The first procedure to be carried out when buying a property is to determine the current value from the municipality to which it is tied.
If you have concluded the negotiations for your property and reached agreement on the payment terms, you will have begun the legal procedures for the purchase. Even if you complete the buying procedures without any problems, you may still be faced with various penalties in the future – in particular due to procedures where the legislation was not completely adhered to. Therefore, it is necessary to be careful during this process, and to strictly adhere to the required legislation in full. The property buying process is legally comprised of municipality and title registry procedures.
So, what are the procedures which need to be carried out at these stages, and what needs to be paid attention to?
The first procedure to be performed during the property buying process is determining its current value from the municipality which it is tied to. The current value is the value of the purchase price you notify to the municipality, subject to this figure being higher than the minimum limit determined by the municipality based on its square meter size for that particular neighborhood. The municipality records this as the official value. While it is a simple procedure, it is at the same time the beginning of a process where a heavy penalty and tax burden can be incurred in the event that the value is not declared correctly.
Title duty penalty for under-declared values
The buyer and the seller each pay 2 percent title duty during title purchase and sales transactions. Title duties are calculated as 2 percent of the current value which you have determined at the municipality. That is to say, if you under-declare the current value, you can pay a lower amount of title duty. Therefore, in the past, those wishing to pay less title duty would declare the current value to be lower than it actually was. The Revenues Administration Directorate intervened in this situation, and currently request details of the loans used from the banks and compare them with the declared current values.
As a result, those buying properties must declare the current value as the price at which they are buying. Monitor these procedures closely, and do not allow the realtor or homeowner to declare these figures to be lower than they actually are on your behalf. Finally, if you have under-declared the current value, you can increase it by submitting a petition of remorse and paying the title duty difference.
Procedures at the Title Registry
After determining your current value, the buyer and seller will need to separately pay the 2 percent title duty to the contracted bank, together floating capital fee. Once the duties have been paid, you can make an application to the land registry with the necessary documents.
- Original and photocopy of identification documents.
- Photographs (1 of the seller and 2 of the buyer).
- Original and photocopy of the title deed.
- A letter confirming that the property has no outstanding dues (to be obtained from the municipality when determining the current value).
- The mortgage documents of the bank, if credit is to be used.
Following the delivery of the documents to the title registry, the sales transaction may take place on the same day. This may vary according to the workload of the region you are in, and you could complete within 2 days. On the other hand, if the property has more than one legal owner, they will need to be present at the title registry in person, or have given a power of attorney. Otherwise, the seller will only be able to sell the part registered in his / her name.