- Due diligence in Greece requires a dual search of both the Mortgage Registry (Ypothykofylakeio) and the National Cadastre (Ktimatologio) to ensure undisputed ownership.
- Commercial properties are subject to strict "characterization" by the Forestry Service and the Archaeological Service, which can legally prohibit construction even on privately owned land.
- Foreign legal entities must obtain a Greek Tax Identification Number (AFM) and may face specific restrictions if the property is located in designated "Border Regions."
- Commercial leases in Greece offer significant statutory protections to tenants, meaning a new owner cannot easily terminate an existing lease simply because the property changed hands.
- A technical audit by a certified civil engineer is just as critical as the legal audit to verify the "legality" of existing structures and compliance with building permits.
How do you verify property titles at the Greek Land Registry and Cadastre?
Verifying property titles in Greece involves a comprehensive search of public records to confirm the seller's absolute ownership and the absence of encumbrances like mortgages or seizures. This process requires an investigation of the "merida" (the owner's file) at the local Mortgage Registry and a cross-check with the Hellenic Cadastre. A 20-year history search is standard because this is the legal timeframe required to establish ownership through "adverse possession" under the Greek Civil Code.
The Greek land recording system is currently in a transitional phase. While many areas have migrated to the Hellenic Cadastre, some still rely on the older, person-centered Mortgage Registries. During due diligence, your legal team must ensure:
- Chain of Title: Every transfer of the property for the last 20 years must be documented and properly registered.
- Encumbrances: The search must confirm there are no active mortgages, pre-notations of mortgage, or pending lawsuits (lis pendens) against the property.
- Cadastral Diagram: The physical boundaries and square footage recorded at the Cadastre must match the actual property and the building permits. Discrepancies can lead to significant delays or the need for expensive "rectification" filings.
What are the environmental and archaeological restrictions for Greek commercial property?
Commercial real estate in Greece is heavily regulated by the Archaeological Service and environmental protection laws, which can freeze development if the land is deemed of historical or ecological significance. Because Greece is rich in antiquities, any excavation or construction often requires a "clearance" from the local Ephorate of Antiquities. If ruins are discovered during construction, the Central Archaeological Council (KAS) has the authority to halt the project indefinitely.
Beyond archaeology, investors must navigate environmental "Natura 2000" zones. These are protected habitats where commercial development is either prohibited or restricted to low-impact activities. Key checks include:
- Archaeological Clearance: Confirming the property does not sit within a designated Zone A (complete building ban) or Zone B (restricted building).
- Environmental Permits (AEPO): For specific commercial uses, such as factories or large hotel units, an Environmental Impact Assessment is mandatory before any permits are issued.
- Waste Management: Ensuring the property complies with local regulations regarding sewage, waste disposal, and proximity to water sources.
How do forestry and coastal zoning laws affect commercial development in Greece?
Greek forestry and coastal laws are among the most stringent in Europe, often leading to "hidden" building bans on land that appears suitable for development. The Forestry Service maintains maps that categorize land; if a plot is characterized as "forest" or "forestal," private construction is generally prohibited. Similarly, the "Aigialos" (shoreline) and "Paralia" (beach zone) laws strictly regulate how close to the water a commercial structure can be built.
Investors must obtain a "Characterization Act" or verify the latest Forest Maps to ensure the land is "non-forestal." For coastal properties:
- Shoreline Delineation: The Greek state owns the shoreline. If the boundaries of the shoreline have not been officially "demarcated" via a government gazette, you cannot obtain a building permit.
- Setback Requirements: Commercial buildings must respect specific distances from the shoreline, which can vary based on the date the building was original constructed or the local urban planning zone.
- Forestry Certificates: A certificate from the local Forestry Service is a mandatory attachment to any commercial property transfer deed.
How are existing commercial leases and tenant rights assessed during due diligence?
In Greece, commercial leases are governed by Presidential Decree 34/1995 and subsequent reforms, which provide tenants with substantial stability. When buying a commercial property with existing tenants, the buyer steps into the shoes of the landlord. It is critical to review the lease terms because Greek law often protects the tenant's right to stay for a minimum duration, even if the written contract specifies a shorter period.
During the legal assessment, your lawyer should focus on:
- Duration and Renewals: Standard commercial leases generally have a minimum legal duration of three years, regardless of what is signed, though many historical leases had 12-year protections.
- Rent Adjustment Clauses: Many Greek leases include annual increases based on the Consumer Price Index (CPI) plus a specific percentage.
- Arrears and Litigation: Check if the tenant is in default or if there are ongoing eviction proceedings.
