Property Buying Regulations
Buying your house is probably the biggest financial transaction that you will ever carry out. It is also probable one of the more stressful one. In order to help you out with the process we are listing some of the pertinent rules relevant to this procedure. This is a list of the must-know regulations relating to property. You are however strongly advised to take buying or selling legal advice only from a registered Notary or Lawyer. Some consideration prior to making your buying decision:

• Size of property, it is good for you now, or will you need small or larger quite soon. Children?
• Location: Why do you want to live in the area where you are looking for property. Make a list. Does it make sense?
• Facilities: Are they close enough to you, schools, grocer, pharmacy, etc. If not, how far are you prepared to travel. What facilities do you need often?
• Where is the money coming from, to purchase this property. Sale of existing house, investment, parents, Bank (have you made an appointment with the Bank yet?)
• Type: Flat, Masonette, Penthouse, Condo, House of Character, Terraced House, Bungalow, Villa? Modern, Classic, Rustic, Minimalist, Art Deco?
• Garage: Large, Very Large, 1 car, 2 car, street level, basement, car space or just do not need one in the first place. Do you have a boat, or keep animals?
• Garden: Everyone wants one. But do you really need it? Can you afford it?

Share this information with your Property Consultant. Be frank. He is there to help you and probably sees dozens of new properties every week. It could be that that new property that came in today, has your name on it. Help him to help you. You are just a phone call away.

Once you have found the property of your dreams, (or at least that which your Bank Manager allows you to dream about) make sure that you are absolutely clear about the following:

• Price: Amount and payment terms
• Deposit: Normal 10%. Is it to be held by Notary, by vendor, under what conditions may you forfeit it? Is it a deposit on account of the price or is it a 'Kappara', both have their implications. Ask your Notary, and make sure that it is YOUR Notary that you are taking this kind of advice from. You can normally expect to loose the deposit if for a reason not valid at law you fail to sign the final deed/contract.
• Ground Rent: It it Perpetual, Perpetual Revisable, Temporary. If temporary is it State owned or privately owned.
• Extras: Are you buying an empty house? Are the air conditioners staying, what about the fitted kitchen, the fitted cupboards? Are they going to stay? Are they included in the price?
• Outstanding Works: Are you buying the place as it is when you saw it? If not where does it say so? Is it written in the convenium? Is it explicitly clear and who is going to pay for what? Be clear...
• Convenium: What is the duration? What is it subject to? If these conditions are not met, what are the consequences? Is your deposit safe?
• Bank: How much is the Bank lending? Have you gone to the Bank to see how much you qualify for? Is the convenium subject to Bank loan? It should be.
• The Parties to the agreement: You know who you are. But do you know who the seller is? Has he brought his ID Card? Is it an individual who is selling or a company or an inheritance? Are you buying alone or with your girlfriend? Are you married? Do you know enough about the 'Community of Acuests' and its implications?

Once you are happy with all the answers to the above questions and you have explicitly agreed to them with the seller, find a Notary that you can trust and set up a date together with the Seller, to draft and sign your convenium. This is your promise of sale (and implicitly a promise to buy from your part).

Once you have signed a convenium certain things have to be done:

• Legal Searches: The Notary will normally order the legal searches from Eureka Services into the assets and liabilities of parties involved and assures himself that there are no outstanding debts, hypothecs, or liens on the property. It takes time. Notaries might not be inclined to order the searches if there are subject-to clauses in the convenium that should have been settled and have not been. Don't take anything for granted. Regular phone calls to the Notary, the seller and your Bank are not a waste of time. You might regret not doing them. You cannot sign a contract or take a Bank loan with the Legal Searches being completed. You might exceed the term of the convenium, loose your deposit and loose the property if you are careless. Be careful.
• Permits: The Notary, contrary to popular belief, is not responsible to ensure that the place is built according to permits, even if there is a declaration from the seller that all is fine. Only an Architect can do this. It is not expensive. Just Do it. You will be responsible for any problems (thought you might have legal recourse to the seller) if the building is not in compliance with a valid building permit. Besides if you bring an Architect to see the place before you buy it he can advise as to the structural soundness of the property. An architect is not however the ideal person to give advice on a property unless of course he is a developer himself or is regularly involved in the purchases or sale of the type of property that you are buying. Ask an independent broker. MEPA are getting stricter by the day and an enforcement Notice is not one of the more pleasant things in life.
• Time Frames and Obligations: Buyers must honour all his conditions contained in the Convenium (promise of sale agreement), such as expeditious Bank Loan applications and building permit applications within specified time frames. Seller must honour all his conditions contained in the promise of sale agreement, such as finishing or refurbishing works within specified time frames, regularisation of permits.
• Contract / Final Deed: This is drafted by the Notary who notifies all sides, including the Bank who will want to see the contract a few days, possibly weeks, before it is signed. All outstanding conditions and obligations deriving from the Convenium have to be honoured BEFORE the contract is.

