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28/10/2016

Five year anniversary from the time Greek Real Estate changed forever!

In the beginning of September 2011 a new law concerning properties landed like a bomb in the Greek real estate market. It required all properties that were to be transferred through a notary transaction to acquire a legality status certificate. 

Although there was a legislation in place before 2011 that accounted for strict fines for people who owned illegal properties e.g. properties that were built without a building permit or had constructed illegal additions and usage. The legislation already in place could enforce demolition of illegal buildings and constructions. At this time the state did not have a process implemented which could check every single property to verify whether it was legal or not.

Up to that point, people could donate to their children or sell to any interested party, properties without any formal legality checks. In 2011 this changed overnight. It became compulsory to have a certificate issued by a Civil Engineer or Architect stating the inspection of the property. This certificate had to be attached to the notary deed for the real estate transaction. In reality, this law stopped any transactions for properties with illegality issues.

In order to be certain that this law would be implemented, legislators stated that if a legality certificate was found to be inaccurate, the contract was considered void and invalid. Furthermore strict penalties were passed referring to the responsibilities and duties of all parties involved: lawyers, notary, real estate agent etc.

But the real burden fell on the engineer signing the certificate. This law stated that

The engineer that issued an inaccurate certificate of legality is punished with minimum 6 months of jail time plus fines beginning from 30.000 to 100.000 Euros, depending on the value of the illegal construction.

Additionally despite their legal prosecution described above temporary or permanent ban from performing their occupation will be imposed.

One may ask “But what could one do if their property had illegalities?”

The Greek state had introduced legislation in 2009 and in 2010 providing the ability for owners to declare illegalities and settle them by paying a fine.

Therefore people who wanted to transfer a property to their children or sell it were forced to pay the fines and settle the illegalities first. 2011 was also a time that the financial crisis had become more intense and the Greek state was trying to increase incoming funds via this legislation.

The real estate market literally froze for several months as there are currently very few buildings that are constructed exactly as on the building license plans. The engineers and architects needed weeks to be informed of the implications of this new legislation as well as of the defined property inspection process. In the meantime no sales or transfer contracts were signed. 

Despite the fact that the legality certificate has become a nuisance for every owner, seller, buyer as well as all professionals involved in real estate transactions it is fair to say it has brought order to the real estate market. Today, any buyer purchasing a property in Greece knows that it has been inspected and comes with a report stating the illegalities settled. At the same time the seller knows that each transaction is a case closed without any unforeseen future implications. Personally, I believe that engineers and architects are very careful when inspecting a property. Especially since it is common for buyers to hire a second engineer to verify the inspection.

The legality certificate has also prevented the construction of a new generation of illegalities. This law specifies that it allows the settlement of illegalities in properties constructed only up to July of 2011. Not after that. It also made it clear that illegal properties found on beaches, forestry areas, areas of ancient artifacts, monuments or lands that are to be replanted could not be settled. 

However, the cost of settlement is significant, especially for people living in Greece in the years of recession. Sellers today sell for lower prices and this extra cost has not been easy to accept.

It must be noted that the latest law for settling illegalities is the law 4178, valid since 2013. This settlement opportunity was expiring in October of 2016 but got extended for 4 months until the new law comes into action. The legislation that will replace it is under discussion but up until now it has not been voted by parliament. So far, this forthcoming settlement legislation promises lower fines but via a more complicated process. It will be a theme for a later article after it becomes a law of the Greek state.

Personally I believe the settlement law (always for illegalities constructed up to 2011) should be available to all without an expiry date. Why?

A. To allow people to do the settlement when they have available funds. Currently some people are experiencing difficulties in covering their basic needs. So settling the illegalities of their property is not an option.

B. There are owners of properties living abroad, as for example the members of the Greek international communities that are not aware of this legislation.

It is certain, that at some point in time, all who own a property in Greece will want to donate it to their children, lease it or sell it. And it is only fair that we have the ability to do so. Our properties are not just bricks and concrete. They are our homes and our investments. This is why we need to have them protected.

 

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