Transferring proceeds of villa sale

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Brian
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Transferring proceeds of villa sale

Postby Brian » Wed Aug 05, 2015 9:07 pm

After a long and protracted process a friend of mine is in the final stages of completing the sale of his villa . I ask on his behalf, is there any legal way he can transfer the proceeds of the sale back to the UK. He is selling the property at a 40% loss. He will observe the law of the land re. outstanding tax, municipal charges, etc. He expects, after discharging all his financial obligations, to have roughly £100,000 to repatriate. Any info appreciated.

bobscott
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Re: Transferring proceeds of villa sale

Postby bobscott » Thu Aug 06, 2015 8:13 am

Rumour has it, and I stress 'Rumour' that a change in the law last year sometime allows non-Greek buyers from non-Greek sellers to have the funds transferred between the two individuals' banks in their home countries. That is, a Norwegian (say) buying from a Brit can transfer funds direct from Norway to the UK bank account of the vendor without having to go through a Greek bank. I keep meaning to ask my accountant about that and what the tax implications are, but she is never around when I want her to be! Others (Warwick?) may know the answer. It's obviously a vital question given the current capital controls.
Bob.
Yesterday today was tomorrow. Don't dilly dally!

Kilkis
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Re: Transferring proceeds of villa sale

Postby Kilkis » Thu Aug 06, 2015 8:35 am

I cannot comment on its legality but it is certainly true that sales have been completed with direct transfer of funds outside Greece in exactly* the way Bob describes. Obviously this only works when both buyer and seller are non-Greek.

Warwick

* I mean exactly.

Danny
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Re: Transferring proceeds of villa sale

Postby Danny » Thu Aug 06, 2015 3:20 pm

If buyer and seller have accounts outside of Greece then the transaction can certainly proceed without one Euros entering or leaving Greece.

john4d
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Re: Transferring proceeds of villa sale

Postby john4d » Thu Aug 06, 2015 3:37 pm

I thought, tell me I'm wrong, that the money was handed over at the same time the Notary read the contract to the two parties, or their representatives. If this is the case do you just hand over a 'promise to pay' document?

John
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Kilkis
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Re: Transferring proceeds of villa sale

Postby Kilkis » Thu Aug 06, 2015 4:08 pm

I would use a lawyer in each jurisdiction outside Greece. For example using Bob's scenario the buyer transfers the amount agreed to his appointed lawyer in Norway. That lawyer informs the seller's lawyer in the UK that the funds have been deposited with him. The lawyer in the UK informs the seller that the Norwegian lawyer has the funds. The contract is exchanged in front of the Greek Notary but no money changes hands. The buyer informs his lawyer that he is now the legal owner of the property and his lawyer transfers the funds to the UK lawyer. The UK lawyer transfers it to his client. It sounds complicated but it minimises counter-party risks.

If the buyer transfers the funds directly to the seller's UK account before the contract is signed he runs the risk that the seller walks away and doesn't sign.

If the seller signs the contract before the buyer has transferred the funds the buyer could walk away with legal title to the property and not pay for it.

Warwick

PS You are correct, John. Money usually changes hands in cash at the time the contract is signed. In my experience it is done between the lawyers of the two parties outside the notary's office. Thus when, I was buying we went through the contract in detail with my lawyer translating into English. When that was done, with the odd question and answer, I handed over the money to my lawyer. My lawyer and the sellers lawyer went into the next office while the seller and I signed the contract. When they came back the sellers lawyer handed the money over to him.

filippos
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Re: Transferring proceeds of villa sale

Postby filippos » Thu Aug 06, 2015 5:44 pm

When we sold our place I went to the Notary's office with my lawyer and settled down in company with the buyer and their lawyer. The notary went through the contract word by word, checking the accuracy of every topograph point and even correcting spelling/grammar through about three paragraphs.