Final Procedure

• Bank Loan: If a Bank loan is required for the purchase, the final deed is signed at the Bank, in which case the deed will consist of two parts, firstly the Bank loan to purchaser and secondly the sale from vendor to purchaser. The loan will be paid directly from the Bank to vendor as part of the purchase price.
• Reading of Contract: The contract of purchase is read out and if all is in order and to their approval, all the parties concerned sign it.
• Payment: The balance due i.e. the purchase price less any deposits paid on account is paid to the vendor.
• Expenses: The parties concerned settle their relative expenses concerning the purchase.
• Keys: Keys to the property are passed on to the purchaser.
• Registration: The Notary Public registers the transfer at the Public Registry (and Land Registry if applicable). All transfers must be registered at the Public Registry, but not all transfer dealings need be registered at the Land Registry. This is because not all of Malta and Gozo has been declared a “Compulsory Land Registration Area”, and only those properties in areas which the Land Registry has declared “compulsory” must be registered. More information on this technical point can be obtained by the Notary on or prior to the Sale.

Notaries and Estate Agents go through these procedures practically every day. Make copious use of their services. They will be only too happy to help out. If needed we are just a phone call away on 23 88 00 99 or 79 44 66 88

Expenses on Selling or Buying Immovable Property
Upon the transfer of immovable property the following expenses must be taken into consideration:

Purchaser Charges

• Stamp Duty: 3.5% on the first Lm30,000 (thirty thousand Maltese Liri) of the immovable property contract price. This concession is applicable only on the purchase of one's sole place of residence and subject to the purchasers not having other residence in their name.
  
  5% on an amount greater than Lm30,000 (thirty thousand Maltese Liri) of the immovable property contract price, or on the full price if the concessions mentioned previously are not applicable.
• Notary: Approximately 1% of the immovable property price is due to the Notary, who is usually chosen by the purchaser.
• Recognition Fee: On immovable property subject to ground rent, a recognition fee (known as a Laudemium) equivalent to one year's ground rent is due upon the signing of the contract of sale. This fee is payable just once and is due to the owner of the said ground rent.
  
  If the present owner is imposing the ground rent, no recognition fee is due to the vendor but stamp duty amounting to Lm100 (one hundred Maltese Liri) is due on every newly imposed perpetual ground rent up to Lm100 (one hundred Maltese Liri). One can avoid this proposed ground rent prior or on the deed by “redeeming” it at the rate of 5%, or the proposed ground rent multiplied by 20.

Vendor Charges

• Capital Gains Tax: 7% of the immovable property contract price is charged as a provisional capital gains tax. This provisional tax is always due, with the following exceptions:
  
  
  1. If the immovable property was inherited and is being sold for the first time since it was inherited.
  2. If the immovable property was the vendor's primary residence for the previous three years.
  3. If it can be proved that no profit on the sale has been made, in which case a Certificate to this effect from the Office of Inland Revenue would be required prior to the deed.
  
  One must bear in mind that, as a provisional tax, the 7% forms part of the vendor's annual income and ultimately the amount to be paid can be lesser or greater, depending on how much the immovable property was purchased for, the expenses incurred (against receipts) and how much it is being sold for at present.
  
  Naturally, every case must be taken upon its' own merits. We would be in a better position to advise the vendor when the immovable property is placed on our books.

Estate Agency Fees

• 5% of the selling price in the case of a multiple-agency agreement, or 3.5% of the selling price in the case of a property benefiting from a sole agency agreement.

The expenses listed above are all due upon the signing of the final contract. Stamp duty and capital gains tax are collected by the Notary, preferably in the form of bank drafts to be passed on to the respective government departments while notarial and estate agency fees are paid directly there and then.

This information has been compiled by:
Notary Patrick Critien BA LLD,
of St. Mary's Street, Sliema, Malta.
Tel: 21312770, 21330389; Mob: 99492420; Fax: 21388259