluding a notarial land purchase contract. The contracting parties may also be represented by a lawyer without being personally present at the authentication — an important simplification for contracting parties living abroad. This requires a corresponding special power of attorney, which can be granted before a notary at the party’s place of residence or at the nearest Greek consulate. Greek notaries do not accept a general power of attorney for such transactions; a special power of attorney tailored to Greek formal requirements is always required.

The broker’s role in concluding the contract

Where the contract is brought about through the intermediation of a broker, the notary must record this in the deed, together with the details of the broker and the agreed commission, in accordance with the statutory requirements. The broker’s entitlement to commission arises upon signature of the obligatory and the transaction in rem agreements. In practice, the broker therefore frequently attends the notarial authentication appointment and usually receives a copy of the agreement transferring ownership; beyond this, no separately codified right to attend is provided for by statute, and the matter is, in the individual case, also governed by the brokerage contract.