The buyer then handed me two Banker's drafts, one based on their own account and one in the amount of bank mortgage, totalling the objective value contained in the contract. Details of the drafts were entered in a ledger alongside the contract reference. A third draft, for the difference between objective value shown in the contract and the true sale price, was wafted under the Notary's nose. She then waved a hand dismissively and strode from her office, taking her papers with her. I signed a receipt for this third draft in accordance with the private contract previously agreed between us via the lawyers.

I scampered off to deposit the three drafts.

P.S. In our case the process took a long time. There were actually three contract to wade through. The buyer wanted the plot split in two before transfer of ownership so there was one contract to do the split and a sale contract for each part (and they were long, quite complicated contracts). Altogether, I had to sign my name over forty times.

footscapes
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Re: Transferring proceeds of villa sale

Postby footscapes » Thu Aug 06, 2015 5:59 pm

We sold our property in Crete in January this year. The buyer was non Greek and lived outside of Greece. At that time, their Greek lawyer firmly advised (instructed) them that the funds had to be transferred to a Greek bank before being transferred to us. She either wasn't aware of any law change that allowed completely external (to Greece) funds transfers (which I doubt - she was a very clued up lawyer), or the law change referred to above hadn't happened then.

Because of the risks within the Greek banking sector at the time, we declined a bank draft, insisting on an electronic funds transfer to a bank outside of Greece.

On completion day, we went to the buyer's bank (Eurobank). The electronic transfer was set in motion, up to the point of final button push. After this, we all trooped to the notary's office, contracts were read out and signed by all parties. After signing, the 2 lawyers (ours/theirs) went back to Eurobank with a copy of the contract to give to the bank. The final button was then pushed to transfer funds to us.

It became clear during the process that Eurobank would not release the buyer's funds without sight of a contract covering the value of funds to be transferred. As the "bank jog" was beginning at that time, I suspect it was more likely to be Eurobank themselves making a sizeable transfer a bit more difficult rather than any legal requirement for them to see a contract. There was obviously some slight risk to us between signing and final transfer, but effectively our respective lawyers were keeping both parties honest. Not as good as escrow, but close enough.

Paul

filippos
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Re: Transferring proceeds of villa sale

Postby filippos » Thu Aug 06, 2015 11:23 pm

If I understand this correctly, the buyer must have transferred funds to their bank (Eurobank) in Greece. After completing the contracts the buyer's bank transferred the funds to your bank outside Greece.

That was in January, before the introduction of capital controls. Presumably now, while capital controls remain in place Eurobank, nor any other bank, will be able to 'push the final button' to transfer substantial funds out of Greece so you'd be stuck with the money here, or am I missing something 'cos it's late and I'm old?

P.S. The rigmarole I described in my post took place eight years ago. Fortunately there were no capital controls or other restrictions then. The drafts were cleared very quickly and the money was rapidly transferred to external accounts via Internet banking as the whole Euro situation looked unstable even then.

footscapes
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Re: Transferring proceeds of villa sale

Postby footscapes » Thu Aug 06, 2015 11:59 pm

filippos wrote:If I understand this correctly, the buyer must have transferred funds to their bank (Eurobank) in Greece. After completing the contracts the buyer's bank transferred the funds to your bank outside Greece.

That was in January, before the introduction of capital controls. Presumably now, while capital controls remain in place Eurobank, nor any other bank, will be able to 'push the final button' to transfer substantial funds out of Greece so you'd be stuck with the money here, or am I missing something 'cos it's late and I'm old? ,,,,,,,,,,,,,,,,,,,,,,,


No, you're spot on. Maybe I should have made the point better. The point of my post (para 1) was in response to Bob Scott's post of a law change last year allowing the funds to be transferred completely outside of Greece. As of January this year, a pretty clued up lawyer acting for the buyer of our place didn't offer this as an option. Our buyer (and we) would have preferred this, but the lawyer made it a no no (in terms of proving funds provenance) in Jan 2015. Had a new law been in effect then, I'm convinced that she would have known that this was an option, and offered it. The law has either changed or it hasn't, and a good accountant or lawyer should be able to confirm or deny the "rumour", but recent experience (ours) suggests that the rumour may be just that. That was what I wanted to get across.

