Real estate with debts to AAΔΕ: how a notary can conduct a sale and retain part of the price

Thousands of real estate transactions in Greece may have a chance to be completed, even if the property is seized due to debts to the tax authorities. The new mechanism should allow AAΔΕ lift the arrest for a specific saleand part of the transaction price will be retained by the notary and used to pay off the debt.

Important: we are not talking about debt forgiveness or the free sale of seized real estate without control. The state is trying to replace the dead-end scheme, in which the property remains “frozen” for years, with a more pragmatic one: the property is sold, the buyer receives a clear title, and AAΔΕ receives part of the money immediately.

What’s changing

Today, the sale of real estate that has been seized by AAΔΕ due to overdue debts is often extremely difficult. Even if the owner has found a buyer, the deal may fall through due to tax restrictions, lack of a certificate of tax integrity, or the risk that the state will later challenge the transfer of the property.

The new norm should give AAΔΕ the opportunity finally release the seized property for sale when several conditions are met. The main one: part of the transaction price is retained by the notary and immediately transferred to account for the seller’s debt to the state.

Such a mechanism was included in the government bill to reduce bureaucracy and make procedures more convenient for citizens. The official government announcement states that the amount withheld cannot be less than 25% of current debt balancefor which the arrest was made. Source.

How the sale will work

The diagram looks like this:

• the owner finds a buyer and submits an application to lift the arrest for sale;
• AAΔΕ checks whether a certificate of tax integrity or proof of debt can be issued;
• the notary receives the documents and calculates the amount to be withheld;
• part of the transaction price is transferred directly to AAΔΕ;
• after this, the property can be transferred to the buyer without previous seizure by the tax authorities.

The notary becomes a key figure in the transaction. He does not just draw up a purchase and sale agreement, but actually coordinates part of the process between the seller, the buyer, AAΔΕ and the Cadastre: he receives electronic documents, withholds the amount of the debt and sends it to the state.

How much will they keep from the price?

The amount of withholding will depend on the tax discipline of the debtor and on how realistic it is to collect the remaining debt after the sale. But the general principle has already been outlined: the retention cannot be less 25% of the current balance of debt.

If the price of the property is less than 25% of the debt, AAΔΕ will be able to receive the entire transaction price. In other words, the sale may still take place, but the seller in this case may not receive the money in hand: the entire amount will be used to partially repay the debt.

For example, if the debt is €100,000, the minimum amount withheld will be €25,000. If an apartment is sold for 20,000 euros, the tax office can receive the entire amount of the transaction. The remainder of the debt does not disappear automatically, but remains with the seller.

What conditions must the owner fulfill?

In order for AAΔΕ to agree to lift the arrest for the sake of sale, several conditions must be simultaneously met:

• the debtor must have the right to receive a tax certificate or proof of debt;
• the transaction price cannot be lower than the commercial value of the objectestablished at the time of arrest;
• if the commercial value is lower than the objective tax value, it applies objective value;
• if the arrest was imposed more than five years agoa new appraisal will be required from an independent certified appraiser;
• from the transaction price the notary must withhold the amount determined by AAΔΕ.

These conditions are important to avoid fictitious sales at artificially low prices. Otherwise, the debtor could conditionally sell the apartment to a relative for symbolic money, and the state would get the crumbs. The tax office, oddly enough, has known this story for a long time.

What about mortgages and other encumbrances?

Before completing a transaction, the rights of third parties must be taken into account: mortgage, pledge, bank claim, court decision or other property encumbrance. Therefore, the sale of real estate with debts will not become completely automatic.

If there are several claims from different creditors at the property, the notary and the parties will have to determine the order of payments. In such cases, documents from the Cadastre, data on arrests, mortgage records and the decision of AAΔΕ to lift a specific arrest are especially important.

What changes for inheritance and parental gifts

The reform also concerns inheritance, gifts and parental transfers of real estate. In some cases, inheritance or transfer tax can be calculated and transferred not by a separate payment in advance, but directly from the subsequent sale price.

This should reduce the number of transactions that are stuck because the heir received the property but cannot complete the sale until he pays the tax and has no available funds to do so.

At the same time, the notary’s digital role is expanding: through electronic services, he will be able to request certificates, calculate taxes, send data to AAΔΕ and complete the registration of a transaction in the Cadastre. The electronic real estate transfer service is already operating through the state platform akinita.gov.gr.

When a new topographic plan may not be needed

Simplification is separately provided for areas where the Cadastre operates and the act of applying the city plan has been approved. In such cases, a new topographic plan may not be required, which will reduce the cost of the transaction and reduce the time for preparing documents.

But this does not negate the obligation to check a specific object. The presence of the Cadastre in itself does not guarantee that all data on boundaries, area and rights are already correct. In Greek real estate, sometimes even the house itself suffers from paperwork problems.

What does this mean for the market?

The reform can revive the real estate segment, which has remained blocked for years due to debts to the state. For the owner, this is an opportunity to sell the property and reduce debt. For the buyer – a chance to purchase real estate with a legally cleared title. For AAΔΕ, this is a way to get money without waiting many years for an auction.

But this is not a one-size-fits-all solution. If the price of the property is too low, the debt is enormous, or the property has a mortgage and other encumbrances, the transaction may still be difficult or economically meaningless for the seller.

Main

The sale of real estate with a tax lien in Greece may become possible if AAΔΕ agrees to lift the arrest for the transaction, and the notary retains and transfers part of the price to the state. The minimum withheld amount will be 25% of the remaining debt, and if the transaction price is too low, the tax authorities will be able to receive the entire sale amount.

For owners, this is not a cancellation of debts, but a new way to get their property out of a deadlock. For the market, this is an attempt to replace the slow and often useless arrest procedure with a more lively system: the object is sold, money goes into the budget, and the case finally stops gathering dust in a folder marked “someday.”

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