PRELIMINARY PURCHASE AGREEMENT
The first stage in buying a property in Crete is the signing of a ‘Preliminary Purchase Agreement’, though if recommended by your Lawyer, the Notary Public can draw up the ‘Purchase Deed’ without having a prior ‘Preliminary Purchase Agreement’.
The ‘Preliminary Purchase Agreement’ specifies to a large degree the terms and conditions of the final ‘Purchase Deed’, and will include such matters as:
- the names of the contracting parties,
- the agreed Purchase Price,
- terms and conditions regarding the possible return or forfeit of a deposit,
- a description of the subject property (preferably with an attached plan),
- method of payment,
- any exceptional conditions either party may wish to impose (this may include a Clause which states that the purchase is conditional on your obtaining Planning Permission for whatever alteration or extension works you are proposing)
The ‘Preliminary Purchase Agreement’ will be drafted in Greek, and I recommend that you have this translated to enable you to check its correctness.
Duties of the Seller
Prior to the signing of the Preliminary Purchase Agreement, the Notary Public will inter alia:
- require a copy of the Topographical Survey of the plot/building(s),
- in the event of purchasing a building, require confirmation that the floor plans represent what has actually been constructed, and are the same as those held by the TEE-TCG (Technical Chamber of Greece),
- require proof that the Seller has no outstanding debts with the local Tax Office,
- require a copy of the Certificate of Legality,
- require a copy of the Property Declaration (Form E9), with the correct details of the property,
- require proof that all ENFIA (Property Tax) payments have been made by the Seller,
- require a copy of the TAP Certificate from the relevant Municipality to confirm that no Municipal Taxes, paid thought the Electricity Bill, are outstanding,
- require a copy of the PEA (Energy Performance Certificate),
- require confirmation that there are no outstanding I.K.A Insurance payments
Purchase Transfer Tax
Before signing the ‘Preliminary Purchase Agreement’ the local Tax Office (Eforia) will calculate an estimated value of the land or property. The ultimate ‘Purchase Transfer Tax’ payable by the purchaser (the ‘Buyer) is based on this estimated amount.
It is usual to pay a minimum 10% deposit when signing the ‘Preliminary Purchase Agreement’.
The ‘Preliminary Purchase Contract’ can be cancelled at any time by either party. In the event of the Purchaser withdrawing, then they will forfeit their deposit. On the other hand, if the Vendor (the ‘Seller’) withdraws, they will have to pay the Buyer a sum equal to the deposit, plus the return of the original deposit.
Prior to making this initial deposit, it is essential that you make sure that you know the terms and conditions regarding the possible return or forfeit of a deposit.
If you do not have funds available in Crete at the date the deposit should be paid, it may be possible to pay a ‘nominal’ deposit and sign a ‘Reservation Agreement’, which is usually valid for a period of 30 days, during which time funds can be transferred. If funds are not transferred within this period, your ‘nominal’ deposit will be lost.