RISKS OF PURCHASING REAL ESTATE PRIOR TO COMPLETION OF CONSTRUCTION: WHAT BUYERS NEED TO KNOW

Apr 21
2 min read

The acquisition of real estate at the construction stage in Greece presents potential advantages, including the opportunity to purchase at a reduced price and to participate in the selection of finishing materials and layout solutions. At the same time, such transactions involve heightened legal, technical, and financial risks. This necessitates thorough due diligence of title and supporting documentation, careful analysis of contractual terms, and qualified legal assistance at all stages of the transaction in order to minimize potential risks.

RISKS OF PURCHASING REAL ESTATE PRIOR TO COMPLETION OF CONSTRUCTION: WHAT BUYERS NEED TO KNOW

1. Risk of Construction Delays or Non-Completion

One of the primary risks is the delay in completion or even the full suspension of construction. The developer’s financial difficulties, market fluctuations, or unforeseen circumstances may result in a halt of construction, leaving the buyer without the property despite having already made advance payments.

2. Issues Related to the Land Plot

Prior to completion of construction, legal or other obstacles related to the land plot may arise, including encumbrances, mortgages, third-party claims, as well as technical or other circumstances (for example, the presence of underground utilities or archaeological findings). Such factors may significantly complicate the construction of the property and jeopardize the investment.

3. Violations of Urban Planning Regulations

Construction carried out without a valid permit or in deviation from the approved project entails significant risks. Violations of urban planning regulations may result in fines, the requirement to subsequently legalize the property, and may also prevent the official transfer of the property to the buyer.

4. Insufficient Detail in Contractual Terms

Contracts for the purchase of real estate at the construction stage often contain insufficiently detailed provisions regarding completion deadlines, technical specifications, materials used, and penalties for delays. The lack of sufficient detail significantly limits the buyer’s ability to effectively protect their rights in the event of a breach of contract.

5. Risk of Loss of Advance Payments

Making advance payments without reliable guarantees creates a risk of partial or total loss of funds, particularly in the event of the developer’s insolvency. The absence of financial guarantees for the developer’s obligations significantly increases this risk.

6. Deviations from Project Documentation

The completed property may differ substantially from the approved design, including in terms of floor area, quality of materials used, and the layout of common areas. Such discrepancies often become a source of conflict and may lead to legal disputes between the buyer and the developer.

7. Unforeseen Financial and Tax Obligations

During construction, additional costs or tax liabilities may arise, such as changes in tax legislation of Greece, increases in the cost of connecting to utility networks, and others.

Purchasing real estate at the construction stage in Greece may represent a significant investment opportunity; however, it requires careful review of documentation and professional legal support. A properly drafted contract, reliable guarantee mechanisms, and consultation with a qualified attorney help minimize risks and effectively protect the buyer’s interests.

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