Useful Advice regarding the Purchase of immovable property

Three important things to be discussed with the owner before signing a promise of sale agreement (convenium) are: -

After this stage, a notary is chosen by the purchaser to draw up the promise of sale agreement (convenium). This agreement contains: -

The identification of the parties, a full description of the property to be sold/purchased including any ground-rent and /or any other conditions burdening the property;

The price and the mode of payment. It is normal practice for a sum equivalent to 10% of the purchase price to be paid as a deposit on account of the price on the same agreement. Earnest (kapparra), as opposed to a deposit on account of the price, is less binding as neither party can oblige the other to appear on the final deed of sale/purchase. Any furniture and other movables included in the price are mentioned;

Conditions agreed by the parties eg subjecting the agreement to the obtaining of a bank loan by the purchaser within a stipulated time frame or subjecting the agreement to an architect’s approval;

The period of validity of the same agreement and if any works are to be done within the same validity

On the same agreement the notary collects from the purchaser a sum equivalent to 1% of the price (a little bit less than 1% of the price in case the property to be purchased is to be purchased as the purchaser’s sole ordinary residence) as provisional duty to be paid with the registration of the agreement with the Commissioner of Inland Revenue.

During the period of validity of the agreement the notary will carry out the necessary searches and documentation to verify that the owner is in fact the owner and that there are no debts on the property. The purchaser will provide the notary with a letter from the financing bank confirming a bank loan (should this be the case) while the owner (the seller) will finish the works agreed upon (should this be the case).

The notary will then carry out the necessary searches into the title of the property and once all the conditions agreed upon in the promise of sale are satisfied, the final contract is signed and the ownership of the property is transferred.

An overview of the expenses incurred when buying a property

Stamp duty

3.5% or part thereof on the first €150,000 of the immovable property price if the property is to be purchased is to be used as the purchaser’s ordinary residence and 5% or part thereof on the price over and above the €150,000 or on the whole price if the property is a secondary residence etc. 20% (totaling 1% of the price or a little less) of the whole amount of the stamp duty is paid on the promise of sale which is to be registered with the Inland Revenue Department within 21 days of the signing of the same promise of sale.

Notarial Fees

Generally speaking, the notarial fee amounts to approximately 1% of the price.

In all the above-mentioned stages, both the notary and the broker/estate agent will be able to guide further the parties in the transaction.

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