- Stamp Duty and Registration: All leases must be declared electronically via the Independent Authority for Public Revenue (IAPR) portal. An undeclared lease is not legally enforceable against the state.
What are the tax compliance requirements for foreign legal entities?
Foreign legal entities purchasing commercial property in Greece must navigate a complex tax landscape that includes transfer taxes, annual ownership taxes, and potential "special" property taxes. Before the transaction, the entity must obtain a Greek Tax Identification Number (AFM) and appoint a local tax representative who is a resident of Greece.
The primary tax obligations include:
| Tax Type | Rate/Description |
|---|---|
| Transfer Tax (FMA) | Generally 3% of the purchase price or the "Objective Value," whichever is higher. |
| VAT (FPA) | 24% may apply instead of transfer tax for "new" buildings (first-time use) if the permit was issued after 2006, though suspensions often apply. |
| Annual Property Tax (ENFIA) | A yearly tax based on the size, age, and location of the property. |
| Special Property Tax (SHT) | A 15% annual tax on the objective value, primarily designed to discourage offshore "shell" companies. Entities can be exempt if they disclose their ultimate beneficial owners (UBOs). |
Common Misconceptions About Greek Commercial Real Estate
"A 'Clear' Title from the Seller is Enough"
Many investors believe that if a seller provides a certificate of non-encumbrance, the property is safe. However, this certificate does not account for technical "arbitrariness" (illegal construction). In Greece, a building can have a clean title but be legally "untransferable" if it has un-regularized structural changes that deviate from the original building permit.
"Buying Property Automatically Grants a Golden Visa"
While commercial property can qualify for the Greek Golden Visa (Permanent Residency), the rules regarding commercial-to-residential conversions have changed recently. Simply buying a warehouse or an office does not guarantee the same residency benefits as a residential investment unless specific investment thresholds and usage requirements are met.
Checklist for Commercial Due Diligence in Greece
- Appoint a Legal Team: Ensure they are experienced in Greek administrative and real estate law.
- Hire a Civil Engineer: This is mandatory. The engineer must issue a "Certificate of Legality" stating the building has no illegalities.
- Verify the "Objective Value": The Greek Ministry of Finance sets minimum values for properties. If your purchase price is lower than this value, you will still pay taxes based on the higher Objective Value.
- Check "Border Region" Restrictions: If the property is in certain areas (e.g., Rhodes, Corfu, parts of Northern Greece), foreign investors from non-EU/EFTA countries may need a special permit from the Ministry of Defense.
- Review Utility Debts: Confirm there are no outstanding debts for water, electricity, or municipal taxes (TAP), as these can sometimes follow the property.
FAQ
How long does the due diligence process take in Greece?
A thorough legal and technical due diligence typically takes 4 to 8 weeks. This timeline depends on how quickly the local Mortgage Registry issues certificates and how fast the engineer can complete the site survey.
Do I need to be physically present in Greece to buy commercial property?
No. You can grant a Power of Attorney (PoA) to a lawyer in Greece. The PoA must be signed either before a Greek Notary or at a Greek Consulate in your home country.
What is the role of the Notary in a commercial transaction?
In Greece, the Notary is a public official who drafts the transfer deed and ensures all mandatory certificates (tax, social security, forestry) are attached. However, the Notary does not perform due diligence for the buyer; that is the responsibility of your private lawyer.
Can I change the use of a commercial property after purchase?
Changing the use (e.g., from an office to a restaurant) requires a new permit from the Town Planning Authority (Poleodomia). You must check the "Land Use" (Hrisi Gis) regulations for the specific area to see if your intended business is permitted.
When to Hire a Lawyer
You should engage a Greek real estate lawyer the moment you identify a potential commercial investment. Do not sign a "Reservation Agreement" or pay a deposit until a lawyer has reviewed the preliminary titles. In Greece, the legal landscape is decentralized and highly bureaucratic; having an expert to navigate the interplay between the Land Registry, the Forestry Service, and the Tax Office is the only way to protect your capital.
Specifically, hire a lawyer if:
- You are purchasing property through a foreign corporation.
- The property is located near the coast or in a forested area.
- There are existing commercial tenants with long-term leases.
- You are planning significant redevelopment or a change of use.
Next Steps
- Secure Legal Representation: Contact a law firm specializing in Greek commercial real estate and foreign direct investment.
- Issue a Power of Attorney: This allows your lawyer to obtain a Tax ID (AFM) and start title searches immediately.
- Open a Greek Bank Account: While not always mandatory for the purchase, it is essential for paying ongoing taxes and utility bills.
- Request the "File": Ask the seller for the building permit, the topographic diagram, and the latest ENFIA (tax) statement to begin the technical audit.
