Most of the payments are due by stage payment.
Often you pay a reservation fee to take the property off the
market and then 30 days later you’ll need to pay a deposit
of 20% - 30% minus the reservation fee.
This 30% corresponds to the value of the land
and then throughout the construction you pay by stage payment.
A typical example would be:
- 20% Deposit
- 20% on completion of the concrete frame
- 20% on completion of the brickwork
- 20% on completion of the electrical installation, plastering,
flooring and carpentry work
- 20% on delivery
You’ll want to hold back a fee on transfer
of title deeds – see later.
On your contract of sale, you need to have
a clause saying that the money will be released only if a
civil engineer has confirmed that the phase has been completed
properly.
By the same token, if you have paid a small
deposit with the rest due on completion the work has to be
checked by a Civil Engineer before you release the money.
You ONLY have to pay the developer when you
know that they have done their job properly and the only way
to be sure of that is to appoint a civil Engineer who will
check on your behalf. Do make sure that this is clearly stipulated
in your contract.
Remember this is just an example: your developer/
agent may have a different schedule that you will be asked
to agree to. Run it by an independent lawyer to check that
all is well.
2. Protection against late delivery:
This part is very important. Some developers
can be late on completion – sometimes up to 6 months
and even 1 year late - and of course this can be a very serious
problem, especially if you have planned on letting the property,
as you will be losing out on rental income.
On the Sale Agreement, the developer sometimes
has a period of grace for 1 month. After that, you’ll
want to ensure that there is a penalty charge, which MUST
be specified in the contract.
Make sure you are happy about the amount that
you will receive per month for compensation. If you have planned
to relocate for instance it will need to cover the cost of
alternative accommodation …
If you buy an apartment, ‘completion’
means that your flat must be in a liveable condition, with
electricity and water etc, but it also includes completion
of communal facilities such as the swimming pool and landscaping
of the gardens.
Also make sure that you don’t have a
clause that stipulates that you, the purchaser, may NOT hold
back any portion of the total purchase price, so if the developer
is late you have the freedom to withhold payment.
For example, you could state in the contract
that if the developer is 3 months late on the completion date,
they are obliged to pay you £30.00 per day as a penalty
charge.
This means a total of £1,800 that you could deduct on
the last payment, allowing for the 1 month period of grace.
Also within this particular clause, you’ll
want to stipulate that you can sue the developer for compensation
if they are making you wait too long.
3. Protection against non-approval
from the land registry:
After you have bought your property, the developer
has to make a deposition of your agreement for approval. If
it is NOT accepted you need a clause in the contract to state
that the developer needs to repay any amount previously paid
by you IMMEDIATELY.
4. Guarantee:
You need to ensure that your contract has
a 1 year guarantee for the installations and area which directly
affect the normal and proper functioning occupation. More
than 1 year would be better but developers will usually not
guarantee that. You’ll also want to stipulate a 10 year
guarantee on the structure.
5. Freedom to sell any time:
Your contract needs to state that you can
sell the property any time after signing the sale contract,
without penalty. This allows you to sell prior to completion.
If you’re buying property to sell for
a profit, this allows investors the ability to sell before
the final payment is due. It is also helpful to have this
freedom in the event that your circumstances change.
To get the rest of the MUST-HAVES
in your Contract of Sale, buy the Greece Buying Guide Today...