The rest of my post was simply in response to john4d's post about timing of funds handover in relation to the notarial process. Our experience was very slightly different.

Paul

filippos
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Re: Transferring proceeds of villa sale

Postby filippos » Fri Aug 07, 2015 7:55 am

footscapes wrote:No, you're spot on. Maybe I should have made the point better.
Perhaps it's my brain that needs clearing. Don't you find though, that sometimes trying to write a detailed explanation of something simple to someone with little or no knowledge of the subject can be difficult? Something as simple as explaining "How to make tea" would drive me crazy if I had to tell a Martian who didn't even know what water is. Not too difficult if you have the makings to demonstrate, but without them? (And then the silly s*d asks where does water come from?)

bobscott
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Re: Transferring proceeds of villa sale

Postby bobscott » Fri Aug 07, 2015 8:44 am

filippos wrote:
footscapes wrote:No, you're spot on. Maybe I should have made the point better.
Perhaps it's my brain that needs clearing. Don't you find though, that sometimes trying to write a detailed explanation of something simple to someone with little or no knowledge of the subject can be difficult? Something as simple as explaining "How to make tea" would drive me crazy if I had to tell a Martian who didn't even know what water is. Not too difficult if you have the makings to demonstrate, but without them? (And then the silly s*d asks where does water come from?)


Er....... Yes Phil. Bob.
Yesterday today was tomorrow. Don't dilly dally!

Danny
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Re: Transferring proceeds of villa sale

Postby Danny » Fri Aug 07, 2015 4:13 pm

For a transaction to keep monies from arriving or departing from Greece monies are transferred by the buyer to an escrow account usually held in the name of a lawyer agreed by both seller and buyer and held in the country to which the seller wants the money transferred to. When the contract is signed the monies are released immediately.

footscapes
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Re: Transferring proceeds of villa sale

Postby footscapes » Fri Aug 07, 2015 6:14 pm

Danny wrote:For a transaction to keep monies from arriving or departing from Greece monies are transferred by the buyer to an escrow account usually held in the name of a lawyer agreed by both seller and buyer and held in the country to which the seller wants the money transferred to. When the contract is signed the monies are released immediately.


Doing it this way is possible (although I believe that some notaries might refuse such a transaction), but there is a significant tax risk to the buyer in doing so. This is why our buyer’s lawyer wouldn’t allow it in January this year. The risk arises as follows: assume someone buys a €100k property by transfer of funds completely outside of Greece. In the following Greek tax return, they declare a new asset (the property), value €100k (or maybe its then objective value). The taxman has no “pink slips” for the official importation of already taxed funds to buy the asset. He says “you must have earned €100k (or the objective value – whatever the asset is valued at) in Greece. You now owe me tax on those earnings. Here’s a tax demand for X arising on those earnings”. X is unlikely to be small change.

Bob Scott was indicating, I think, that this is the law, or principle, that may have changed. Until that is verified, although a wholly external (to Greece) funds transfer may be practically possible in selling a property, it would probably be unwise for the buyer to proceed in this way.

Paul

Kilkis
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Re: Transferring proceeds of villa sale

Postby Kilkis » Fri Aug 07, 2015 8:28 pm

You are completely correct, Paul. In the case I know of the contract contained the objective value. The objective value was transferred to Greece by the buyer to his bank account in Greece. The seller was paid that amount in Greece. The difference between the objective value and the market value was paid directly outside Greece. That meant that when the buyer filled in an E9 to show he had obtained the property he had a pink slip for the amount shown on the contract. When the seller filled in an E9 to show he no longer owned the property he could justify the amount in his Greek bank account. He could then transfer that amount out of Greece with no problem or tax implications.

Obviously that was before capital controls. I am not sure how to deal with it today with capital controls in place. It may be possible to apply to the body that is in charge of monitoring capital transfers to get permission to transfer the amount transferred into Greece out of Greece again since it is not depleting in any way money already on deposit in Greece.

Warwick


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